D2C Brands Making A Mark This Festive Season

As the ecommerce ecosystem in the country witnesses a festive bonanza in terms of its domination, the direct-to-consumer (D2C) brands have also leveraged the market boom to the best of their ability. In a significant shift in the online retail landscape, D2C brands seemed to have emerged as tough competitors to the marketplaces.

As brands continue to look to own direct relationships with their consumers, they have been able to grab the attention of the market. As technology becomes more advanced, an increase in the number of internet users and growth in per capita earnings have been the key aspects which have driven the rise of the D2C market.

A report by GoKwik, an ecommerce enablement company, revealed that D2C brands recorded an impressive 64 per cent growth in orders from last year during the recent sale period, compared to 26 per cent growth seen on the marketplaces, reflecting growing shopper confidence and trust in D2C brands. This festive season, the response within the industry has been positive across segments.

“Customer response so far this festive season has been phenomenal. Customers are drawn to festive-specific menus and premium gifting options. Sweet Truth dessert hampers have been a favourite, with customers enjoying gifting our delicacies to their loved ones,” stated Sagar Kochhar, Co-founder and Chief Executive Officer (CEO), EatSure- Rebel Foods.

As consumers have shown their interest towards the D2C segment, personalised offerings from the brands to meet the consumers’ needs have been one of the key propellers of this growth. “Consumers are showing increased trust and loyalty towards D2C platforms with a seamless buying experience, brand authenticity, and personalised offerings being driving factors,” highlighted Madhav Kasturia, Founder and CEO of Zippee.

Demand Driving Segments
While beauty, personal care, fashion segments along with categories such as television typically dominate the sales as far as the festive season sales are concerned, the niche categories such as festive hampers, décor items and personalised jewellery too have managed to attract the consumers this time around.

"Our home appliances segment, particularly televisions, sound bars and our luxury audio range has seen the highest demand this festive season. With growing demand for connected devices and a desire for smart home solutions, these categories have witnessed robust growth, contributing significantly to our overall sales," added Ajay Mehta, Managing Director- AIWA India.

Shrey Sehgal, Co-founder of FlowerAura highlighted, “In terms of product categories, festive hampers have dominated the scene. Customers are loving the carefully curated combinations of sweets, dry fruits, plants, and decor items, offering a perfect blend of tradition and modernity. Our personalised gifts, eco-friendly plant and flower collections have also gained traction.”

“Skincare and beauty remain our top-performing segments. The festive season has also sparked an increase in giftable items, extending beyond dry fruits—fragrance and skincare gift sets have seen a notable rise,” highlighted Swagat Sarangi, Co-founder, Smytten.

Rise In Average Order Value (AOV)
The increase in AOV for the D2C brands has been a true indicator that the brands in this industry are not only able to attract customers but are also capable of reaping the economic benefits from the surge during the season. The report from GoKwik mentioned that the AOV for D2C brands also saw an 11 per cent jump year on year, from Rs 1,368 to Rs 1,869.

“Yes, there has been a positive change in the AOV this season, driven primarily by an increase in premium product sales. Customers are showing a strong preference for higher-end, feature-rich models, which is reflected in the overall rise in AOV compared to last year," added Mehta.

Jewellery, often a category viewed with scepticism in the early days of ecommerce, led this surge, with AOV increasing from Rs 1207 in 2023 to Rs 1809 this year. “The overall average order value has increased by 25 per cent for our online sales. For the offline sales, this is slightly higher,” stated Disha Shah, Founder, DiAi Designs.

Enhanced Participation From Non-metros
Gone are the days when the growth parameters for a brand or an industry used to be dependent on the performance in metro or tier-1 cities, now with growing internet and digital awareness along with the ease of availability backed with convenience, there has been a rise in the role that non-metros or tier-2,3 cities play in the ecosystem. The participants from these non-metros have stepped up their game have really made a mark and have steered the festive season sales ship quite steadily.

“We’ve witnessed a substantial 30 per cent increase in demand from these regions, with more individuals opting for online gifting as a convenient and reliable option,” added Sehgal.

As the spending power in these tiers has increased significantly, buyers in these cities are now interested in investing in stylish fine jewellery pieces as well. “In India, the tier 2 and 3 cities have picked up in demand because of the affordability that comes with lab-grown diamonds,” added Shah.

Expanding availability in the non-metros has resulted in sales, especially for the affordable and mid-range product lines across categories. Mehta added, “We’ve seen strong growth in demand from tier-2, 3, and 4 cities, driven by increasing digital penetration and growing disposable incomes.”

UPI, EMI Dominating Payment Landscape
During this season, there has been a strong preference for digital payments. Unified Payments Interface (UPI) and Equated Monthly Instalments (EMI) have dominated the landscape. While consumers have opted for UPI for mid-range products, higher-end purchases have attracted the EMI mode of payment, which in general has indicated the shift towards flexible payment methods.

“UPI has continued to dominate as the preferred mode of payment, with a significant 60 per cent rise in transactions compared to the previous festive season. The convenience, speed, and ease of use have driven UPI’s popularity, especially in tier 2 and 3 cities,” mentioned Swati Bhargava, Co-founder, CashKaro and EarnKaro.

On the data front, the GoKwik finding revealed that payment behaviour has also undergone a transformation. There has been a 5 per cent increase in prepaid orders, especially in fashion, where shoppers are increasingly opting to pay upfront. While UPI continues to be shoppers’ favourite prepaid mode of payment, EMI also seems to be the flavour of the season.

“At Boba Bhai, UPI has emerged as the preferred payment method for orders, reflecting the growing trend of cashless transactions in India,” stated Dhruv Kohli, Founder, Boba Bhai. With Gen Z shopping more and more, brands are bridging the gap between aspiration and affordability by providing easy and flexible EMI option.

The Logistical Hurdle
As order volumes skyrocket, logistical challenges in ensuring seamless deliveries during peak festive shopping times become a concern not just for one player in the ecosystem but for the industry as a whole. Enabling same-day delivery for consumers has also proved to be a challenging task, especially when the quick commerce ecosystem is thriving at a rapid pace.

“The biggest challenge this season has been managing the supply chain to meet the rising demand, especially in remote areas. Ensuring timely delivery amidst high volumes and logistical constraints has required us to streamline our processes and enhance coordination with our distribution partners," added Mehta.

As the numbers and sentiment among the industry experts indicate towards the D2C ecosystem’s upward trajectory in terms of their stand in the market landscape, there are still roadblocks that have been hampering the growth. With factors working out in their favour, the D2C segment in the country is set to have its mark in the fiercely competitive market.