Role of Direct-to-consumer in India’s Startup Revolution
The Indian version of the popular American show Shark Tank has taken Indian media consumers by storm. Whether it is the appreciation for Indian entrepreneurship or the tons of memes on social media, the show has certainly made a mark on Indian television. With all the so-called sharks getting differing reviews from the audience, the one thing common about them is that most of these entrepreneurs head popular Direct-to-consumer (DTC) businesses. From Sugar to Mamaearth and to Lenskart, the fact that a show based on entrepreneurship chose a majority of entrepreneurs from the D2C segment shows something about the Indian business industry. It shows that D2C is the most popular business segment currently in India.
D2C or business-to-consumer (B2C) refers to selling products directly to customers, bypassing any third-party retailers, wholesalers, or any other middlemen. The sales model prevalent throughout the world before the introduction of large business enterprises is back to the forefront thanks to digitisation and globalisation. Almost like completing a full circle, economies around the world are back to where they began in terms of running their businesses.
India too has seen a rapid D2C revolution with the onset of digitisation and the tremendous growth of the Startup India campaign. The D2C industry is more important for India than it is for the rest of the world in the sense that most Indian industries suffer from middlemen. Grassroots entrepreneurs were unable to start businesses for several reasons, many of which have now been resolved through D2C. From reducing the investment required for starting businesses to providing a direct platform to reach consumers, D2C has bridged the gap between opportunity and success for Indian entrepreneurs.
When we speak of the Indian startup ecosystem and the 88 unicorns that we boast of, we often forget about the role the D2C industry has played in India’s achievements. While a remarkable amount of funding has been given to Indian startups by venture capitalists and banks, it is important to acknowledge that these startups have worked well with a rather small amount of funding which has been made possible only through the use of digital infrastructure that is less expensive than building physical infrastructure.
As per a Google India report, search interest in direct-to-consumer, or D2C, brands rose by 533 per cent as businesses moved online to meet consumer needs. Searches for “which brand is good" grew by 41 per cent as Indians researched before making decisions. There has been an up to 80 per cent growth in customers searching for a brand’s official store as well. Panasonic India has plans to launch a D2C platform by Q2 of 2022. E-commerce giant Flipkart has launched a program to spot and build such digital-first brands on its platform through a service fee model. Flipkart Boost is an integrated program for new-age digital-first consumer brands to move into the next phase of growth. Through a service fee model, Flipkart Boost will provide emerging Made in India brands end-to-end support covering planning, advertising, cataloguing, logistics, quality control, and mentoring.
Seeing the role played by the D2C business model in India’s startup ecosystem and the clear interest from larger, established firms as well, it is time that we have policies aiming at the D2C industry, incentivising more entrepreneurs to take up the business model. The D2C model can be especially beneficial for the agriculture sector of India if we are able to make farmers entrepreneurs through the use of digital platforms.
This is authored by Karishma Sharma.