India's D2C Rush
As more and more consumer brands go digital to reach customers faster and carve a unique identity, India’s direct-to-consumer (D2C) moment is well and truly here. With thousands of brands competing in the D2C space, will this be the future of India’s retail market?
“We want to give you the components that would make this shoe not just look like ours, but also match our approach to sustainability,” Joey Zwillinger, CEO of Allbirds wrote to Amazon’s Jeff Bezos, talking about a product sold on Amazon that was strikingly similar to Allbirds’ Wool Runner, a product created using wool.
Zwillinger’s conviction and love for his products is something India’s D2C brands would relate to. Product is surely the king and product efficacy is the core to build the business for these digitally native brands.
As we have seen in our previous articles, launching a D2C channel for a brand is a matter of weeks these days. From readymade software and third-party logistics on any scale to free or cost-effective marketing tools and platforms, the options to help launch are aplenty. However, to thrive and not just survive, the only differentiator and competitive edge a brand can have is the product. The success of marketing, an essential part of D2C, also depends on product innovation. Marketing strategy may help in product positioning, but what improves conversion and retention rates is surely the product.
Many established brands have also failed when it comes to new product launches. A case in point would be the famous C2 launched by Coca Cola in the US. Diet Coke, which came before C2, was a hit, but it had a feminine brand image and taste was not well-received by consumers, so it was not a success among younger men, despite being lured in by the no-calorie formula. So C2 was launched with half the calories as a can of regular Coke and with the same taste. However, this didn’t go down well with the target group and thus the product didn’t take off. One year later, Coca Cola launched Coke Zero, a no-calorie, full-flavor product which turned out to be an all-time hit.
This also explains why many founders of D2C consumer brands choose to be hands-on when it comes to new product launches. They prefer delegating other work such as marketing and sales strategy and perhaps even technology, but when it comes to product design and testing, they are involved in every step, from ideation to R&D to design to testing and launch.
Most D2C brands also have a limited number of products listed on their ecommerce channel even though it offers the luxury of launching as many products as one wants as against traditional retail businesses where shelf life is limited. This is because they believe in quality over quantity and the differentiation each product can bring in. For instance, personal care brand Mcaffeine offers only 20 products, but each product offers something unique.
Why Consumer Is King For D2C Brands
Product innovation is key to set a business apart from the crowd. For D2C brands, this is the only way they can compete with established businesses. And, what gives them an edge in the business competition is the ability to achieve customer voice with ease by receiving quicker, direct and instinct feedback.
For instance, early this year, fashion accessories brand Zouk’s customers who carried the company’s stylish tote bags along with a dull black backpack said they wanted a tote bag style backpack. So, they launched office backpacks in tote bags style and the response was phenomenal. Though it was the first time Zouk launched a product with a price point above INR 2,200, and the six designs were sold out within the first week. For any other category, it would usually take nearly two weeks to sell the same quantity and it was also bought by a healthy mix of existing and new customers.
MyGlamm’s bestseller, the ‘Total Makeover FF Cream Foundation Palette’ has a similar story. While conceptualising the product, the key consumer insight was that the Indian woman was confused between a primer, compact, concealer, foundation. They didn’t know the order in which to apply the products and they found it extremely cumbersome to buy five different products (plus a sunscreen) and apply all of them.
Moreover, they never found a foundation that matched her skin tone color. The company built on this insight, went to its Italian factories and first created a formula which combined the benefits of all five in one product and then added skin tone correctors along in the same palette, to give the Indian woman a complete face product, by buying just one single product. The end product became a bestseller!
MyGlamm also has a platform to test, measure and take decisions about new products. Similarly, other brands might use the direct channels online to soft launch or test new products and test local markets to monitor consumer response before going full on into the market. This improves the overall speed and agility of the business.
For D2C businesses, since product development starts with the customer insight, they also have a consumer insights team that constantly speaks to customers to understand their needs and those insights are passed onto the product development team.
“Our new product development (NPD) team has a clear DNA of taking customer insights and marrying it to innovation and bringing it to the shelf. The NPD team has a clear KPI of ensuring that at least 70% of our products are ‘first time in India’ and created specifically for the Indian women’s needs,” said Smita Baishakhia, head of new product development, MyGlamm.
These brands also keep a huge database of customers’ suggestions and that helps in anticipating their needs ahead of their competitors.
“As a D2C brand, we are able to rapidly experiment. For many categories, we got initial inputs from customers via surveys on Instagram and Facebook. We designed and made the products in-house and listed them online. Given over 90% of sales happen via our own website, we got quick, real feedback from customers, both pre-purchase and post-purchase,” Disha Singh, founder & CEO, Zouk told Inc42.
