Rising to ambition: The growth of direct-to-consumer brands in India

Ten years ago, very few working professionals in India would have dreamed of being entrepreneurs, let alone of launching their own consumer brands in India. Challenges such as cost, complexity of distribution, brand building, and scaling of a business made it a herculean task.

Fast-forward to today: Entrepreneurship in India is red hot. In combination with a favorable business and economic environment, more working Indians than ever before are taking the plunge—fueled by the success of early pioneers like Flipkart. The only constraint to success seems to be the limit of one’s imagination.

More interesting still is the fact that entrepreneurship is not just for some—it’s for all. Young and old. Longtime business professionals and fresh-from-university upstarts. Falguni Nayar quit investment banking at Kotak Mahindra at the height of her career to launch cosmetic brand Nykaa. Meanwhile, Ritesh Agarwal wasn’t even 21 when he started hospitality network OYO rooms.

Gangtok Travel Guide: Places To Visit & Things To Do | OYO

In both cases, the brands they created weren’t channel sales brands or indirect retail brands. They designed their brands to be sold directly to consumers with no intermediary, partner, or middleman.

While these are just two of the many entrepreneurs in India, their experience is quickly becoming the norm. Many of India’s popular startups are now direct-to-consumer businesses that have abandoned the long-held model of brand building—seeking traditional bank loans, pitching to companies, proving the product’s functionality, negotiating contracts, and then finally, maybe years later, running the business—in favor of a much more agile, do-it-yourself approach. As a result, two key questions have emerged in my mind:

What led to the rise in direct-to-consumer brands? And how has the cost of entry been lowered for new entrants?

The proliferation of direct-to-consumer

Direct-to-consumer brands didn’t just develop out of nowhere. They were created in response to new consumer trends and attitudes. Just consider the Indian millennial’s mindset toward work. Unlike my parents’ generation, young Indians are less inclined to enter predictable, risk-averse, and staid professions like accounting, medicine, engineering, banking, and government service. The opportunity to forge their own path and create their own destiny beckons. This coincides with a shift in Indian societal values, where ambition and success have become much more important than they were 20 years ago. Entrepreneurship provides a faster route to this future—one where you have far greater control over the outcome.

Consumer habits have also dramatically changed. The liberalization of myriad sectors of the Indian economy has transformed society. India went from having one TV channel for the entire country to having over 500 channels available to today’s average Indian. As a result of this exposure to the outside world, society transformed. Consumers look outward for approval and recognition. Beauty, wealth, success, health, and wellness matter more than ever before. New categories are ballooning while old ones are being reinvented. And the explosion of travel has opened the eyes of consumers to highly aspirational lifestyles. As a result, the Indian consumer is hungry for more—more apparel, more vehicles, more homes, more luxury, and more food, just to name a few of these yearnings.

The smartest entrepreneurs are recognizing these fundamental shifts. They are using them as opportunities to exploit market gaps and take on behemoths in established categories. For example, Falguni Nayar, founder and CEO of Nykaa, identified that urban Indian women strongly desire a trustworthy source for beauty expertise. She created a business to serve that need and a brand that is now highly respected in the Indian beauty industry. Similarly, Anuj Rakyan, founder of Raw Pressery, honed in on the trend toward health and wellness for urban Indians. Using a subscription model, his cold press juices fit perfectly into the health-obsessed Indian’s lifestyle.

Dusky Skin Diaries Ft. Debasree Banerjee | Nykaa

Perhaps the biggest enabler of the surge in direct-to-consumer brands is the digital revolution. Even with limited resources, it’s easy to set up your own online shop and begin selling your product to your desired audience. This allows brands to build stronger relationships with their customers and have greater control over the way their brand is experienced.

Entrepreneurialism without boundaries

Digital technology has also trickled through other parts of brand and business. Entrepreneurs can now leverage big data and digital analytics to better understand their customer base and their own brand. Social media helps brands connect with consumers and stay top of mind. And brands can easily partner with influencers to introduce new products to large audiences—something that previously required a lot of money, time, and strategy. Furthermore, the logistics ecosystem has evolved substantially, making it easier to set up shipping for a direct-to-consumer business regardless of your location.

Shoppers of direct-to-consumer brands

Buoyed by the promise of the Indian economy and the brilliant sales pitches from the many emerging Indian entrepreneurs, capital is chasing talent like never before. Venture capitalists see the Indian entrepreneurial craze as a phenomenal opportunity—a chance to not only build valuable consumer brands but to also create full-scale direct-to-consumer businesses. Whether you plan to sell lingerie online or want to establish a marketplace for home services, seed funding is now just a click away.

The future for direct-to-consumer brands

So, is it all smooth sailing for entrepreneurs today? Hardly.

The biggest challenge is differentiation. The experience you create for consumers has to be unique, fresh, engaging, and constantly evolving. Nayar of Nykaa calls it “the art of retailing.” It’s about curating the experience in a way that drives desire every time a customer visits.

Website for direct-to-consumer brands

The immense task of building a brand hasn’t gone away—it’s just changed. It calls for a lot more effort than money alone. It calls for standing out and being noticed, even in today’s cluttered and fast-changing world. Harder still, your brand has to be preferred, not just once, but over and over again. For that, your brand has to stand for something distinct and deliver its difference at every touchpoint. The consumer can effortlessly switch to another alluring brand in a click, so your brand must keep the customer front and center at every turn.

 

This piece was originally published in Brand Berries (19 June 2018). Republished with permission.