D2C 2.0: Digital, Phygital, and Beyond

D2C itself has moved so quickly in the past five years, that what we see today is actually a new version. What I'd like to simply call D2C 2.0: Kanwaljit Singh

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Five years ago, Fireside Ventures was set up with the vision of creating iconic digital-first brands. We began talking about a consumer trend that we'd seen in action in the US and other developed markets: Direct-To-Consumer, or as it was usually called, DTC. On several occasions, we had to explain the concept, usually in terms of digital marketing and online sales. Today, D2C is common parlance, and brands like boAt, Mamaearth, and Licious are household names.

Freepik

Fact is, D2C itself has moved so quickly in the past five years, that what we see today is actually a new version. What I'd like to simply call D2C 2.0

Many ways to quicker fulfilment

D2C 2.0 is true to the foundational idea of Direct-to-Consumer, but actually follows it to its logical conclusion of serving consumers where they are. This could be through a brand's website, a third-party marketplace, or a social channel, of course, but equally, it could be a supermarket, a neighbourhood store, or a popup shop.

Licious recently opened its first offline store. Mamaearthis in thousands of stores – including its own.Nykaatested the waters with NykaaLuxe, and has been rolling out Nykaa On Trends across the map.

For founders, this means, deeply understanding omnichannel – particularly retail – which can be counterintuitive to digital natives.

The second big game changer has beenquick commerce, a $45 billion market thatis expected tostaggering fifteenfold in the next three years (RedSeer). If you need to be at your consumer's doorstep in 10 minutes flat, you will need to build production lines to support it. Conversely, you might need to pivot towards products that can be used regularly, even daily.

Technology can fix broken supply chains

Pandemic-caused disruptions have cast a spotlight on global supply chains, and brands will not want to be caught in that situation again. boAt, for instance, chose to acquire manufacturing of its own, and co-partner tech companies for R&D. Fable Street runs manufacturing in-house and follows Just-in-Time methodology to support a 7-day inventory.

Technology is also throwing up solutions in the shape of raw materials and greater production efficiencies. In fact, the tech-enabled supply of raw material is providing cost savings to the tune of 11-15% (RedSeer).

Made in India for the world

Freshworks led the way, but the global market isn't restricted to technology or SaaS companies alone. Amazon India now runs Propel, a Global Selling programme for start-ups from India. Brands like Vahdam, and Wellbeing Nutrition have already gained a foothold overseas.

The higher price points that overseas markets afford are a great incentive, one that brands like Urban Company are seizing in Australia, where it provides a similar suite of services at significantly higher prices. The SleepCompany, too, has adopteda similar approach in Japan and the UAE.

The role of purpose

The last driver is one of particular interest to us at Fireside – responsible consumption. There is a growing sensibility among consumers and brand-owners alike that we need to be responsible about the resources we consume. It is our view that brands that are truly resilient have the twin tenets of sustainability and responsibility hardwired into their DNA.

Vahdam, for example, has been offsetting its carbon footprint for years. Slurrp Farm has been walking the talk on diversity and inclusion. No Nasties is "planet positive." Mamaearthnow has a completely gender-balanced team. Design Café has invested in upskilling their talent. A host of food brands are sourcing ingredients ethically, and actively looking for fairtrade, organic and climate-resilient practices.

It's interesting to see that while the pandemic has accelerated e-commerce trends across the world, India has been uniquein its response to digital-first brands –- their consumption, their creation, and their growth. Our D2C 2.0 brands are on a mission to deliver customer-centricity at scale, serving a knowledgeable and mature customer, by leveraging an innovation-led, tech-enabled, highly localised ecosystem. As an investor, a former marketer, and a consumer, I cannot wait to see how they will continue to innovate and delight us all.