D2C retail on the rise: Shoptimize’s forecasts for 2022 and beyond

Updated: Apr 29

D2C Retail On The Rise: Shoptimize’s Forecasts For 2022 And Beyond

The Indian D2C sector is projected to reach $100 billion by 2025, up from $33.1 billion in 2020. An article by BusinessWorld shows that post the pandemic, over 20% of new customers have bought something online, a habit they intend to continue now and in the future.

Are you getting your fair share of this very large pie?

On the Shoptimize Growth Platform during the festive season in 2021, we have noticed a 273% increase in online transactions across D2C businesses, and a resultant 386% increase in Gross Merchandise Value (GMV).

All of these pointers carry a simple yet profound message- D2C retail is here to stay, and retail entities that care for their brand and their consumers will gain significantly in the future.

More specifically, here are a few trends in D2C retail that we will see in 2022 and beyond.

1. The Demand For Personalization And Customization Will Grow

Customers love personalized experiences. In fact, more than half of all customers expect brands to anticipate their needs and offer relevant products.

In India too, this trend is taking off significantly. Lenskart, for example, does a great job at offering personalized experiences to customers. Their website has a 3D Try On section where customers can upload a selfie video and try thousands of glasses from all angles.

Blurb: With personalization playing a vital role in buying decisions, D2C brands are likely to implement personalization across their customer interactions.

Here, personalization goes beyond sending emails with the recipient’s first name. Brands will create more user-centric experiences in the future to drive customer engagement and retention.

2. The Definition Of Essential Items Will Evolve

Even though the pandemic has subsided, its effect on D2C retail is likely to remain for years to come. The pandemic has created a paradigm shift in people’s lives. Working from home has become the norm, enabling people to spend more time at home.

Therefore, the meaning of “essentials” has changed. In the pre-pandemic era, groceries, medicines, health supplements, food products, fuel, and packaging materials fell into the list of essential items. Amid the pandemic, the government also added sanitary napkins, sanitizers and disinfectants, self-care products, oral care products, and charges/battery cells to the list

Furthermore, the growing work-from-home culture has also accelerated the demand for comfortable clothing, home interiors, and appliances- all of which were previously optional, and largely bought from physical stores. This has turned out to be a major boost for D2C brands in India with fashion retail experiencing massive growth. The blockbuster listing

Blurb: As offices continue to remain shut, we will see a definitive upward trend in consumer goods, electronics, and large furniture items being bought from D2C retailers.

3. Subscription-Based Purchases Will Help Smooth Cash Flow Issues

Dollar Shave Club, a US-based D2C brand, was one of the first D2C retailers to introduce the subscription-based business model in D2C retail. Though most D2C retailers in India haven’t yet adopted this model, it can soon become one of the most popular direct-to-customer trends in the country.

Several factors have hindered the adoption of the subscription model in India. In countries like the US, most payments happen with credit cards, which isn’t essentially the case in India. The lack of credit-based purchases, along with low per-capita income and lack of awareness, has restricted D2C brands from implementing a subscription-based model.

Until now, that is.

Some D2C brands like Let’s Shave, Sleep Owl Coffee, and Nua have already started experimenting with this model. Subscription-based buying is also common in categories such as books and personal hygiene, and we expect that 2022 will drive further acceptance for such models across categories

Blurb: Subscription services in D2C are a huge untapped opportunity to generate consistent revenues.

4. Omnichannel Marketing Will Become More Mainstream

We are witnessing the rise of digital-first D2C brands like Beardo, Bewakoof, and The Man Company. Since most D2C brands live online, they do most of their marketing online

However, traditional marketing is not going anywhere, and more D2C brands could embrace it in 2022 and beyond. A recent global survey by eMarketer found that 20% of customers came across a D2C brand via traditional marketing channels. These include TV, print ads, billboard ads, street ads, etc.

Does this mean that online marketing will lose its significance? No, it won’t. More importantly, both traditional and digital marketing will co-exist, giving rise to another prominent future trend- omnichannel marketing.

In India, D2C brand Beardo does an excellent job at omnichannel marketing. The brand runs PPC ads, remarketing ads, and social media ads. It also runs TV ads — remember the Don Beardo ad featuring Hrithik Roshan?

Blurb: D2C brands need to leverage omnichannel marketing strategies to increase reach, boost brand awareness, and get sales.

5. Buy Now, Pay Later Will Drive High-Value Purchases

Buy Now, Pay Later (BNPL) is not a new concept in eCommerce. LazyPay, for example, allows people to pay in 15-day cycles for their purchases, as does PostPe. If you want to read more about this topic, click here.

Since 2016, digital payments in India have been on the rise. Recently, India surpassed China to become the global leader in the number of digital payments made per day. This increased awareness of digital finance paves the way for BNPL adoption in India, and D2C brands could be at the forefront of its adoption.

Dhani, a financial products company, has launched the OneFreedom card that allows customers to get an instant line of credit and pay it back in three installments. D2C brands can partner with such NBFCs and banks to provide BNPL and other payment options to customers.

Blurb: BNPL is not just the domain of large-value purchases, and every retailer offering this payment option can ride out economic fluctuations

6. Data-Driven Decision-Making Will Accelerate D2C Growth

The best thing about online advertising is that it is trackable. D2C marketers can track the performance of their marketing campaigns to make informed decisions. For instance, marketers can compare the performance of various channels to identify the best-performing channels.

In 2022 and beyond, a data-driven approach to marketing will become one of the common D2C trends and tools and platforms that enable this will become more accessible to growing businesses as well. There’ll be a rise in the use of eCommerce analytics tools to identify ideal customers and their preferences.

Blurb: With personalization being the gold standard of eCommerce, data analytics will help brands offer tailored experiences to their customers.

The future of D2C in India is bright. In the past two years alone, we have seen the steady rise of homegrown brands as well as a consumer base that is more ready to buy online. The increasing role played by technology will be a key differentiator, and brands that use data to drive growth will continue to thrive.

Keen to explore how to capitalize on the growing segment? Reach out to us.