Going Digital: How D2C eCommerce Is Set To Disrupt The Next Decade Of Shopping In India
Worldline Rise in association with ET Retail organised a webinar on the 22nd of June: How D2C eCommerce Is Set To Disrupt The Next Decade Of Shopping In India. It emphasised on the Direct to Consumer (D2C) model of eCommerce and how it has proven to be a game changer during the pandemic. The discussion focused on the key trends in the D2C eCommerce space, challenges that these brands face, and the key takeaways of this ecosystem in the new normal.
Let’s meet the Panelists:
- Utsav Malhotra, Chief Operating Officer, Noise
- Siddhant Rana, Market Development Lead, India and South Asia, Shopify
- Navjot Kaur, Vice President, Fireside Ventures
- Sheik Mohideen, Vice President, SMB, Channel and Bank Alliances, Worldline India
- Ganesh Balakrishnan, Co-Founder & CBO, Flatheads
The webinar was moderated by Varun Jain, Special Correspondent, ET Retail.
Points of Discussion
Key trends in D2C eCommerce space:
With the onset of the pandemic, D2C (direct to customer) businesses have grown exponentially. As the offline retail sector was badly hit due to the lockdown, brands, merchants and customers had to pivot quickly to the digital platforms.
Navjot Kaur: Health, wellness and comfort have taken a precedence and customisation and personalisation has become a priority for customers. The two main questions that have come to the fore are What and How. Consumers are getting increasingly conscious of ‘what’ they are consuming and the tech-enabled ‘how’ is driving D2C commerce and social enablement today, helping brands cater to the changing customer preferences.
Ganesh Balakrishnan: This is the decade for D2C brands in India to emerge. Consumers have moved towards a value-for-money kind of buying, eventually turning to revenge buying once the situation is better. The online platform has become a convenient and a regular go-to channel for customers.
Utsav Malhotra: The pandemic has acted as a catalyst in ingraining the idea of shopping online. Marketeers will now pay more attention to AI-enabled decision making and consumer data insights to enable social commerce by creating different niches of target groups and hyper-localising content for them. Now that all customers have gotten comfortable with the idea of sitting at home and shopping, newer payment platforms will emerge to engage and interact with the customers.
Siddhant Rana: With time, online stores have become more accessible across the world. Today, the definition of a store is no longer restricted to brick-and-mortar; it can be a website or one created on social media. Platforms like Shopify really enabled entrepreneurs to reach consumers with very little investment. We were able to remove the middleman and reach out to consumers directly.
Sheik Mohideen: Since merchants are in direct contact with the customer, they understand their needs more closely and are able to deliver in that capacity with tech-led innovations, such as forecasting and recommendations, vernacular language interfaces and conversational commerce. Omnichannel strategies and a multichannel approach on all connected devices to provide a seamless and customer-friendly shopping experience to users can be a key takeaway in the coming years.
The D2C model operates primarily through digital mode of payments. With post-COVID safety concerns, contactless payments have become the norm. Customer-focused online payment experience can only happen if convenient payment options such as No Cost EMI, Zero Cost EMI, cardless EMI, Buy Now, Pay Later, subscription payments, various mobile wallets and so on. These kinds of payment options enable people with lower or more uncertain income to participate in eCommerce purchases and be a part of eCommerce growth.
How can a PSP help D2C channels flourish?
Sheik Mohideen: D2C eCommerce can flourish with the help of a payment service provider (PSP) like Worldline India. There are 3 fundamental responsibilities of a PSP: to provide a stable platform, ensure high success ratio and be compliant with regulatory guidelines like PCI DSS and ISO for an uninterrupted service. As a payment gateway, we must ensure we achieve at least 99.98% of success ratio.
Ganesh Balakrishnan: Apart from these hygiene checks, payment experience of a one-click checkout and an AI-enabled system that fills up all required fields helps.
Sheik Mohideen: When it comes to convenience, flexible payment options and acceptance of all available payment modes is primary, especially in a country like India. Worldline India offers 350+ payment options across the globe.
Utsav Malhotra: As D2C sales custodians, we are trying to manage conversion rates by offering a plethora of options so that you don’t miss out on customers. A seamless payment experience holds immense value that can make or break a transaction.
However, while these solutions exist, D2C brands also face certain challenges.
Pain points and challenges:
Sheik Mohideen: The challenges that D2C customers face from a payment perspective are: to handle rural India’s digital ecosystem, consumer trust deficit in online payments and additional transaction charges that make customers opt for cash on delivery.
Worldline India understands the potential scale of growth and we support our D2C payment partners with our Next Gen Payment Gateway product. It is a secure and reliable platform for our partners to enable a seamless transaction. Worldline India has been actively investing to ensure our payment gateway is secure and reliable. We are PCI ISO and DSS certified with a dedicated global internal security team. We have an in-house risk management tool which is integrated with our payment gateway. It immediately flags any fraudulent transactions based on the pre-defined algorithm. Our onboarding is completely paperless, so that our clients can quickly onboard and start transactions.
Utsav Malhotra: The lack of services available in Tier II and Tier III cities is also a major reason why cash is a preferable mode of payment there.
