Swagat Sarangi

Co-Founder, Smytten

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What Does Future Hold For D2C Businesses In Beauty Sector?

Wow Skin Science, Plum, Mamaearth, MyGlamm, Sugar, and other D2C brands are occupying niches and creating aspirational brand identities through innovative offerings, tech-enabled insights, and customer-centricity

The time has transcended immensely after the Covid-19 hit the world in 2020. With this acceleration in the evolution of the market, business models have swamped entirely resulting in an unprecedented growth across the sectors gradually. The rise of the D2C revolution has taken over the leash of our Indian economy. India, with a population of over 1.3 billion people, is now the world's fifth-largest retail destination. The sector has emerged as one of the most dynamic and fast-paced industries, with new players and innovative offerings appearing on a daily basis. The sector accounts for more than ten percent of the country's GDP and approximately eight percent of employment. By 2025, the D2C market in India is expected to be worth more than $100 billion. In India, there are currently over 100 million online shoppers, raising the potential of the model to stay and thrive even further.

One of the fastest-growing segments in India is the beauty and personal care market. The pandemic has been a key initiator to empowering this potential sector in many ways. The rapid growth of the beauty and personal care market has been fueled by several market triggers and lifestyle changes. A shift toward chemical-free and environmentally friendly products, growing concerns about personal hygiene leading to high demand for wellness items, and the rise of the direct-to-customer (D2C) model, resulting in agile and customized solutions, have all fueled growth in this space.

FMCG behemoths such as Johnson & Johnson, Himalaya, Hindustan Unilever, ITC, Lakmé, and others that have been the key dominators of the market for decades are now competing with D2C-focused start-ups such as Mamaearth, The Moms Co., Bey Bee, Azah, Nua, and Pee Safe. The market titans took 20 years to reach the Rs. 100 crore (US$ 13.4 million) revenue mark, whereas new-age D2C brands like Mamaearth and Sugar took four to eight years, respectively. The D2C revolution thus has empowered these early-stage startups so much that they are drawing in funding steadily. Wow Skin Science, Plum, Mamaearth, MyGlamm, Sugar, and other D2C brands are occupying niches and creating aspirational brand identities through innovative offerings, tech-enabled insights, and customer-centricity.

As the Indian direct-to-consumer market grows, here are some of the notable key trends that will shape the D2C industry in the coming years and beyond:

1. Omni-channel Exposure: In today’s tech-savvy generation, the consumer vastly expects a personalized touch in every part of their internet experience. Covid-19 has amplified this exposure and has resulted in a huge adoption of technology in D2C brands to meet this need in equivalent form for millions of customers. Through the use of AI and ML, Smytten is aiming to create a recall for their customers by providing a seamless and unforgettable experience. Thus, redefining the consumer’s journey by engaging with them on every possible platform to resolve almost every possible query. The target for D2C brands have become via multiple touch points across multiple channels from apps, websites, mobile, and social media to brick-and-mortar stores simultaneously. An omni-channel strategy allows businesses to track users' behavior across multiple platforms and channels in order to better understand their demographics, pages visited, time spent on each page, product categories viewed, and so on. The data is used to further refurbish the business strategies to provide ultimate customer satisfaction.

2. Customized Experience: The customer now demands the brands to meet their unique choices and requirements individually. They want the suggestions which meet their respective thoughts and searches beforehand. Thus to empower the same, we at Smytten are architecting full-stack solutions based on data analytics to make the discovery and decision-making journey of Indian consumers a lot easier, prior to them committing to a final purchase. In the world of 1000+ brands and 3 billion+ choices, we through our deep analysis figures out the preferences of our customers to further assist them in choosing the right product.

3. Stance on Sustainability: The consumer today is not only aware of what premium brands they should choose but also how it affects their surroundings, nature, and the world. We have observed that the stance on sustainability has become directly proportional to the demand for a brand in the market that is cruelty-free, vegan, eco-friendly packaged, etc., thus creating a pool of opportunities for the upcoming D2C brands to direct their customers’ attention towards them. Sustainability is no longer just a marketing philosophy but its actuality also influences the stakeholders, potential investors, government incentives, etc., which also allows the growth of these D2C brands in the long-term. Emerging businesses thus have started to maintain their ESG practices in order to verify their claims of being eco-friendly.

4. Dynamics of Logistics: Logistics is a key differentiating factor in the performance of any D2C brand. The pandemic has tremendously affected the growth of logistics companies which has yet given a push to the growth of the D2C sector as well. The ability to reach the customers on time and in a hassle-free manner has aided the D2C brands to create a reputation of being devoted and determined toward their customer base. Most brands are leveraging the 3PL to the utmost level in order to provide a seamless and smooth experience for their customers in every possible way. The focus is from the beginning to end, be it- last-minute delivery, express delivery, real-time tracking, reverse logistics, etc., ensuring a connection with the customer for the long term.

5. Formulation Innovation: Clean beauty is the new buzzword in the industry. Brands are constantly looking for new solutions, and the majority of the leading beauty brands are introducing chemical-free products with natural elements. Consumers today, not only get influenced by the big brand names now but also look out for what ingredients any brand is incorporating in their products. Natural Age Control Range by The Mom's Co, one of our brand partners, rejects the use of potentially harmful ingredients in their beauty products, such as parabens, synthetic fragrances, SLS, phthalates, artificial colors, triclosan, Talc, BHA, and others. All brands are now curating sustainable, ethical, and cruelty-free products that benefit consumers as well as the environment.

The standards are rising every day but what makes the D2C sector an everlasting flourishing space is the ability to adapt and the vision to expand. We have seen a drastic growth in just the last three years but there's still a lot to discover and learn. The technology and innovation have set the course of movement for the D2C brands. Now the game is all about the survival of the fittest.

(The given article is attributed to Swagat Sarangi, Co-Founder at Smytten and has been exclusively created for BW Disrupt website)

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house

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D2C Businesses beauty sector Swagata Sarangi Smytten

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