D2C’s Dilemma- My way of Interpretation.

 

Communication is very dynamic nowadays; many new things are evolving differently. Technology is making it dynamic and playing an important role in our day-to-day life. The pieces of information which once were secret and were handy with few people in the market, now it is one finger click on our mobile. Helping businesses to think beyond the peripheral and time. The same way consumers are getting market updates every second and AI on social media is capturing every move of their thoughts and trying to get the inside of our minds. Especially when we are searching grocery, home appliances, electronics or any other products on a website, means we are exposing our interest to the world.  They are forcing us to think about their products and trying to change or judge our preferences, interests, and even hobbies.  Changes in e-commerce take place when customers’ preferences change. Exactly technology companies through a social platform, Application or information through other means trying to change our preference and interest.

Let's validate this thought of change in consumer preference. 

Let’s move to the year 2000  and try to memorize the market scenario especially in Retail. you will find products that are approached to consumers that such a brand is best for health etc and promotions were done through Newspaper, Radio, and Television. Few standalone supermarkets were there in metro cities which were showcasing the merchandise in the best way. In the modern world, retail was evolved 3 decades ago so consumers are aware of brand and branding. 

Indian retail is vast in terms of size and rise so opportunities are there in a very ample way.  $500 billion grocery retail size is huge for an unorganised sector here in India. Covid brought new synergies and opened a new line of business for companies or start-ups who are willing to use this ecosystem for more fields to plough.  Yes, change is unavoidable but persistent so things move on for new dynamics and new heights to touch. A consumer must have felt the touch during the covid wave, how e-commerce companies facilitated them and fulfilled their daily needs unorganized. Also, numerous new products have been seen and tasted.  I am very close to this ecosystem of retail so I can feel that things are going in the right and disruptive way. Startups and organizations started introducing FMCG products across categories and getting huge investments. 

Terminologies have been changed significantly, dramatically, Consumer and logically but products remain the same but the way new products are introduced in the market is changed. What are those terminologies?  Let's figure it out and explain how it is forcing us to think and adapt.

Consumer’s preference is changing towards hygiene, sanitation, convenience, quality, and health and welcoming brands entering these segments. Well, now directly come to the article about D2C ( Direct to consumer).  This is new terminology for brands reaching directly to consumers via e-commerce platform or direct distribution like direct marketing but still, we can find lots of change in way of working and making its market fit.  Old terminologies are used by the company to consumers i.e. C2C, Private label for standalone supermarkets, and consumer brands in the fast-moving segment.  Let’s jump to the names which got fame and name during the last two or three years, most brands got earmarks only after 2015. 

Below is the list of a few known startups in D2C brands,  let’s figure out how many are available near your Kirana stores.  Stand-alone stores of a few D2C startups are now there in tier I & Tier-II cities like Lenskart, firstcry are very visible and consumers footfall is there in these physical stores. They are asset-heavy startups, yes but still brands like mama earth and beardo are very much on the b2c commerce platform and doing great. 

Startups	Starting	Segment	Life Cycle as on date
Lenskart	2010	Eyewear	11
Firstcry	2010	Baby Care	11
Healthkart	2011	Fitness Products	10
Pepperfry	2012	Home Furnishing	9
Bewakoof	2012	Clothing	9
Plum	2014	Organic Beauty Products	7
Noise	2014	Electronic Lifestyle	7
MyGlamm	2015	Beauty Products	6
Sugar Cosmetics	2015	Beauty Products	6
Licious	2015	Non-Veg Segment	6
Country Delight	2015	Dairy	6
Melorra	2015	Jewellery	6
Candes	2015	Home Appliances	6
Bombay Shaving Company	2016	Men's Grooming	5
Mamaearth	2016	Personal Care	5
The Moms Co.	2016	Healthcare	5
Wakefit	2016	Home Furnishing	5
Wow Skin Science	2016	Skin Care	5
BoAt	2016	Electronic Lifestyle	5
Sleepy Owl	2016	Beverages ( Coffee)	5
Flatheads	2018	Footwear	3
Indus valley	2016	Kitchenwear	5
Mcaffeine	2015	Personal Care	6
Vahdam	2015	Beverages ( Tea )	6
Nyumi	2019	Nutraceutical	2
Onlife	2019	Healthcare	2
Mensa	2021	Fashion & Apparel	Unicorn
Monrow	2016	Footwear	5
True Elements	2014	Plant Based Food	7
Juicy Chemistry	2014	Skin Care	7
Oziva	2016	Plant Based Food	5

Do we think that these all are newly invented concepts or ideas or they were not in existence before or have we never seen such products at physical stores?  They were there but we hardly know the name not because we are not using them but we are treating those brands just as a product or commodity.  We know them by the name Private Label, mark, brand.  Status etc. but now it is the era of start-ups with new ideas and with speed to grow in a short period.