Navjot Kaur: In digital eCommerce, when the value of a product is high and if it is being used over a long period of time, then the ability of consumers to pay in fragments increases their trust in the brand.
Pandemic-accelerated growth in D2C brands:
Utsav Malhotra: During the pandemic, every store was joining the online bandwagon. As a result, new use cases have emerged (e.g., latency earphones for meetings and gaming).
Siddhant Rana: We saw a 100% growth in the number of merchants on Shopify in 2020. This is testament to the fact that while lockdown was at play, brands and merchants adapted to digital payments. Offline necessities like grocery even came online and gained traction.
Navjot Kaur: The adaptability we saw within our portfolio from women’s work wear to lounge wear was brilliant. The fact that brands could adapt to consumer needs was the overarching takeaway that D2C is here to stay.
Ganesh Balakrishnan: A pandemic is either the worst time or the best time to be a brand. If you are a traditional brand with significant retail distribution offline, then the pandemic would have come as a shock to you with your inventory being locked away and your bleeding work capital. However, all the brands are on the same turf now, trying to figure out how to sell online.
The impact is not only at the retail level, but also on the supply level. The global supply chain was disrupted very badly. Even the biggest suppliers’ orders were either cancelled or put on hold. They were willing to work with brands of any size. These were the opportunities we needed to grab.
Why does a D2C brand make for a good investment opportunity?
Navjot Kaur: A D2C brand is very exciting for multiple reasons. The whole DNA of businesses have changed online. Getting to a 100-crore revenue has now become easier than it was back in the day. And this boundary is being pushed day-by-day. There is better capital efficiency, direct contact with the customer, faster relaunch of a product, and customisation.
Siddhant Rana: This model works out best for investors. Since there is no middleman, there is a scope for high business margin, by default. You get more value at the end of the day.
Will this growth sustain in the new normal?
Utsav Malhotra: In a D2C business, the ability to understand all the customers, engage with them and retain them, is easier. In the pandemic, there are brands that have done well and some that haven’t. Using this as a base to extrapolate or draw projections would be unfair. Every year is a year for growth. A higher number of brands and supply is likely to trigger higher growth as the consumer now has many alternatives to choose from.
Navjot Kaur: If we build on good D2C companies, there is a lot of data transaction and behaviour data that we can use to retain customers. The question is, once offline stores open up, will D2C be able to keep pace with their distribution and delivery channels? However, investing in the right product and the right technology at the right time can help eCommerce businesses overcome this problem.
There are many companies that are getting into the payment space. What should be their main focus for sustainable growth?
Sheik Mohideen: The 4 key pillars of companies to succeed in the payment space are: platform performance, settlement performance, reconciliation, and managing refunds effectively.
Have we expedited the growth, usage or implementation of technology in our processes to create a better customer experience which otherwise would have taken us a couple of years?
Siddhant Rana: Shopify’s aim is to make commerce better for everyone. With our merchant base spread across the world, the use cases have evolved. The world in general has become more conscious about ensuring that the SMB (small and medium business) ecosystem survives. So, the purchase of gift cards from small players increased. We enabled local delivery, curbside pick-up, and tipping. So, innovation has only fast forwarded, making these tasks possible.
Ganesh Balakrishnan: There are multiple functionalities on Shopify in order to improve customer experience. Our main goal as a brand is product design, marketing and brand building. The entire logistics part including warehousing, fulfilment, exchanges and returns are completely managed through different technological apps. There are third party logistics aggregators we use to deliver and at the right time. There are multiple options on payment gateways as well and UPI is gaining a lot of attention. We used to do a lot of roadshows, but with all that gone away due to the pandemic, we have started video demonstrations on our website. There is, in fact, a lot of technological innovation going on.
Acceleration of technology:
Navjot Kaur: It is important to emphasise on technology, along with social technology. Smaller eCommerce enablers have come up to offer smarter and more efficient retention and targeting tools. Social tech enablers help in solving the problem of customer trust deficit. The rise of influencer platforms, micro bloggers on social eCommerce, and advocacy, have become key trends.
Sheik Mohideen: Customers who want to expand their business abroad should opt for international payments. Our product Cross-Border Payments helps customers meet this goal. Worldline India, as a group, has more than 40 years of experience in the global payment space. Our services are available in 175+ countries.
Key learnings for D2C businesses seen over the last few years and in the forthcoming years:
Utsav Malhotra: We need to be prepared for everything and be agile to pivot and adapt to changing circumstances.
Ganesh Balakrishnan: Make the most of an opportunity. Pick the right technology and use it efficiently. Adapt to consumer shifts in behaviour and habit, and understand what their needs are.
What do you expect from upcoming D2C brands and what should they incorporate in their existing systems?
Navjot Kaur: D2C brands should understand customer preferences in terms of price, product, and delivery time. Instead of spending money on platforms to acquire customers, they should work towards customer acquisition with the help of a sustainable brand.
Siddhant Rana: Enable merchants to improve existing product functionality and further enable app ecosystem.
Sheik Mohideen: From a payments perspective, speed is the essence of the game. Enable quick and simple integration, onboarding, and transaction. Provide multiple plugins and different integration kits for the merchants to come onboard.
We hope that D2C continues to flourish in the new normal and merchants, customers, and brands can reap the benefits.