Mumbai: Amongst the many industries that have been witnessing growth, one such industry is direct-to-commerce (D2C).
The world opened up in 2022 after two years of the pandemic-led slowdown. The last couple of years saw a significant shift in demand for various product categories, accelerating a decade’s worth of adoption into just 100 days, giving a strong push to the emergence of the D2C channel. The D2C industry is one of the fastest growing in India as more and more consumers are turning towards channels that enable convenient and faster purchase experiences.
The D2C industry in India has benefited from the widespread adoption of e-commerce led primarily by the increased penetration of the internet and access to mobile devices in the country. In recent years, there has been a significant rise in the number of D2C brands in India, as well as a rise in the number of consumers purchasing directly from these brands. Optimism is running high for Indian D2C brands.
It is estimated that D2C brands in India are growing at a compound annual growth rate (CAGR) of 40 per cent. The combined revenue of D2C brands is expected to hit $60 billion by FY27 from $12 billion in FY22 according to the CII Shiprocket India D2C Report 2022.
Indiantelevision.com spoke to some of the leading D2C brands in the Indian market to find out about their success story, their vision and their way forward for 2023, and about the trends and innovations that would be significant for the D2C market this year.
An uptick in purchases of D2C brands
Noise chief operating officer Utsav Malhotra emphasises that D2C has changed the way consumers interact with the brand or define their purchase journey. “We started with a digital-first approach and soon understood the importance of expanding our footprint beyond the digital medium to reach consumers across pan India. Offline has further become an important channel for D2C brands as they obtain an omnichannel presence.”
He adds, “At Noise, we have been at the forefront of the growth of the smartwatch category in India by focusing on creating awareness, availability, and affordability. Our marketing strategies are based on the objective to amplify the differentiation we create through our offerings, laced with our philosophy of following our instincts. We have a very efficiency-driven approach when it comes to deciding marketing strategies, with clear objectives defined for each type. We recently onboarded Virat Kohli as our brand ambassador as he resonates well with our ethos of co-creation. We are always innovating when it comes to our campaigns, further deepening customer trust and allegiance, leading to trendier and more meaningful offerings across our smartwatch segment.”
As a result of this, Noise emerged as one of the fastest-growing wearable brands in India, the largest smartwatch brand for nine quarters now, with a current market share of close to 30 per cent (29.5 per cent), and the second-largest in the TWS category since last year, with a growth of 100 per cent YoY. “One out of every four smartwatches that sell in India today, is a Noise smartwatch. We also recorded a remarkable growth of over 200 per cent during last year’s festive season, selling over two million smartwatches during the period.
WOW Skin Science co-founder Karan Chowdhary discusses, “Our growth rate has continued to remain impressive through 2022, as more and more consumers purchased our products. We have grown as a company and as a brand, so there is the need to build a stronger brand connect with our consumers, which is where our ad spend comes in. We have invested in getting new brand ambassadors like Rashmika Mandanna and Kartik Aryan to promote our bestselling hair care products.”
Re'equil India head - marketing & online sales Anshul Sharma brings out that the hallmark of a strong marketing exercise is less about how much you are spending and more about how effectively you are doing it. From customer acquisition to retention to building brand loyalty, every spend needs to aligned with the larger business goal and have to ensure adequate return on investment. “Re’equil is a brand that is built on consumer feedback and consistent engagement. Over 87.2 per cent of our customers have rated our product four stars and above which has also led to positive word of mouth (WoM) for the brand and purchase.”
Television and digital - the main mediums
While Chowdhary could not talk actual numbers, he reveals that WOW Skin Science does invest a considerable part in advertising and marketing to develop meaningful brand connection with its consumers. “We have always been a digital-first organisation, so our main focus has always been to leverage the marketing opportunity that the digital medium provides. We have used social media, online video channels and our own website to tell the brand story and connect in a more meaningful way with our consumers. We have only recently started using the television as an advertising medium, so the percentage of ad spend there remains lower.”
Sharma of Re’equil states that as a D2C skincare brand it primarily relies on modern marketing tools that are dynamic and have an increased propensity to influence brand consideration. “While traditional platforms like television work for larger consumer brands, digital marketing and communication has been the game changer for us while reaching out to a target audience that is highly mobile, technology savvy and discerning. Owing to the growing influence of digital mediums we have been able to build a skincare brand that is consultative and effective by leveraging the power of online community and word-of-mouth. Digital mediums have helped us connect better and faster with our consumers and exchange information that has helped us develop specific solutions for their concerns. Our goal is to continue exploring more new-age platforms that will enable us to connect more meaningfully with our consumers.”
2022 strategy vs 2023 strategy
“Our strategy for the next year is to double down our growth, whether it is in terms of revenue or offline expansion to increase our consumer touchpoints. We recorded a remarkable 100 per cent YoY growth and closed 2022 at Rs 850 crore which was doubling down from last year. To continue the momentum we are aiming to close FY23 at Rs 2,000 crore. Our aim would be to continue developing products based on four key pillars - consumer centricity, design, and innovation,” tells Malhotra.
