Indian D2C sales could reach $60 bn by FY27: Shiprocket-CII-Praxis study

Many D2C brands have crossed Rs 100 cr in revenue 3-5 years after launch; several orders from tier-2 cities and smaller towns; study projects 1.3 bn smartphone users, 500 mn online shoppers by FY30

Amazon, e-commerce, online shopping
The report shows that brand packaging has also been a key factor in attracting buyers.
Peerzada Abrar Bengaluru
3 min read Last Updated : Jun 27 2022 | 10:38 PM IST
Direct-to-consumer (D2C) brands are estimated to become a $60 billion industry by FY27, growing at a CAGR (compound annual growth rate) of about 40 per cent, according to a new report. The study was conducted by e-commerce enablement platform Shiprocket in collaboration with Confederation of Indian Industries (CII) and Praxis Global Alliance, a global management consulting and advisory services firm. According to the report, D2C  is a $12 billion market currently and is growing rapidly. The report states that several D2C brands in India have crossed Rs 100 crore in revenue within 3-5 years after their launch.

“Today, brands aren't limited to marketing their products through online marketplaces or offline channels,” said Saahil Goel, co-founder and CEO of Shiprocket. “Many are developing their own e-commerce stores or apps with the aim of capturing orders and delivering them with the help of e-commerce enablers straight to the customer."

Aiding these trends is the brands’ agility and Go-To-Market (GTM) strategy, alongside strong digital capabilities that have helped their businesses gain a competitive edge. The report shows that brand packaging has also been a key factor in attracting buyers. The average order value (AOV) on each product and a hefty gain in gross margins are the fundamental tailwinds that further foster this trend.

“We've seen that almost all pin codes in India are using e-commerce,” said Mohit Mittal, Partner of Praxis Global Alliance. “Many of these transactions and orders come from tier-2 cities and smaller towns. By FY30, India will also have over 1.3 billion smartphone users and over 500 million online shoppers.”

Mittal said to reduce their reliance on marketplaces, even traditional brands are increasingly developing their direct-to-customer channels such as websites, apps and social media handles to reach out and sell to their customers.

The report considered seven categories in order to estimate the size of the D2C market in India. These include personal care, clothing and footwear, groceries and refined foods, jewellery, electronics, health care, home furnishings, and garden. 

Incumbent players (such as Unilever, Marico, Tata Consumer Products, and ITC) are either acquiring prominent D2C brands or choosing the organic route of launching their own brands online and building their own D2C platforms. However, for D2C brands to maintain this growth, the report said that they need to strengthen product innovation and revamp manufacturing and sourcing strategies to become market leaders. 

“So, to win the market, it is also essential to improve offline distribution, customer acquisition, and unit economics,” said the report.

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Topics :e commerceOnline shoppingConfederation of Indian IndustryConsumer brandssmartphonesReliance RetailOnline marketplaceOnline shoppers

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