India is becoming a hotspot for direct-to-consumer (D2C) brands, with the pandemic-induced lockdown in 2020 significantly boosting the fashion industry. Along with the pandemic, the rise of e-commerce and new AI-powered technologies has made the growth of D2C businesses skyrocket.
While many segments are doing well in D2C, the fashion industry has taken charge in this regard. The fashion industry’s discretionary spending is higher than other segments in D2C, but it also brings increased competition in the D2C fashion space. A report showed that fashion has the highest growth potential in the D2C space. In the fashion segment, apparel and footwear are the most significant categories and will account for 77.6% of the online D2C fashion market by 2025.
The future of D2C brands in India
India is now home to 800 D2C brands, which will only increase in the coming years. A new-age digital-first customer base, an increasing familiarity with online payments and a bustling e-commerce space has made D2C lucrative and profitable. The real test will be to hold their own amidst global competition in the coming years.
Expanding their reach through analytical tools and implementing curated strategies based on extensive consumer data, brands are now adopting an omnichannel strategy to keep in constant touch with their consumer base. Curated handwritten notes and personalised messaging now give the consumer a unique insight and a feeling of belongingness to the company and the brand. Many brands also use community-building strategies to differentiate themselves from the expanding market.
Consumers’ inclination for online fashion
Unlike other segments, fashion has an edge in logistics as they can ship to thousands of pin codes pan India, which is not always true for luxury watches, jewellery, electronics, and furniture. With social media exposure, consumers have become more aware of what they want and are open to exploring more local homegrown brands operating on D2C channels. This factor has allowed new start-ups and D2C brands to compete with legacy brands in the fashion space. Above all, the easy return, refund and exchange policies have given online fashion retailers an optimal way to build trust with their consumers.
These factors are ultimately attracting more investors to invest in homegrown fashion brands. They are also because many young start-ups are leveraging their foothold in social media and their customer reach to dominate the Indian markets. They are getting the INR 100 Cr revenue mark before the legacy brands.
After multiplying with excellent efficiency in the Tier 1 cities, many fashion D2C brands are planning to expand their reach in Tier 2 and Tier 3 cities. Businesses need to see the potential in smaller towns and use this opportunity to explore and build a more extensive customer base.
New corridors to explore
While the pandemic opened the doors for the D2C brands in the fashion industry, they need to keep on their toes to match new and emerging trends that can push them ahead of their competition. There is an increase in personalised products, a push to be sustainable, and a growing pre-loved and organic fashion market.
The D2C brands have indeed been able to increase engagement and attract more customers in the last two years, but the next challenge will be to keep those customers and win their loyalty. The above factors show tremendous potential in the D2C fashion sector, which, if unlocked, will set the scene for the coming decade.
Views expressed above are the author’s own.
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