The Global Expansion of the Direct-to-Consumer Brand Market

D2C, or Direct-to-Consumer, refers to a business model where companies bypass intermediaries and sell their products or services directly to customers. This direct approach allows brands to establish a closer relationship with their customers, gather valuable data, and provide a personalized shopping experience. With all middlemen removed, the seller has total control over the customer experience.

Indian D2C Market Projections and Economic Impact

The Indian D2C brand market is poised to hit $61.3 billion by FY27. The Indian direct to consumer (D2C) brand market is likely to more than triple in four years, buoyed by increased targeting by brands, hyper-personalisation, increased competition and rise in per capita earnings. The D2C market is estimated to grow at a compounded annual growth rate of about 38% from nearly $17 billion in FY23 while creating about 10 million direct and indirect jobs in the retail space by FY27. Total shipments in this space is expected to increase to over two billion in FY27 from about 600 million in FY23.

Key Market Data and Statistics

• Projected Indian Market Size (FY27): $61.3 billion
• Compounded Annual Growth Rate (CAGR): 38%
• Expected Jobs in Retail Sector: 10 million
• Total Shipments (FY27): Over 2 billion
• New Brands entering the market (2023): 25% jump
• Average Investment per Transaction (2022-23): $6.8 million

Strategic Growth Drivers and Category Performance

The expected growth in the market would be aided by macroeconomic factors like the growth in per capita earnings as well as trends like an explosion in the variety of brands and the increasing focus on hyper-personalisation. In terms of categories, grocery, fashion and BPC (Beauty and Personal Care) are the three largest in the Indian D2C market, making up 39%, 27% and 13% of the overall market, respectively. Consumer electronics continues to be one of the reigning e-commerce champion verticals, with expected revenue of €839 billion in 2023, or 22.1% of all online sales.

Regarding sales channels, about 64% of the overall sales for D2C firms come from marketplaces like Amazon and Flipkart, with brands' own platform accounting for 21% of sales and offline stores contributing 15% of sales. We’re also seeing the omnichannel strategy working out, and customers increasingly want more touch points across digital and physical stores.

Evolution of the D2C Sales Model

Established brands are lapping digital natives, accounting for more than 75% of this year’s US D2C sales. US D2C ecommerce sales will see double-digit increases through 2024, when they will hit nearly $213 billion, making up 16.6% of all ecommerce sales. The No. 1 reason that consumers buy directly from a brand is that they say they get a better buying experience than with a retailer.

Shifting Advertising and Investment Landscapes

The D2C market has attracted total investments of over $4 billion across about 730 deals between 2020 and 2023. At the same time, D2C ad spend is shifting. Ever since Apple’s AppTrackingTransparency (ATT) took effect, Meta’s share has been on the decline, while Google and TikTok are picking up the slack.

To remain viable, brands must be able to maintain roughly 60% gross margin to be able to build the brand, as unit economics can be toppled by the logistic costs in tier 2 markets and beyond.