Mumbai: MMA Global India and Publicis Commerce has launched their insightful report ‘D2C Advantage – Guide to Maximise ROI Of E-Commerce Investments’ with top leaders from various corporations in attendance, in addition to the Publicis Commerce and MMA Global India leadership team.
This toolkit is the first of its kind with rich reference material for the C-suite and Brand Leaders on making D2C ventures a success by investing in sound strategies and having a clear value proposition, taking into considerations and capabilities required for profitability.
MMA Global India & Publicis Commerce launched the toolkit in Mumbai on 5 March amidst a full house. The event kicked off with a welcome address by MMA Global India country head & board member Moneka Khurana followed by a keynote address by Publicis Groupe South Asia CEO Anupriya Acharya who was joined by Performics India CEO Lalatendu Das which is part of Publicis Commerce India. The toolkit launch followed shortly after.
However, businesses that have seen success with D2C have done it primarily through clarity of proposition, developing consumer insights through data enrichment and utilisation and analytics and reporting, augmenting the consumer share of mind through unique and compelling shopping experiences, the right media and engagement and innovating on product UI/UX. While the path to profitability of D2C business is quite challenging when viewed independently, the true value of D2C investment is unlocked when insights from D2C businesses are connected to the overall e-commerce business. In a conservative estimate, when done right, D2C businesses have potential to deliver eight per cent + operating margin consistently.
To gain insights into the full potential of D2C businesses, Indiantelevision.com caught up with Anupriya Publicis Groupe South Asia CEO Anupriya Acharya. In the discussion, she illuminates the challenges encountered within the D2C and e-commerce sectors, providing perspectives on how these industries can thrive.
Edited excerpts
On the need for creating this toolkit
eCommerce in India is experiencing Turbo growth. Overall eCommerce market size is likely to grow at 19% CAGR starting 2022 to reach USD 400 billion by 2030. Within eCommerce, D2C plays the role of primary growth driver. In-fact, D2C ventures share of overall eCommerce investments in India has been growing over 49% CAGR over past three years.
In spite, of the excitement surrounding D2C business, merely 12% of D2C businesses we surveyed reported to be profitable. This contradiction between D2C opportunity and sub-optimal profitability, encouraged us to write this report exploring various factors that affect D2C businesses and their path to profitability.
In order to prepare this report, we conducted our primary research involving both quantitative approach (online surveys) and qualitative approach (in-depth interviews of practitioners). Further, we referred to industry trends data provided by our knowledge partner Google. Last but not the least, we leveraged our collective experience of Publicis Commerce and MMA to derive key insights articulated in the report.
On benefits of D2C brands including traditional FMCG players venturing into omnichannel business
Omnichannel businesses (including D2C as a channel) provide several advantages to businesses, such as
● Complete control on customer experience across the lifecycle, thereby improving chances of sale.
● Access to first party data about customers – drive product and experience innovation based on insights generated from customer data
● Ability to drive richer engagement with customers, driving cross-sale and up-sell opportunities
On India being drastically low in D2C sector despite being the 2nd largest base in e-commerce
Below are some of the challenges in scaling D2C ecommerce in India
● High customer acquisition cost
● Complex last mile delivery and returns
● Cost of managing supply chain, inventory and D2C operations
● High spends on promotions and discounts to stay relevant in a highly competitive market
On pricing being one of the key drawback for D2C businesses even though according to the eEconomy report, the growth of upper middle/high-income consumers is projected to increase from 117 million in 2022 to 200 million by 2030
The above-mentioned growth in the upper middle/high-income consumer segment is likely to generate substantial disposable income. Substantial portion of this disposable income is likely to flow into D2C businesses with improvement in digital literacy and trust in digital payments. This shift in the market may allow D2C businesses to focus on fair value exchange with consumers instead of overly worrying about being simply price competitive.
On your opinion on Das mentioning product innovation as a profit method for D2C businesses, considering the consumer hesitancy in India towards innovative approaches
D2C businesses generate rich consumer data across the funnel. Using insights from this data, successful D2C businesses are innovating on product and experiences.
Such innovations can come in the form of new products addressing unmet needs of specific customer segments or bridging gaps in customer experiences leading to better conversions and sales. In both scenarios – this is a win-win solution for both customers and D2C businesses,
For example, ITC foods runs Yogabars brand to bring healthy snacks to consumers. Using insights from their D2C channel, they identified a gap (missing in peanut better segment) in their product portfolio. Based on further market study, they launches Yogabar Protein Peanut butter product, which added to the overall D2C sales and profits.
On D2C channels provide the best way to capture first-party consumer data
One of the core benefits of D2C channel is that the business retains complete control of experiences, technology and data (unlike Marketplaces, where the marketplace platform owns the data and selectively share some information with brands). Given the full control of experiences, D2C businesses can nudge customers to share additional details about them. For example
● Businesses capture basic PII data (phone, email, address) on first purchase
● Invite the customer to join a loyalty program (with appropriate value exchange) and in the process capture additional demographics, income and family data
● Offer additional value-added services to customers through partner network (e.g. Co-branded credit cards, coupons etc) – in the process try to generate a profile of consumers habit, propensity to pay
Using the above first party data, D2C businesses can further estimate customers potential life time value and offer appropriate product bundles to drive sales.
On this toolkit impacting the landscape of D2C & e-commerce in India
The D2C Advantage X toolkit addresses the profitability challenge of D2C businesses through
Identifying key challenges and cost headers in running D2C business
● Identifying new leavers using which D2C businesses can generate incremental value
● Provides a set of actionable steps which businesses can take in their journey towards profitability
The insights and recommendations in the report are applicable to both digital only D2C businesses as well as omnichannel players having D2C as a channel. Therefore, we believe a large segment of current eCommerce industry will significantly benefit from the report.
