By Manoj Chugh, Chairman- Manoj Chugh Advisory LLP
As the old adage goes, the Consumer is king (and will always be so!). Whilst the pandemic brought many woes, it has also been credited with being the catalyst of digital transformation. Many businesses got a leg up, through this acceleration. For modest sized consumer brands, the option of going direct to the customer rather than depending on aggregation platforms to drive their business has now become a viable option.
The pandemic in-fact has accelerated the adoption of D2C (Direct to Consumer) by at least a decade. Not only emerging brands but also the legacy ones are striving to generate a significant portion of their revenue from D2C. They are expecting to drive up to 30% of their revenue through this approach. With eCommerce becoming the new norm, consumers today are more connected and empowered; they value experience and convenience and prefer to do business with the brands that offer them the best.
The government’s push for Open Network for Digital Commerce (ONDC) and the investments made by global giants like Apple and Amazon are indicative of the immense potential that the Indian eCommerce market holds. With over 190 million digital buyers, India boasts the third-largest online shopper base in the world, following only the United States and China. In fact, it is expected that Indian online shoppers will soon surpass their American counterparts by numbers. The rise of direct-to-consumer (D2C) brands in India is also noteworthy, with a staggering CAGR of 40 percent. It is not surprising that D2C in India could well surpass the $300 billion mark by 2030, presenting a massive opportunity for businesses and investors alike. As the eCommerce landscape in India continues to evolve, India has the opportunity to set the benchmark for the rest of the world.
The global D2C market continues to grow unabated and is set to reach $1.1 trillion by 2025, with the US and India contributing significantly to this growth. However, with this growth comes increased competition, making it a ripe market for disruption. Brands that are quick to adapt and differentiate themselves will be the ones to make waves in this post-pandemic World. As we move forward, it will be interesting to see, how brands restructure their business models to ensure continued growth and consumer retention, despite the expected economic headwinds. In addition, with competition becoming intense, unique and immersive experiences will have to be offered to win consumers.
In today’s highly competitive market, acquiring and retaining customers has become a daunting challenge. The traditional approach of relying on performance marketing and a catalog-first site on Shopify is no longer yielding the same results. With millions of merchants on the platform, the ease of acquiring consumers has turned into a costly and frustrating affair. Homogeneity is potentially leading to higher bounce rates and cart abandonments. Customers who purchase once will not want to return if they have to go through a static experience post the first purchase. To make matters worse, recent updates to iOS privacy, GDPR, and the phasing out of “cookies” has made it increasingly difficult for brands to define or “segment target” audiences on Ad platforms. As a result, brands have to spend 250% more on Ad spend to achieve the same ROI as they did in the past.
Customer Acquisition Costs are rising through the roof, causing unit economics to crash for Direct to Consumer businesses. Many brands are struggling to survive and are either shutting down or seeking acquisition by a legacy brand or aggregation by a ‘House of Brand.’
Given these challenges, it is important that brands adopt a new strategy and shift their mindset from a commerce-only focus to a content-first engagement. The right way to organically win consumers is by offering great content that educates them and build a community that inspires them to engage. Commerce then becomes a natural extension of this deep relationship between the brand and the consumer. As they say “ Content is King.”
The new playbook that has to be adopted has to be built on the foundation of an experiential site that seamlessly blends the 3Cs of Content, Community, and Commerce. Unfortunately, the current tech options are outdated and not suited to meet the needs of digital-native brands. In the absence of any purpose-built solutions, brands have to either settle with ill-fitted platform options or opt for expensive custom-build solutions, built either in-house or with partners. The latter are not only time-consuming and expensive but also disjointed. Most developers are not designers, and most designers aren’t developers. The last thing Brands want to do is to worry about integration or deal with complex tech problems.
Brands want an intuitive purpose-built commerce solution to act as their backbone. Fortunately there is a good solution available now. dotkonnekt, a digital experience and commerce tech startup that transforms transactional commerce sites into experiential, by seamlessly orchestrating the 3Cs, offers a good option. The modular and composable approach to building the platform works well for mid-market brands who want to compete with the large brands in their category without being constrained by vendor lock-ins or requiring an extensive in-house development team. Dhiraj Jain, Chandan Mahajan, and Chethan Prabhudeva have done a tremendous job in combining the power of custom development with the convenience of a unified platform. Their quest for building a unique platform, after leaving cushy Corporate roles that had brought them close to Global retail and brands has borne fruit. dotkonnekt is democratizing best-in-class commerce, making it accessible to mid-market brands and enabling them to stay ahead of the curve.
Finally, there is a way forward and a promising journey awaits those Brands yearning to create their own unique space to serve their customers better….. and David may eventually win the battle!
