In India’s fastest-growing retail sector, direct-to-consumer (D2C) brands have gained significant traction in the last few years. This shift is driven by evolving consumer behaviour, increasing internet penetration, and a growing preference for personalized shopping experiences. According to a recent report by 1Lattice and Sorin Analysis, India’s D2C market was valued at approximately $16.9 billion in FY23. It is projected to reach an astonishing $61.3 billion by FY27, growing at a Compound Annual Growth Rate (CAGR) of 38%.
It is worth highlighting that D2C brands, unlike traditional retailers, establish direct-to-consumer channels by eliminating intermediaries. This streamlined approach enables them to maintain higher profit margins due to reduced overhead and foster direct connections with customers.
By controlling the entire customer journey, D2C brands effectively utilize digital platforms to optimize marketing, sales, and customer engagement.
As these D2C brands gain enough traction, many eventually transition to adopting an omnichannel strategy, integrating physical retail stores, pop-up shops, and social media presence to further enhance their reach and customer touchpoints.
Key D2C Segments
The growth of India’s D2C market is primarily driven by four major categories, each contributing significantly to its expansion.
Grocery commands a 39% share of the total D2C market as of FY23. This is followed by Fashion with a 27% share, Beauty & Personal Care (BPC) with 13%, and Electronics with 11%. These categories represent diverse consumer preferences and the strategic focus of D2C brands in catering to varied market demands.
Grocery
India has witnessed a surge of startups and established players venturing into the grocery delivery business, spurred by the impact of the COVID-19 pandemic. This period saw a notable increase in online grocery shopping, particularly in metro cities, as consumers sought convenience and safety.
D2C grocery brands have capitalized on this trend by focusing on delivering fresh and unadulterated products in a short span of time. They have also introduced subscription models to incentivize repeat purchases with discounts. Their competitive pricing strategies and ability to provide fresher and more personalized products quicker than traditional retail channels have resonated strongly with consumers.
The D2C grocery market in India is projected to grow significantly from approximately $6.7 billion in FY23 to an estimated $26 billion by FY27, reflecting a robust Compound Annual Growth Rate (CAGR) of around 41%.
Some of the popular D2C grocery brands are Country Delight, Akshayakalpa, Licious, Paper Boat, and Sleepy Owl Coffee. As these brands continue to innovate and expand across urban and rural areas alike, they are set to play a transformative role in shaping the future of grocery retail in India.
Fashion and Beauty & Personal Care
In Fashion, D2C brands like Bombay Shirt Company, HRX and Zivame are capitalizing on trends such as customization and celebrity collaborations to cater to a digitally savvy audience. India’s D2C fashion market is estimated to expand significantly, from $4.6 billion in FY23 to $14.9 billion by FY27, growing at a CAGR of about 34%.
Similarly, India’s D2C beauty & personal care market is projected to grow from approximately $2.2 billion in FY23 to $7.6 billion by FY27, at a CAGR of around 36%.
D2C BPC Brands such as Mamaearth, Nykaa, Wow, Minimalist, and Sugar Cosmetics have capitalized on the growing demand for personalized and clean beauty products, particularly among tech-savvy younger consumers. The market’s growth is further propelled by the increasing popularity of men’s grooming products. Brands like Beardo, Ustraa, and Man Matters have strategically positioned themselves to cater specifically to the male demographic, offering a range of grooming solutions tailored to their needs.
Electronics
The demand for electronics on e-commerce platforms has surged dramatically in India over the past decade. As a result, the D2C electronics market in India is estimated to grow from $1.8 billion in FY23 to $6.9 billion by FY27, at a CAGR of about 40% during the period. This growth is driven by several key factors, including the increasing consumer preference for premium products, affordability, and the expanding penetration of e-commerce platforms in Tier 2 and Tier 3 cities across India. Brands such as boAt and Lifelong have emerged as frontrunners in tapping into this expanding market.
As D2C companies in India gear up for significant growth, shipment volumes will soar over the next few years. D2C shipments are expected to increase from approximately 0.6 billion units in FY23 to 2.3 billion units by FY27. This growth reflects the increasing adoption of online shopping platforms and the growing preference of Indian consumers for direct purchasing from brands.
Reflecting this burgeoning demand, D2C companies in India have attracted substantial investments over the last three years. Between CY 2020 and CY 2023, these companies have collected a little more than $4 billion in investments, showcasing strong investor confidence in the sector’s potential for growth.
The Road Ahead
The future of D2C in India looks promising. Brands are expected to focus more on omnichannel strategies, leveraging technologies such as augmented reality (AR) and virtual reality (VR) to enhance consumer engagement and shopping experiences. Sustainability and ethical practices will also play a pivotal role in shaping consumer preferences and brand loyalty.
As India’s retail industry continues to evolve, the D2C segment is set to redefine the way consumers shop and engage with brands.
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