Bengaluru: Direct-to-consumer (D2C) fulfillment has seen significant expansion in recent years. Brands are increasingly adopting the D2C model, enabling them to develop their own sales and marketing strategies while offering an end-to-end brand experience. The D2C landscape in India, in particular, has experienced exponential growth; market size is predicted to reach $100 billion by 2025. However, both challenges and opportunities exist for merchants in the D2C space. With the inputs of Raju Dedhia, Head of Pre Sales and Enterprise Solutions, Vinculum we have busted some common myths surrounding D2C and offers considerations for those launching a D2C business.
One of the common myth of D2C fulfilment is – it is a simple and low-cost setup. D2C fulfilment differs for each business and can be very complex and high on budget. Fulfilment of orders involves various steps – inventory mgmt., order processing, selection of the right 3PL partner, shipping, returns and customer service. A lot of this depends on the chosen technology, which can sometimes get very complex and high on budget. The right technology selection is essential to ensure smooth, easy and low-cost operations. The technology investment will include a selection of an e-commerce platform, order & inventory mgmt. Platform, mar-tech platforms and many more. It also includes hiring of skilled personnel or agencies to manage digital marketing, shipment/delivery. An upfront cost investment and ongoing expenses are needed to maintain the channel’s effectiveness.
Another myth is that D2C will replace brick-mortar retail. Many believe that D2C fulfilment will eventually render brick-and-mortar retail obsolete. However, this myth oversimplifies the complex relationship between these two channels. While D2C has disrupted traditional retail, it doesn’t necessarily replace it entirely. Many consumers still value physical stores for certain products, services, and experiences. Instead of viewing them as separate, competition, or adversaries, businesses should consider a hybrid approach combining D2C and brick-and-mortar retail to cater to diverse customer preferences.
Another myth is that D2C Guarantees a Higher Profit Margin. While D2C can yield higher margins by cutting the intermediates, it is a no means guaranteed outcome. Cutting middlemen can reduce price, but spending on customer acquisition costs can be at times significantly very high. Lowering prices can attract customers and reduce margins, while increasing prices may create a perspective of niche or costly products. Success depends on various factors, including product quality, pricing, technology spending, marketing strategy and competition. Achieving higher profit needs a well-thought-out approach and continuous optimization.
In conclusion, while D2C fulfilment can offer various advantages for businesses engaged in direct sales, it must recognize that it involves complexities and challenges that may not align with common misconceptions. Success in D2C requires a strategic approach, dedication, and ongoing effort. It is not a one-size-fits-all solution, and businesses must tailor their D2C strategies to align with their unique goals, products, and target audiences. Understanding the realities behind the myths is essential for harnessing the true potential of D2C fulfilment in direct sales.
Direct-to-consumer fulfilment has progressively expanded in the last few years. Brands today continue to accelerate D2C model licensing them to build their own sales and marketing strategies and provide an end-to-end brand experience. D2C landscape in India has seen exponential growth over the past few years and the market size is prophesied to touch $100 billion by 2025. However, there are also challenges and opportunities associated with D2C for merchants. We explore the myths around direct-to-consumer and the things you should keep an eye out for when starting your business.