A lot has changed over the last 18 months. One big thing that has actually changed dramatically is the way we buy. The pandemic has made us change an age-old habit that we had taken for granted.
How did we typically buy? The great Indian consumer, with his purchasing power as fuel, runs to the market. Everything is bought and sold in the market. The physical marketplace is an institution in itself. There are specific markets for specific products, just as there are markets that are a carnival of shops that sell literally everything from cars to condoms for you to take home.
On the very foundation of the physical market, everyone in the enterprise of starting a digital option invested ideas, time, energy and money in the process of putting it all together. In came e-commerce with its first fledgling effort of Fabmart in 1999. The age of e-commerce boomed ever since but plateaued a bit just prior to the start of the pandemic. In 2019, the size of the e-commerce market in India was estimated at $50 billion. The current rough estimate of e-commerce in India exceeds this in large leaps: $84 billion. It is expected to become India’s new hectocorn category as it crosses $100 billion sooner than ever before.
Let’s go back. The physical marketplace created the electronic one then. And now, the big buzzword of the day is not e-commerce as much as the oft-faultily bandied-around term: D2C, Direct-to-Consumer. While e-commerce offers the ability to get an item displayed at an e-store directly to the home of the consumer, D2C offers the nuanced ability to customise it all from the start. D2C is therefore a different animal altogether as compared to e-commerce.
D2C is therefore the brand new buzz in the business of business. Every business wants to have a D2C avatar. It is the option that allows individual brands and companies to communicate directly with the consumer, sans intermediation. D2C is the ability of an 8 o’clock coffee brand from the stable of Tata Consumer Products Limited to communicate, make-aware, promote and deliver that coffee packet-of-desire into the home of Mrs Sunalakshi Patel in Rajkot.
The beauty of D2C is the fact that it disintermediates the selling and buying process. The company that sells meets the consumer who buys. There is no intermediary in between. There is no e-commerce platform in between. There is no C&F agent, distributor, wholesaler and retailer as intermediaries as in the case of physical retail. D2C is therefore a third-animal in our midst. It is that very direct process, made possible by technology and social media, to get the producer to meet the buyer. The producer may decide not to have a marketing team in between as well. So be it. D2C makes every producer a seller with access to large markets. Gone are the days when the small manufacturer of the niche product was doomed to stay hidden in a niche all the while. Out here, with D2C on a roll, every one of us can aspire to reach out to the entire market out there, global and local included.
D2C is therefore manna from heaven to the small brand with an appetite to reach out to its potential consumers, wherever they live. D2C makes geography a complete history. It destroys the paradigm that it is difficult for niche products to make a connection with buyers simply because their specific customers live in disparate geographies served by an internecine physical distribution and retail system. In one stroke of a D2C app of your own, you can create direct pathways to your consumers, living as small little invisible specks in the vast hinterland of the real market.
D2C also breaks yet another relatively new paradigm in place due to the emergence and dominance of e-commerce. A new brand that wants to reach its consumers in the market must offer big enough margins to the e-commerce intermediary to get a piece of this space. Not anymore. D2C is totally disintermediated and possibly the best form of 1:1 selling, 1:1 marketing and 1:1 distribution we have seen emerge in decades.
In many ways, D2C is a complete intermediation-killer in sales and distribution. While in the physical market, we have five stages of intermediation before a product reaches us, in the digital e-commerce market, we have one intermediary and in D2C, refreshingly, there is none!
Even as businesses big and small grapple around with this new potential elephant in the room and its disruptive abilities, we must remember that the best way of buying and selling still remains 1:1. In the old days we had the saree seller walk into our homes with a big bundle of sarees on his head, attendant in tow. Women of the house would gather around the saree-seller and admire his wares and eventually buy. As those days get consigned to the flames of the pandemic, in comes a whole new way of buying that Kanjeevaram saree directly from the source after admiring all the offerings in literally the very same way you did in the good old days. It’s back to the old way of buying and selling, only this time round it’s called D2C and it has got technology embedded in it.
Remember the knife sharpener at the door, the agarbatti seller, the local murukku seller and many of their tribe? They are back, through the digital window!
Brand Guru & Founder, Harish Bijoor Consults