Hospitality in India: Serving a new gen of...Apr 24,2023
Digitalization and the rapid adoption and advancement of technology have resulted the hospitality sector to look into evolving guest expectations...
Senior Vice President – Marketing, Worldline
There are broadly two ways in which a business can set up its online venture. One, where they partner with aggregators and big marketplaces, like Flipkart and Amazon, and set up their catalogues on these platforms. The second, where they set up their own website, build their own brand and approach customers directly.
Of late, the Direct to Customer (D2C) approach of eCommerce has been picking up pace and holds potential as the market matures and customer behaviour changes. Consumers have become more comfortable with online shopping and as they become seasoned online shoppers, they look beyond the regular to quench their shopping urge. They prefer unique, personalised, and customised products that suit their needs and requirements. Although marketplaces build a level of comfort with their exhaustive catalogues, they have more width than depth. Despite having a plethora of goods and services to offer at one marketplace, they lack the depth of meeting consumer-specific needs. This void is filled by D2C brands.
A D2C brand establishes a direct relationship with customers and looks into their preferences closely. They have a direct feedback window that helps them evolve faster and better their offerings. Their ears are on the ground. This helps them understand customer preferences and adapt accordingly. As against this, a marketplace that is a mere aggregator across verticals focuses on offering a wide range of products to its customers at the best price and in the quickest time frame through its extensive fulfilment setup.
Setting up an online store has become easier with platforms like Shopify, WooCommerce, and Magento. There are preferred shopping platforms for different product categories with features to support the same, e.g., food, apparel, cosmetics, jewellery, consumer electronics, etc. These platforms don’t require much coding but they can be tactfully configured. They have built in shopping carts and a provision for API integrations with payment providers and logistics providers, so that the entire fulfilment system is set up. Along with this, they also have a payment gateway plugin that provides multiple payment solutions. Worldline’s Next-Gen Payment Gateway is one such online platform that offers 17+ payment integration kits for over a dozen platforms with a plug-and-play payment integration possibility. Similarly, top Logistics companies have their plug-ins for popular platforms. Once integrated, your logistic set-up is complete with a pick-up and drop facility along with shipment tracking. Therefore, technology, logistics, fulfilment, payment acceptance, and collection is taken care of by third-party service providers.
D2C brands need to build their core expertise in product development by identifying customer behaviours, innovating products to meet the ever-changing needs of their target customers. Consumer interest is shifting from buying a general product that is purchased by everyone to a more personalised product that is designed keeping their needs in mind. Food, fashion, and cosmetics - these are the categories that are gaining traction and where D2C brands have built a noticeable presence. The audio company, boat, for example, has been tapping into the lifestyle element - that headphones or earphones can be used for work, entertainment, fitness, or education, thereby catering to various target groups all at once. This Delhi-based company recently raised $100 million, an amount which could otherwise take years to gather. Thus, the creation of a like-minded community has helped these brands grow faster.
The biggest challenge for D2C brands would always remain getting discovered, unlike being on a big aggregator portal that is heavily advertised, has high traffic, and has millions of users surfing their platforms every day. D2C is a company on its own.
Their other challenges include the fact that since they mostly sell only a category of products and a limited catalogue, they would always have to put in more effort to get the customers to return. They do not gain as much traffic as marketplaces that have a variety of goods and services to offer. These brands also have to carry their own inventory and have to be sure of the quality and quantity of commodities they produce.
Inventory is another challenge. D2C brands need to have enough channels for liquidation so that they are always fresh on inventory and don’t get stuck with the old stock. The movement of goods would ensure new styles, fresh stock, and not too much capital sucked up in inventories. D2C brands have a strong advantage of data analytics as they are directly in touch with end customers. They can base their intelligence on consumer data. This helps them create a competitive advantage and also assist in scaling profitably.
The D2C model is making headway as one of the most popular eCommerce models today, and this is the opportunity to grab - to get closer to your customers and enjoy their loyalty while retaining control over your brand. Armed with marketing tools, logistics, and supply chain providers, the D2C business model is here to stay and flourish.