In recent years, direct-to-consumer (D2C) brands have emerged as a popular way for companies to bypass traditional retail channels and sell their products directly to consumers. Talking about India alone, about 800+ new-age brands have gone the D2C route, eliminating middlemen and keeping an eye on the market. It is projected that the D2C market in India will grow to around $100 Bn by the year 2025. However, even with such rapid growth, these brands are facing a major challenge in gaining visibility across various online marketplaces like Amazon, Flipkart, Myntra, etc.
Breaking Into Ecommerce Marketplaces
The dominance of these marketplaces has made it difficult for long-tail, newer D2C brands to compete. Marketplaces prioritise larger, established brands with substantial growth, making it harder for the younger D2C brands to gain visibility and stand out from the competition. As a result, these brands often struggle to gain traction and achieve sustainable growth.
In addition to the competition for visibility, marketplaces may charge high fees or require specific certifications for products to be listed. For example, Amazon charges a referral fee for each sale made through its platform, which can significantly impact a D2C brand’s profitability. Additionally, some marketplaces require certifications and adhere to stricter cataloguing guidelines for products to be listed, which can be time-consuming and costly for small businesses. Furthermore, to boost their visibility, D2C brands end up investing in advertising on major marketplaces, which presents two challenges:
- Unfamiliarity with the platform compared to performance ads on Facebook and Google and a lack of in-house expertise to optimise efficiency
- The need to allocate a significant budget over an extended period to observe tangible outcomes
To overcome these challenges, D2C brands are increasingly turning to their ecommerce websites for increasing sales or figuring out other channels for distribution such as offline, etc. By building a strong online presence and leveraging social media/influencers to drive traffic to their websites, D2C brands can reduce their reliance on marketplaces and gain more control over their sales and growth strategies.
Building A Strong Online Presence
However, this shift to increase performance from their captive sales channels is not without its challenges. Building a strong online presence and driving traffic to a website/app requires significant investment in marketing and advertising, which can be difficult for smaller businesses with limited budgets. Additionally, social media algorithms and advertising policies can be unpredictable and constantly changing, making it difficult for brands to keep up and make them work for their growth.
D2C brands can build a unique brand identity and offer a differentiated customer experience that can give them an edge on selling on their brand.com over ecommerce marketplaces:
- Emphasise brand identity and customer success: D2C brands can create a strong emotional connection with customers by emphasising their brand identity through targeted marketing campaigns and personalised communication. Leveraging their own distribution channels is the right medium to build their brand.
- Curated selection of products: D2C brands can differentiate themselves by offering a curated selection of products that align with their brand values, as opposed to the vast array of options found on marketplaces. In summary, have a differentiated and viable supply strategy.
- Ethical and conscious business practices: By providing high-quality products with a focus on sustainability, transparency, and social responsibility, D2C brands can establish a loyal customer base that values their commitment to ethical business practices.
- Strong loyalty programmes: To maximise cost-effectiveness, it’s essential to focus on retaining existing customers rather than acquiring new ones. A strong loyalty programme can achieve this goal by offering tangible and intangible rewards that recognise and reward brand loyalty.
- Leverage customer data effectively: Developing a comprehensive customer profile. D2C brands can leverage customer data to improve product offerings and tailor experiences, which can increase customer satisfaction and retention.
While D2C brands face significant challenges in competing with established players in online marketplaces, they have several advantages that can help them succeed in the long run. As the ecommerce landscape continues to evolve, it will be interesting to see how D2C brands adapt and grow in this competitive market.