Digitalization Fueling the Growth of the Indian D2C Market

19 Aug 2022

The e-commerce sector has been witnessing a steady rise over the past few years, fueled by the increased adoption of smartphones and availability of low-cost internet. In the pre-pandemic times, the growth of the sector was steady and gradual, however, the pandemic accelerated the use of e-commerce platforms, which helped the sector grow by leaps and bounds in the recent times.

The Indian economy is expected to take shape as the third largest economy by 2030. The percolation of technology in the business ecosystem, as well as in the lives of Indians, is largely responsible for the progress we’ve made as a country. In fact, technology has been one of the India’s inherent strengths and the country’s prowess in exports IT services has truly put it on the global map.

The Government’s impetus on creating a thriving technology landscape through initiatives like Digital India, Start-up India, amongst others, has not only fueled the Indian Industry, but has also caused a massive socio-economic impact. This is evident from the fact that back in 2020, India had around 622 million active internet users, a figure expected to rise by 45% and touch 900 million by 2025. As a by-product of the digitization wave, the growth of the e-commerce segment is set to skyrocket in the coming times.  

Riding on a high demand wave, the e-commerce market has the potential to touch USD 111 bn by 2024 and USD 200 bn by 2026. Attractive opportunities, a conducive policy ecosystem and robust investment inflows into the sector, amongst other factors, make it one of the upward looking sectors of the Indian economy.

Disruptions Caused by Technology

India is one of the biggest markets in the world. It is estimated that the country will have over 1.3 bn smartphone and internet users and 500 mn online shoppers by 2030. Technology has disrupted the way many industries functioned, e-commerce being no exception. E-commerce has provided sellers the opportunity to go via the Direct to Customer (D2C) route, disrupting the traditional retailer business model.

The D2C mode of selling has its own set of advantages. It provides the brands higher margins, direct access to consumers and their data, greater consumer engagement and end-to-end control of various aspects of selling, among others.

Studies reveal that D2C brands are witnessing rapid growth and are scaling up fast, with several brands having crossed the INR 100 crore mark rapidly. The popular segments in which the D2C model has done well include grocery & gourmet, apparel & footwear, jewelry, personal care, electronics and home décor.

Opportunities for Growth of D2C in India

The growth of the D2C segment in India is directly related to the growth of e-commerce in the country and the speed at which internet users are growing. The D2C segment is of high interest to investors. This is due to its potential as a lucrative segment which is growing at a fast pace.

The increase in participation of women in the workforce augurs well for the sector, as women form the largest customer base, especially in the categories of personal care, apparel, footwear, jewelry and others.

D2C offers a win-win opportunity for both the manufacturers and the buyers to avail better margins and prices, as it eliminates the role of ‘middle-men’ involved in the process. Also, it creates opportunities in the fields of website building, logistics & supply chain and marketing.

The shift in the consumer behaviour has a big role to play in the growth of the D2C segment. In the post-COVID era, customers are more comfortable with online shopping, which comes with its benefits. Online shopping provides exposure to a wide range of brands and offers lucrative deals and discounts.

As we look forward, the Indian D2C market is poised for a drastic growth in the coming times, as the e-commerce ecosystem continues to become even more robust on the back of new technological innovations and increased digitalization.

For deeper insights on the future of the India D2C sector, access the India D2C Report 2022 here.

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