SUMMARY
According to industry estimates, over 800 D2C brands are currently operating in India, with the market predicted to reach $60 Bn by FY27.
While the D2C model has helped new brands scale rapidly online, expanding into offline channels has become imperative for the next growth stage
For D2C brands venturing into offline retail, focusing strategically on customer experience rather than immediate scale is paramount
The direct-to-consumer (D2C) model has significantly disrupted the retail landscape in India over the last decade. D2C brands have leveraged the power of the internet and social media to build their brands, acquire customers, and deliver products, bypassing traditional retail channels.
Following rapid initial growth through online channels, many D2C brands are now expanding into offline retail to drive further growth.
The Rise Of D2C In India
The D2C wave in India has been nothing short of revolutionary. According to industry estimates, over 800 D2C brands are currently operating in India, with the market predicted to reach $60 Bn by FY27.
The D2C model has enabled small startups to quickly build brands by eliminating intermediaries and connecting directly with customers. These brands have found product-market fit through social media and targeted digital marketing before investing in manufacturing and supply chains.
Low customer acquisition costs and direct customer feedback loops have fueled rapid iteration and innovation.
Factors Driving Offline Expansion
While the D2C model has helped new brands scale rapidly online, expanding into offline channels has become imperative for the next growth stage. Key factors pushing D2C brands toward omnichannel models include:
- Access and Experience: Offline stores enable customers to touch, feel, and experience products first-hand before purchasing, building more trust and comfort, especially in categories like apparel, cosmetics, and food.
- Mainstream Adoption: Digital-native consumers were early adopters of D2C brands. However, offline retail is critical for appealing to mainstream audiences.
- Cost Efficiencies: Establishing offline distribution networks leads to cost efficiencies compared to pure e-commerce models, which rely heavily on last-mile delivery.
- Market Penetration: Online sales are predominantly concentrated in Tier 1 and 2 cities. Offline retail is crucial for deeper penetration into Tier 3-6 towns and rural markets.
D2C Brands Taking The Omni-Channel Plunge
The D2C phenomenon in India has fueled rapid growth for startups and small brands, utilising digital channels and social media for brand building and customer acquisition.
Many D2C brands are now venturing into offline retail, forming partnerships with established retail chains and embracing an omnichannel approach for sustained growth beyond their initial digital-savvy customer base. This strategy is essential for penetrating mainstream consumer segments nationwide.
Offline stores provide customers with a tactile product experience, fostering trust and familiarity. Retail partnerships add credibility through distribution in mainstream chains, while expansion into smaller cities taps into new demographics.
Despite the continued impact of digital and social commerce, the modern consumer journey integrates online discovery with offline decision-making. Therefore, D2C brands must strategically integrate an offline presence across locations to offer a blend of digital convenience and physical experience, potentially securing significant success in this omnichannel landscape.
Key Strategies For Offline Expansion
For D2C brands venturing into offline retail, focusing strategically on customer experience rather than immediate scale is paramount. Initiatives include:
- Establishing flagship stores in metro cities to enhance brand credibility.
- Offering curated product assortments tailored to local preferences.
- Investing in professional visual merchandising for an optimal in-store experience.
Seeking external retail expertise for design and branding is advisable, avoiding sole reliance on in-house teams. Continuous refinement is key, achieved through collecting and analysing customer feedback using store staff or digital means.
Additionally, building partnerships with modern trade channels should involve pilot testing in select stores before scaling distribution, enabling joint evaluations of product performance.
Opportunities Galore For Digital-Forward Brands
While online channels will continue driving growth, omni-channel expansion unlocks many new opportunities for D2C brands to scale sustainably. Offline retail presence opens doors for testing new product categories, targeted geographic launches, entry into enterprise/B2B sales, and building more targeted, insight-driven marketing campaigns.
Instead of viewing offline retail as an afterthought, D2C brands must plan channel integration from the early stages based on their long-term business vision. Companies that seamlessly deliver connected online and offline shopping experiences will redefine consumer value in a web-influenced but offline-focused Indian retail ecosystem.
The D2C revolution has already transformed digital commerce in India. Now, it’s time for these digital-first brands to transform offline retail by infusing data-driven precision into physical retail operations.
Conclusion
While the D2C wave in India has been built on the backbone of digital commerce, expansion into offline channels has become imperative for sustainability and driving the next growth phase.
Online penetration remains low beyond Tier 1-2 Indian cities. Before purchasing, mainstream consumers still prefer to ‘touch and feel’ products, especially in categories like fashion, beauty, and food.
D2C brands are recognising this gap and making strides in offline retail, opening flagship brand stores and forming alliances with established retail chains. Companies that finely balance physical and digital presence through seamless omnichannel strategies stand to win in the long run.
Thus, breaking digital boundaries through methodical offline expansion while retaining digital-first agility will pave the way for the profitable growth of D2C brands within the evolving Indian retail landscape.
