India is witnessing a surge in direct-to-customer brands dominating the retail market.
With the growing digital penetration, changing consumer behavior, and shift towards personalized experiences, it’s clear that the DTC business model is here to stay and transform the retail space in India.
In this article, we will understand the DTC retail business model, study the rise of these brands, and more!
Understanding the DTC Model
To define simply, the Direct-to-Consumer (DTC) model is a retail strategy in which brands sell directly to consumers, bypassing traditional intermediaries such as wholesalers, distributors, and brick-and-mortar retailers.
This approach allows DTC brands to maintain complete control over their products and pricing strategies, leading to a more streamlined customer experience.
Let’s quickly discuss some of the unique advantages that the DTC model has over traditional retail.
What Makes the DTC Model Unique and Successful?
Stronger Relationships with Customers
The DTC model enables brands to engage with their customers through websites or social media platforms. This enables them to have a real connection with their customers through effective communication.
Faster Feedback Loop
DTC brands can quickly gather customer feedback and adjust their products or strategies accordingly. This agility allows them to respond to market changes and consumer demands effectively and quickly.
Broader Customer Base
As the number of internet users grows, the direct-to-consumer (DTC) model allows brands to reach a wider audience beyond geographical boundaries.
Competitive Pricing
Since there’s no middleman, DTC brands can reduce operational costs significantly. Lesser expenses directly impact their bottom line by providing higher profit margins.
The Rise of the DTC Brands in India
The growth of DTC brands in India has been remarkable, especially after the pandemic.
One clear piece of evidence is a report by Avendus Capital stating that the Indian DTC market is expected to reach $100 billion by 2025. Additionally, Statista notes that India’s e-commerce CAGR is projected to reach 11.45% by the end of 2029.
These reports tell us that the DTC brands have great potential to tap into a diverse market in India in the future.
1. Lenskart, one of the biggest DTC eyewear brands, has seen tremendous growth, achieving revenues of ₹5,500 crore in FY2024. One of the major moves that Lenskart made was to open retail stores across India. This omnichannel approach allowed customers to try products before purchasing.
Fact Byte: Lenskart partnered with GeoIQ to identify optimal locations for over 900 profitable retail stores across India, achieving a 95% accuracy in predicting a store’s revenue before its opening. Know More to Get Started
2. Mamaearth, a personal care brand, made a strong presence in customers’ minds with their natural ingredient products. This DTC brand achieved a staggering revenue of ₹2,488 crore as of 2024.
3. boAt became a major player in the consumer electronics market with their affordable options, making themselves appealing to cost-conscious consumers. boAt achieved a remarkable revenue of ₹3,121 crore in FY2024.
4. Snitch is a rising D2C fashion brand that gained popularity for its unique designs and affordable pricing. In FY2024, Snitch’s revenues reached ₹600 crore. Just like Lenskart, Nykaa, and many other DTC brands, Snitch opened its first retail store in Bangalore in May 2024.
The rise of these DTC brands in India and more reflects the increasing consumer trust in online shopping and it’s clear that it’s only going to go upwards from now.
Is Traditional Retail Dying in the DTC Era?
The short answer is No.
While the overall definition of retail has changed forever, traditional retail remains one of the viable options as a business for many.
As mentioned earlier, many DTC brands like Lenskart, Nykaa, Mamaearth, and Snitch have recognized the importance of opening physical stores and are actively doing so.
This trend suggests that the rise of DTC brands highlights the evolving nature of the industry rather than signaling the demise of traditional retail.
The future of retail is likely to have a balanced blend of online and offline channels, with each complementing the other.
This combination of traditional retail and the surge in DTC brands will create new opportunities for brands and consumers alike.
To sum it up:
Online DTC + Brick-and-Mortar = Success for Many Businesses!
GeoIQ’s Part in Shaping the Future Retail Landscape
As the only location AI platform specializing in retail site selection in India, GeoIQ plays a pivotal role in redefining how retailers identify and select the most profitable locations for their businesses.
Utilizing our solution businesses can make data-driven decisions based on:
Footfall Trends: Assess the real-time foot traffic on an hourly, daily, and weekly basis to understand where and at what time the foot traffic peaks. This will help you pinpoint exactly where to open the store while optimizing the store timings.
Demand Density: Evaluate multiple locations across India to analyze the market saturation to identify areas where the demand density is high. This ensures businesses can enter locations with strong growth potential.
Customer Demographics: Businesses can gain insights into age, income, spending capacity, and average household income of a location. This helps them target the right audience when deciding where to open new stores and tailor their marketing strategies using street-level location data
Predictive Analytics: Our advanced predictive analytics allow retailers to forecast revenue potential before opening a store. By analyzing historical data and market trends, businesses can minimize the risk of store closure.
Competitor Analysis: Understand how many competing brands are there in a location and how they perform. By assessing competitor locations, and market share, brands can develop strategies to differentiate themselves effectively.
Customer Distribution: Our platform helps retailers understand customer distribution patterns, revealing where their customers are coming from. This insight is vital for optimizing marketing efforts and ensuring that retailers are targeting the right audience.
By understanding a location at a granular level, retail businesses looking to open their first store, expand their presence, and DTC brands entering the retail space for the first time can make more informed data-driven decisions to predict their success.
Conclusion
The surge of direct-to-consumer (DTC) brands has started transforming the retail landscape with its many unique selling points that we’ve gone through.
The DTC model is here to stay and is poised to grow significantly in the coming years while complementing the traditional retail business models.
Our location AI platform is here to support this evolution of retail by providing retailers with the critical insights they need to succeed.