India, right now, is having its D2C moment with more than 700 brands selling directly to their customer base. According to the 2021 forecast by Statista, by 2025, the fashion and accessories D2C market in India is expected to be worth US $ 43.2 billion. There also has been a steady rise in D2C funding in the year 2021 as the funding amount grew by 251 percent, with fashion being the most attractive category in the D2C segment. The popularity is so much that Mensa Brands, a start-up that acquires direct-to-consumer brands and helps them scale within the home market and overseas, has become a unicorn just six months after launching its business.
Pre-requisites of being a successful D2C brand
Not only the start-ups but also the established retailers, brands, and even manufacturers are using the e-commerce platform to reach out to their customers.
But what really are the pre-requisites for creating a successful D2C brand? The key to a successful D2C brand lies in establishing a powerful connection with the customers through a unique brand story and identity, a clear value proposition, innovative marketing, and brand voice, a thorough understanding of the customers through rigorous learning and insight, and a seamless feedback channel backed by technology.
The popularity of e-commerce, the growing reach of social media and rapidly changing customer behavior have made it easier and trendier for people to buy things and services directly from the brand itself. New technologies have made it even more feasible for companies to make their websites and apps more user-friendly. The fact that India is expected to add 200 million online shoppers in the next four years, coupled with increasing VC funding, and consolidations, all add to the growing D2C ecosystem in India.
Start-ups make a jump-start on the D2C bandwagon
The future belongs to D2C brands whether it is for better cost, better customer service, and more personalized experiences. The urban millennial customer of today wants to have a relationship with the seller and wants to know their brand story. Also, their product choices are based on wellness, sustainability, social connections,ions etc., which the traditional business model is unable to support. Hence, this is leading start-ups to opt for Direct-to-Consumer (D2C) model to directly handle customers and their needs in the best possible way. D2C is a one-stop solution for brands to broaden the market and user choices in the easiest way and have complete control over the marketing and distribution of products.
Start-ups foraying actively into innerwear and loungewear
Loungewear and innerwear has been one segment that has grown tremendously over the last two years with most people still working from home and spending the maximum of their time inside the houses. Recently, the men’s innerwear segment has been booming with innovation and sustainability at its core values. According to Grand View Research, the global men’s underwear market size was valued at the US $ 29.41 billion in 2018 and is expected to register a CAGR of 5.3 percent from 2019 to 2025.
XYXX is one of the emerging start-ups primarily dealing in men’s innerwear and loungewear and it boasts of a wide variety under this segment like briefs, vests, trunks, boxers, joggers, and track pants. The fabric used by the brand includes none other than TENCEL Modal, cotton-rich, bamboo cotton, combed cotton which is soft and breathable, assuring optimum skin comfort and freedom of movement. A robust omnichannel strategy ensuring speed, flexibility, ease of purchase, a quick feedback channel as well as multiple purchase avenues, and a distinctive product story are some key growth strategies for the e-commerce start-up.
In the words of Yogesh Kabra, Founder, XYXX, “While we have always been a D2C brand, digital avenues for us became a key driver of business. We revamped our own retail channel, strengthened our delivery model as well as streamlined our response time for a seamless shopping experience, no matter where our customers are.”
DaMENSCH, founded by Anurag Saboo and Gaurav Pushkar in 2018, is another such start-up that is also cashing in on this ongoing trend. ” While the innerwear segment for online platforms grew 2.5x pre-Covid, we at DAMENSCH grew 6x,” says Anurag Saboo, Co-founder, of DaMENSCH.
The product range of innerwear at DaMENSCH includes Deo-Soft which is odor-canceling underwear; Neo-Skin which are thermoregulating vests made from a curated composition of sustainable bamboo fibers among other products catering to the comfort of the modern man. “At DaMENSCH, we are pushing the limits of textile engineering and solving unseen problems,” adds Anurag Saboo.
Currently, an online-only brand selling through its own website as well as premium e-commerce channels like Amazon, Flipkart, Myntra, TataCLiQ, and DaMENSCHenvisions emerging as a lifestyle brand that will reach 3x year-on-year growth from Rs.100 crore today. So far, the company has raised two rounds of funding – first in October 2020 and Series B in February 2022.
Redefining ethnic fashion for women
With people going back to their normal routines, ethnic wear is once again finding its rightful space back in the Indian market. Besides, ceremonies, marriages, festivals, and special occasions are again finding a firm footing in this country of myriad cultures and harping on this growing consumer requirement, Rustorange has emerged as a one-of-its-kind start-up offering ethnic wear for contemporary Indian women. The brand works with young designers of India to curate a fashion space for the contemporary woman of today. “The quirky and ethnicity we add to our products is our point of differentiation and that takes our average ticket size to around Rs.1500,” states Samik Sarkar, Co-founder, of Rustorange. He further adds that the growth of D2C brands has just started and is expected to be a US $ 100 billion opportunity by 2025.
Understanding the immense benefits of social media and e-commerce for brand building, 90 percent of sales of Rustorange comes from its own website. This helps the start-up listen to its customers. In fact, its entire merchandise is selected by its customers before they make to the final merchandise.
While traditionally retail businesses are run by distributors, with the advent of internet ad concepts like D2C, it has now become easier for companies to reach out to their customers without the middleman. Rust orange also exemplifies the same and controls every aspect of the supply chain from purchase to garment making. Once the sales team decides a sales quantity for a particular style, the same is fed into a digital planning system. Orders of raw materials are placed in advance by suppliers based on a forecast given by the Rustorange team. Bulk purchase for all its vendors at an aggregate level helps it get discounts on raw material. The entire process is designed in a way that the saved value is passed on to the end customer. Fast turnaround times help vendors in quick recovery on money investment in working capital.
The high velocity process of new product development and design selection keeps Rustorange’s design selection bar way high with the launch of around 150 fresh styles per month. Keeping in line with the growing emphasis on sustainability attributes, garments at Rustorange are made of LIVA-certified eco-friendly yarns.
Samik Sarkar proudly affirms, “Rustorange has been growing significantly since its inception. From a GMV of Rs.1.875 crore in FY 2016-17, it would be clocking a GMV of Rs.20 crore in this financial year. Rust orange was developed in a bootstrap manner with a total investment of around Rs.3 crore. It has maintained a healthy PAT in all these years. We even plan to begin opening a few retail experience centers from the next fiscal year. The initial plan is to have one outlet in each of the metro cities of India. Our product assortment will see additions in categories that range from jewelry, and footwear to other accessories by the end of this year. In addition, we want to add a separate line for plus-size fashion.”