With enhanced brand targeting, hyper-personalisation, rising competitiveness, and rising per capita earnings, the Indian direct-to-consumer (D2C) brand market is expected to more than quadruple in four years, reaching US $ 61.3 billion by FY ’27, said a report.
According to a joint analysis by market intelligence firm 1Lattice and venture firm Sorin Investments, the D2C market is expected to increase at a compound annual growth rate of around 38 per cent from nearly US $ 17 billion in FY ’23 to about 10 million direct and indirect jobs in the retail space by FY ’27.
According to the report, total shipments in this sector are predicted to rise from over 600 million in FY ’23 to over two billion in FY ’27.
According to Mandar Dandekar, partner at Sorin, the market is expected to grow at a faster rate than it would otherwise due to a combination of macroeconomic factors like the rise in per capita earnings and trends like the explosion of brand variety and the growing emphasis on hyper-personalization and catering to specific target audiences or needs that would increase order values and repeat purchase behaviour.
According to the survey, more than 600 new brands have joined the D2C industry since 2016, and that number is expected to increase by 25 per cent by 2023.
According to the analysis, the D2C sector has drawn over US $ 4 billion in investments over the course of roughly 730 acquisitions between 2020 and 2023. It further stated that the average investment amount per transaction for these kinds of investments increased from US $ 2.8 million before Covid to US $ 6.8 million in 2022–2023.
With respect to categories, fashion ranks among the top three in the Indian direct-to-consumer sector, accounting for 27 per cent of the total market share. Marketplaces such as Amazon and Flipkart account for about 64 per cent of D2C companies’ total sales, with brands’ own platforms contributing 21 per cent and offline retailers 15 per cent.
To reach new consumers, D2C businesses are increasingly expanding outside of urban and tier 1 cities. But compared to markets like fast-moving consumer goods, companies with aspirational value in categories like clothing and accessories are probably going to do better, according to 1Lattice director Abhishek Maiti. Certain categories, including clothes and BPC, are more viable in such an environment since products must be offered at a higher average selling price (ASP) in order to meet the greater cost of transportation in tier 2 and beyond, he added.