Chowdhary clarifies that their strategy for 2023 will continue to be on product innovation and customer experience. It is not much different from what the brand did in 2022, since that has been a winning strategy for it from the beginning. In fact, WOW Skin Science has now a dedicated new product innovation team to work on new actives and product formats.
Given the dynamic environment, Sharma reveals that Re’equil is constantly looking to adapt itself to build and strengthen consumer connect. “While 2022 was the year we finally overcame the restrictions imposed by the pandemic, it has led to the creation of a customer who is increasingly tech savvy and way more informed and discerning when it comes to self-care. As a self-care brand we will continue to mobilise modern marketing tools as it has proven to be increasingly effective in networking with consumers, inspiring brand consideration as well as building loyalty. We are a brand that has been built on the back of customer loyalty and word-of-mouth. It is important for us to always put the customer first by creating channels for effective communication to deliver effective results.”
Focus areas in 2022 vs Focus areas in 2023
Malhotra elucidates, “The year 2022 has been a landmark year for a homegrown brand like us who has been leading the smart wearable industry from the front to consolidate top position not just in India but globally as well. India has emerged as the largest market for smartwatches, as per a recent report by Counterpoint where Noise became the only homegrown brand to make it to the top three smartwatch brand list globally.
We are proudly driving profitability as the largest bootstrapped brand in a deeply funded ecosystem. Not just that, Noise is a proud Make in India brand that has led the localisation of production of smart wearables. We started local production trials last year and have already reached the mark of over 45 per cent products being manufactured in India. As per Counterpoint, three out of four smartwatches that were made in India last quarter were Noise smartwatches.”
He further specifies, “In 2023, we further aim to ladder up from our achievement in 2022 and continue to put India on the global map. We launched Noise Labs, an in-house tech incubator with a focus on creating futuristic and first-of-its-kind products, early this year. Looking at the overwhelming response to our initial products - Noise i1 and Noise IntelliBuds, we would continue to strengthen our portfolio under Noise Labs in 2023. We would also continue to expand our consumer touchpoints and expand our reach across offline channels in the coming year.”
For WOW Skin Science, Chowdhary tells that in 2022 their focus was more on sustaining the business and meeting consumer expectations as the latter stepped out again and had different needs from the time they were in lockdown. “The focus was on promoting our products as a solution to their healthy beauty needs. This year we will try out new types of products like fragrances, target skin and hair solutions, lip care and eye care products. We are also working with newer ingredients and hero actives.”
Sharma points out, “Re’equil is a bootstrapped brand; now into our fifth year of operation. We are focused on staying true to our brand promise of delivering effective solutions through scientifically tested formulations and building a stronger connect with our customers. 2023 will also be a year where we are focused on spreading our geographical reach to more tier I and tier II markets across India. We have placed great emphasis on research and have gotten strong insights which will be used to launch innovative products that are in keeping with consumer needs.”
Challenges, learnings and lessons for the year
Malhotra accepts that they don’t foresee any challenges as such; they look at every challenge as a new opportunity. 2022 was a successful year for Noise and they are confident that they will double down this growth in 2023 as well. “We would continue to strengthen our portfolio under Noise Labs, an in-house tech incubator with a focus on creating futuristic and first-of-its-kind products.
We would continue to expand our consumer touchpoints and expand our reach across offline channels.”
“The innovation drive, deep understanding of consumer needs, and diverse portfolio is something that we learnt to offer in 2022 to our consumers. We have been successful in ensuring industry-leading features at a competitive price point which led to substantial milestones in the space. We are keen on implementing these learnings in the coming year,” he adds.
Chowdhary believes, “Every day we are seeing new D2C beauty brands entering the market, and traditional beauty and personal care brands are experimenting with some D2C-like strategies, so the competition will be big. The consumer is spoilt for choice, so the challenge for us will be to retain their loyalty and interest them in repeat buying. So not only will we have to develop unique and innovative products, but also have to keep the conversation going with our target audience in an engaging and meaningful manner.”
“Focus on delivering amazing consumer experience. Our aim was, is and always will be to provide our consumers with a WOW! product experience. We want to build a relationship with them, where they know that we are delivering honest products that are good for them and provide visible results. We want to make sure that we are there with our consumers in their wellness and beauty journey,” he further adds.
“Agility and adaptability are the founding blocks of a growing D2C business. At Re'equil, we believe that there is an opportunity in every challenge. We, therefore, drive ourselves to constantly innovate and apply our knowledge to develop products that are in line with our goal of being an effective cosmeceutical brand. Constant re-invention is the need of the hour to adapt to an ever-changing consumer and market dynamics and we are deeply committed to this,” tells Sharma.
Evolving trends for the year
Malhotra explains that wearable lifestyle technology is ever-evolving in order to cater to the dynamic needs of consumers. Currently, the industry is being driven by a multitude of factors and the demand for more insights that will eventually provide more value to consumers is one of the key ones. “As the chips in our smartwatches get more powerful, they’re expected to start performing more functions and offering effective insights into the users’ life. Smartwatches are now designed to suit various moods and personalities with a host of watch faces, unique colours and dial shapes, and the ability to make calls and touch control amongst others. The integration of artificial intelligence and voice assistants into smartwatches is also something that is gaining traction. They ensure ease of use for making calls, playing music, checking the weather etc. and let your smartwatch do as you command.”
