Direct-to-consumer brands, commonly referred to as D2C or DTC, have risen in prominence in recent times by directly selling their products to customers through their websites and mobile apps, bypassing the need for intermediaries. By harnessing the potential of e-commerce platforms, these brands have established a direct and personalized relationship with consumers, foregoing traditional distribution channels and retailers. The outbreak of the COVID-19 pandemic further accelerated the adoption of e-commerce, leading to a substantial growth surge for D2C brands.

After carving a niche in the digital space, these D2C brands are now pivoting their strategy and gearing towards entering the physical stores. In this newsletter, we will delve deeper into this ongoing shift and how it is going to impact the D2C landscape.
 

D2C (Direct-to-Consumer) brands, which have traditionally operated online, are now expanding their presence into offline retail channels. This move is driven by several factors, including increasing competition in the online space and the desire to reach a wider customer base.

As majority of India (~65%) still prefers to shop via offline channels, D2C brands are moving to offline retail to expand their customer base, make their presence felt in the physical world, and adopt a click and mortar approach that combines online and offline channels for a holistic shopping experience.

Sugar cosmetics & Mamaearth, major players in their industry, have recognized the necessity of offline expansion for growth and scalability. Despite their online success, they understand that Indian retailers still prefer the traditional brick-and-mortar shopping experience. Additionally, they acknowledge that their target audience is not confined to one channel, and to achieve further growth, they cannot restrict themselves to being solely D2C online brands.

Physical store expansion entails substantial upfront and ongoing expenses, including rent, inventory, and staffing. Bombay Shaving Company has spent INR 7-8L in just the initial set-up of a non-exclusive retail outlet (sans inventory). For online-oriented D2C brands, these costs can strain resources, necessitating a careful ROI analysis before venturing offline. Brands also risk diluting their image if the in-store experience doesn't align with their digital messaging. Being aware of the challenges is crucial for D2C brands entering the offline market.
Despite the challenges, brands that successfully transition to offline outlets have reported an increase in overall customer footfall at their newly launched stores.

Way ahead

The expansion of online D2C brands into the offline realm is a transformative trend in the Indian retail industry. Before entering the offline space, D2C brands must carefully consider the pros and cons. For brands that have achieved a certain level of success, going offline becomes the next milestone. Bridging the digital and physical worlds, D2C brands are poised to thrive. Having built their brands and products online, they are now prepared to engage with customers in person. The future looks bright for brands and shoppers alike, both in stores and online.