D2C brands growing at a much faster clip than ecomm, shift to boost third party logistics
- D2C brands’ gross merchandise value is expected to grow to $35 billion by 2027.
- They are expected to grow at a CAGR of 40%, faster than retail and eCommerce markets.
- D2C shipments were at half a billion in 2022, and could grow to 3 billion by 2027.
AdvertisementIndia’s direct-to-consumer brands are growing fast, spreading their wings far and wide. As per estimates by Redseer, their gross merchandise value (GMV) will swell to $35 billion by 2027.
A large number of brands like
“Brand creation is getting easier and incentivized,” it added. But they’re chugging along fast and are expected to exhibit a compounded annual growth rate (CAGR) of 40% for the next four years.
Their growth rate will outdo retail market growth as well as the broader eCommerce market. Their growth rate is thrice as fast as compared to the retail growth, and 1.6 times that of the eCommerce market.
Their growth will also give a push to third party logistics (3PL) players as D2C brands do not follow the traditional distribution channel. In 2022, the number of D2C shipments stood at half a billion. And, they might grow to 3 billion by 2027.
“3PL solutions tie-in well with the D2C segment as demand varies across cities/regions and the required logistics investment is on the higher side. Brands need reliable logistics partners with a wider reach across India to ensure consistency of experience,” said Mrigank Gutgutia, partner at Redseer.
Most D2C products have varied requirements like return management, cold storage supply chain, hassle-free claims and more.
“The mid-large beauty and personal care brands are also competing on reach and quick delivery. Hence aspects like ability to handle fragile items matter more prominently for them,” said Redseer.
Home and general merchandise brands also require high degree of shipment protection to prevent damages. Food brands on the other hand work on lower margins and seek affordable shipping. Brands need quick delivery in cities and dense networks to enable quick delivery.
“The keys to success for 3PLs vary widely depending on the category of D2C players, however, tech-enabled reliability, shipment protection and affordable pricing are what the D2C brands in India seek the most, with pan-India reach being a fairly common expectation,” said Gutgutia.
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