Human psychology is unpredictable and hard to understand. You must have heard a famous sentence mostly used by a politician “ that, the memory of general people is very weak so remind them at the very start of election otherwise they will forget the gold you have given them during your term”.  This same saying seems to fit with the end consumer, but not every time.  The brand is a brand that is inherent sometimes in our memories. Things are changing very fast which further pressurizes individuals to think about the communication which is done by the brands, by the advertisers, by the social media platform, and by word of mouth. The continuous hammering of events is activating the subconscious mind to be addicted to those things which we should not try but buy.

So far D2C brands that are selling their products through eB2B are in good shape but if they want to grow what will be their strategy. Till they are asset-light, must have positive EBITDA but tomorrow when they think to expand in other territories?  Will e-commerce help them to reach there?  Or they will come with an asset-heavy model of physical stores. 

 Questions are in Queue? 

 Let's surf with me with a few questions and will find the answer near to your thoughts.

·         Startups have plenty of commitments owed to their investors & other stakeholders which

         they need to fulfil within five years i.e. short time frame,  do or die situation.

·         Scale to the tune of the top line is a must – big accelerator of valuation

·         Burning money is unavoidable

·         Every time present in the market to raise money

·         Market expansion is a must  -  a milestone to achieve for greater valuation: But where to

         expand?

So far the presence of D2C brands are on the eB2C platform, I am okay with their performance and agree that they are purely D2C and directly reaching consumers without many market intermediaries or existing distribution channels.

But, further, if I think that they will expand the business to other verticals or want to join the traditional distribution then what will happen?  Again differentiation between GT and MT will happen, the same way we need to change the margin structure. Finally, they will come to Retailers. This would be done for sure because without the help or mediation of retailers they will not reach to masses.   I must say, welcome to the Retail network of Kirana Retailers. 

Problems start from now which they will feel starting from onboarding Super Stockist, C&F,  distributors, Sales & Marketing staff, and backend staff heavily. City-wise and state-wise distribution networks need to be developed, stock will move from hand to hand adding cost at every stage.  Challenges will come when the brand will start communication with consumers i.e. demand creation.  Without proper distribution and availability at every Kirana store, things of ATL/BTL marketing will not work, this will be a failure and the brand will be out of sight, out of mind immediately.  Dealing with a traditional mindset is not an easy task.  Kirana Retailer and distributors both are business people, they have their own way of working and dealings. The mere use of technology will not change their way of working. They are masters, running businesses at low operating costs.  “penny wise pound foolish” will change the mind of the brand owner. So, beware of this mindset.

This is a long story of the brand’s journey through a traditional system.  We can make this journey short & sweet. 

 “ Placement of new products on the  Grocery Retail shelf is a mammoth task & hard to deal with a traditional mindset, Journey of the brand can go long” ……… by Bhardari

No Worry,  here in Jaipur, we are making things easy by way of our unique Kirana retailer’s network. This is a confluence of traditional and innovative distribution systems, techniques, and best use of technology.  A network of uniform retail stores across Jaipur city will help new D2C brands to place their products and trigger a call for action for customer footfall at these stores.  On a single click, the entire retail network is available for distribution and will be available for centralized marketing activities. The brand will have large coverage and penetration.  In a shorter period of exploration, we will make the product /brand market fit in the territory.   The power of empowering the existing ecosystem is more energetic, economic, scalable & profitable than creating a new competition so we believe in empowering them and connecting them with our technology stack. I believe in connecting and empowering rather than disrupting.  Disruption is a kind of disturbance in the ecosystem which can not be fruitful for the system and finally the economy. 

Come to us to become part of our journey and introduce your D2C brands to retailers through our platform. We are an offline- platform driven by technology.

D2C is not a dream but again it will take time to come to reality i.e. on the retailer’s platform. We are there to make it market fit.

Writer :: Balwant Singh Rana,

Written on 18.11.2021

Jaipur, Rajasthan

India,