Market Trends of India D2C E-commerce Industry
The Personal Care Segment is Expected to Hold the Largest Market Share
- The personal care industry in India is experiencing rapid growth, and the COVID-19 pandemic served as a catalyst in several aspects. There has been a noticeable cultural change in India toward a focus on stylish grooming and appearance, which is linked to greater exposure to beauty trends on social media and access to international beauty brands. To meet this demand, brands and marketplaces are taking decisive steps to develop products and provide experiences through both physical and digital platforms.
- D2C companies prioritizing digital platforms have experienced significant growth due to the pandemic, causing a slowdown in offline businesses. This growth can be attributed to various factors, including the shift toward chemical-free and eco-friendly products, heightened focus on personal hygiene leading to increased demand for wellness products, and the emergence of the direct-to-customer (D2C) model, which offers flexible and tailored solutions. Additionally, increased investments by personal care brands are playing a significant role in boosting the growth of this segment.
- With the rapid expansion of beauty influencers and online reviewers, modern consumers are well-informed about dangerous components, safer alternatives, and products that suit their needs. Avendus Capital states that there are over 80 direct-to-consumer (D2C) brands in India's beauty and personal care industry, a number that is expected to surge in the coming years. In light of this development, D2C beauty and personal care websites are transparently sharing every aspect of their products, from production methods to ingredients, fostering a deeper and more trustworthy relationship with consumers.
- In March 2023, Plum, the D2C vegan beauty brand, revealed its intention to establish 100 stores throughout India. The brand, known for its diverse product line encompassing skincare, hair care, body care, fragrances, and makeup, is eager to broaden its offerings by introducing new products and enhancing its marketing efforts both online and offline. Additionally, Plum disclosed its plans to expand its presence to tier 2 cities such as Surat, Kanpur, Kochi, and Faridabad by 2024. Such vendor activities are further expected to drive the market's growth.
- India is witnessing a notable emergence of players in the D2C personal care industry. Brands such as Mamaearth, mCaffeine, Oziva, Sugar Cosmetics, Habbit, Plumm, MyGlamm, and other digital-first personal care companies have effectively established a presence in the market. These brands have managed to build strong connections with their customer base. In August 2023, Mamaearth, a D2C personal care brand, announced its plans to raise around USD 120-150 million in an upcoming funding round ahead of its planned initial public offering (IPO).
- According to Simpl, there was a significant increase in business for women-led direct-to-consumer (D2C) brands, as transactions through Simpl's Checkout Solutions surged by 54 times in 2023 compared to 2022. The report highlighted the rising demand for D2C brands, particularly in the beauty, skincare, hygiene, and personal care industries, attributed to shifting consumer behavior. Customers are now prioritizing sustainable solutions over quick fixes, which is propelling the growth of the industry as a whole. This shift indicates the growing popularity of e-commerce in tier 2 and tier 3 cities, where consumers are turning to the internet to fulfill their changing needs. Such significant developments are expected to drive the segment's growth in the coming years.
Understand The Key Trends Shaping This Market
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Enhanced Brand Engagement with Customers is Expected to Drive the Market
- Engaging customers is considered a crucial element for the market to maximize its potential. This entails utilizing omnichannel marketing to connect with a wider range of audiences. Customers are guided through each step of the marketing funnel through the use of marketing automation and personalized communication. By utilizing data-driven insights and implementing agile marketing tactics, brands can effectively enter the market. Numerous D2C enterprises are making substantial investments in diverse approaches to interact with customers.
- According to a recent study conducted by Data Labs, the direct-to-consumer (D2C) industry in India is experiencing rapid growth. It is projected to reach a market size of USD 100 billion by 2025. Over the past few years, an increasing number of businesses have opted to skip conventional retail avenues and are now directly selling their products to consumers via their online platforms, social media channels, and various digital mediums. Through the strategic use of social media, content marketing, influencer collaborations, and focused advertising efforts, companies in the area are successfully conveying their unique value propositions and enhancing customer interaction.
- For instance, Boat, a consumer electronics brand, became the quickest D2C brand to reach INR 100 crore in just two years. Another D2C fashion brand, Bewakoof, aims to achieve INR 2,000 crore in sales by 2025. These brands have quickly become popular among consumers due to their focus on customer engagement and personalized experiences. Furthermore, the rise of D2C brands is driven by their attention to tier-II and tier-III cities for sourcing materials and serving the underserved markets in these cities. These important factors are anticipated to stimulate the market.
- Footwear and clothing companies are making substantial investments in customer engagement through diverse marketing tactics. Neeman, for example, stands out as one of the rare shoe brands in India that has replaced synthetic fibers with organic materials. By recycling PET plastic bottles and rubber to create shoes, this eco-friendly footwear brand has garnered attention from both the media and environmentally conscious consumers. Neeman's customers consistently praise the brand for its comfortable, long-lasting, odor-free, and lightweight shoes that eliminate the necessity of wearing socks.
- The remarkable growth in the D2C e-commerce industry in India can be largely credited to the shift toward online shopping due to accessible internet, widespread smartphone usage, and evolving consumer preferences. With the rising internet connectivity in the region, D2C brands are expected to invest more in digital marketing efforts. As internet penetration expands, the presence of D2C brands across different sectors is set to increase in the country. The region is witnessing rapid growth in the adoption of the internet and growing investments in the production of smartphones.
- According to GSMA Intelligence, India had 1.10 billion cellular mobile connections at the beginning of 2023. In terms of 5G median download speeds, India ranked 14th globally with 301.86 Mbps based on Q4 2023 data. Additionally, with the support of the government's "Production Linked Incentive (PLI) Scheme," the region is experiencing significant growth in mobile phone manufacturing capabilities. It is on track to become the second-largest mobile manufacturing hub in the world. These developments are expected to create opportunities for direct-to-consumer (D2C) businesses in the region.