The global wearable AI market size according to a report by Gran View Research Inc. is expected to reach $166.47 billion by 2030. The on-device AI operations segment currently dominates the market and is expected to witness the fastest growth owing to the increasing requirement for fast computing substantiating this key trend.
“At Noise, we are continuously working towards meeting the dynamic demands of consumers in this space. Our devices resonate with the belief and our latest innovation from Noise Labs, Noise IntelliBuds, exemplifies the integration of AI to make user experience seamless and unique. We have focused heavily on innovation to build brand love and product preference among consumers for all our products. A testament to this is that Noise smartwatches are being appreciated for tech and design, and our upcoming efforts are also a step further in this direction,” he adds.
There are two or three major trends that will drive the market in 2023 for personal care and beauty brands. “In terms of consumer buying behaviour, the demand for eco-conscious, clean beauty products will continue to grow. Single-active, multi-use products will also see greater demand. These trends started becoming popular in 2022 and will continue to pick up steam in 2023. In terms of product and marketing trends, we expect hyper-focused products and services to become popular. Along with hyper-personalisation of branding messages and product, recommendations will also take precedence. Obviously, the customer-first strategy will be in the middle of this all,” reveals Chowdhary.
Sharma understands well that the modern consumer is knowledgeable with easy access to technology, highly networked and eager to provide feedback or share reviews. They no longer rely on hype and want formulations that deliver effectiveness and are highly personalised.
She says, “We have also seen a significant shift in consumer profile where more men are taking self-care including skin and hair care more seriously and investing in the same. The industry has also seen an emergence of gender-neutral brands. Being a self-care brand, our current product portfolio which includes skin and hair is gender-neutral.
There is also a premium placed on brands to be more authentic and transparent, especially with labelling as well as formulations.”
“We are excited to be operating in this environment where consumers are pushing the envelope and demanding more accountability from brands. Brands on their end have also become more flexible, open to criticism and quick to adapt to remain relevant,” Sharma brings out.
Disruptive innovations that are expected
Chowdhary of WOW Skin Science strongly opines that innovations around improving customer experience will continue to remain the main focus for beauty brands. For a brand to be successful in the market in this hyper-competitive scenario, omnichannel presence and experience will also be important. “We as a brand have used predictive models and intensive data analysis to offer the best possible options to our consumers. I think that will be important. What will disrupt the market is when brands start taking a 360-degree view in terms of product development, customer experience, brand engagement, product delivery and customer service, and work on this as a complete approach instead of working on each aspect as a silo.”
Malhotra obviously fathoms that the D2C space has witnessed tremendous growth in the last few years, there is a pool of opportunities running high for D2C brands as 2023 has set in. In 2023 the D2C space is expected to evolve even further and one of the key trends we can expect is the emergence of new and promising segments. “We have seen a proliferation of purpose driven brands entering the D2C space in categories we didn’t foresee could exist. Consumers are intrigued by what problem a brand is solving and chooses to interact with or invest in a brand, they do so with brands they connect and resonate with. We can expect more brands disrupting new categories to adopt a D2C mindset.
Brands in the D2C space are also moving towards an omnichannel approach wherein they’re looking at expanding their footprint beyond digital medium to offline channels, in order to make their offerings available to consumers residing in Bharat, i.e. Tier II and Tier III cities. Not just that, many consumers still prefer experiencing the product in person before making the final purchase decision and this is why it will be important for D2C players to be present across touchpoints. While digital channels have aided D2C brands to reach consumers irrespective of geographies, an offline presence will further deepen the penetration.”
He, too, bets on hyper-personalisation and feels that brand experience is expected to further move into the next phase of consumer experience through hyper-personalisation. This is a key trend which would help D2C brands to build a deeper connect with audiences and higher recall for the brand in a space where players are constantly battling to create distinct differentiation for their offerings. “Noise’s AI-driven campaign in partnership with Rishabh Pant was focused on sending out personalized messages to the potential buyers of our flagship smartwatch, the ColorFit Pro 4 series, offering an increased recall and conversion. As the D2C space grows, we are growing with it and forging our way into the future with a heightened sense of co-creation and innovation in products,” Malhotra specifies.
According to Sharma as well, technology first and AI led intuitive customer interactions will continue to be the game changer for D2C brands. Brands have been able to leverage AI to deliver consultative solutions for the customers taking into consideration their skin type and requirement. With development in technology there will be more immersive experiences available for the customer to make informed decisions without having to physically go to a retail store.
She is another taker for hyper-personalisation, and gathers that the future of D2C is also hinged on hyper-personalisation. While personalisation is not a new concept, pre-pandemic it was largely limited to luxury brands. With the advancement in technology more brands are investing in understanding consumer behaviour, tracking and collecting consumer data from various sources to create tailor made solutions to address specific concerns.