Finding The Right Brand Persona
For D2C brands, the target audience is mostly millennials and besides customer feedback, four things hold utmost importance. One, whether the product offers something new or has a solution that traditional brands did not have, two, if it adds value to the society at large (environmentally friendly, toxin-free, organic, recyclable packaging etc) three, whether it goes with the brand narrative or persona and four, sustainability or long-term growth.
A lot of research thus goes into understanding market sentiments and focussing on what is lacking on Indian shelves and what the competitors are launching.
“We go out of our way and have spent hundreds of nights relentlessly to figure out where we can innovate and add more value to a product category that has remained unchanged for decades, either through incremental change or something truly groundbreaking,” said Prince Kapoor, cofounder, Plush.
Finding a genuine gap in the market for some products is key. For example, Zouk found that a good percentage of Indian women in the workforce wear traditional ethnic wear to work but there was a need for a Bags brand that came in Indian styles. So, they launched laptop bags and women’s office Bags, which have done well for the brand.
It is also important that it fits into the brand narrative and should interest the target group. One such interesting example would be Dr. Vaidya’s Chawanprash in the form of a tablet.
“It has been my grandfather’s business. My job is to take it to the newer generation. So, we basically aim at selling the same products, but with a millennial twist, so the ancient science is passed on to newer generations. For instance, today’s parents do not force the children to eat Chawanprash, even though they understand its value. So, we decided to give it in a tablet form and parents are happy as children don’t say no to it anymore.” said Arjun Vaidya, CEO, Dr.Vaidya’s.
For fashion brands, future trend research on styles, colour palettes as well as fits, and the seasonalities are kept in mind, both within India and globally to build a thoughtful process of upcoming products. Essence of India, toxin free, organic vegan, cruelty-free are also some of the criteria.
The Team Behind The Product
Most brands believe in having a small and agile team and have an in-house designer who brings the brand vision and language to life.
“Contrary to popular belief, a small but effective team is far more efficient than a larger group in order to deliver quick and thorough decisions. This is why we consciously insist on a small, yet focused team – our in-house designer is a key stakeholder for our designing needs.,” said Plush’s Kapoor.
Apparel brand FableStreet has a team of 7-8 members in-house led by the head of product. There are specific members who look at design & future direction, specific members who look at fits & silhouettes as well as merchandisers who look at end-to-end garment testing & features.
Pee Safe has got an in-house team of four designers who collectively work on designing new products and are led by Vice President, Design. “Every designer plays to their strengths. Designers work on packaging such as creating mono cartons and labels for the products and others work on renders and graphics,” said Pee Safe’s Bagaria.
Many brands also have leading experienced design consultants onboard. For instance, personal care brand Mcaffeine has on boarded a designer who designs products for Titan watches. Sometimes they have an agency that is almost like an extension of the team for all creative input. Munchilicious Granolas has a consultant in-house, a food scientist and technologist with 32 years of experience in the pharmaceutical, nutraceutical, and food & beverages under the FMCG category.
In most cases, product design is led by the founder. In the case of Plush, products are sourced and designed by the cofounders themselves. “We have travelled more than 100k km together to source the best materials that are confined to the strictest international standards including US cotton, PETA certified Vegan and FSC approved,” said Plush’s Kapoor.
Behind The Scenes Of Product Design
Most D2C brands follow a strong need-oriented and design-forward process, which makes the entire product designing process a fairly complex and technical one. The process is not taken lightly and it is never just copy-pasting trends from everywhere.
It usually takes anywhere from eight months to two years for a product to go from idea to a retail store, and it passes several stages including prototype, market testing, getting the correct certifications, an extended test run, branding and marketing collateral to finally going live on the website. “Making a product market-ready is a joined effort by the design, product, marketing, and communications team. Each department studies the market as per design, features, pricing, demand, and the kind of communication to be used on the product. The entire process takes about 4-6 months,” said Vikas Bagaria, founder, Pee Safe.
When need arises, most brands also are fairly quick and systematic in terms of product designing and also fairly agile about it.
“Our recent Work From Home collections were designed end-to-end within 15 days (from design to launch) for the new normal, incorporating all the necessary elements & have been live since June,” said Ayushi Gudwani, founder, FableStreet.
If we are planning for a new category launch, then it’s a 3-months process as we need to start with sole designing and procurement to everything from scratch, said Manish Bhagwani, founder and director, Walker Styleways, a footwear D2C brand. But once an investment is done on insoles and Shoe Lasts (an iron form shaped like a human foot), then designing a new pattern or launching a new color is just 15 -20 days of work, he added while explaining, as shown below, the time each step takes while creating a formal shoe collection of square toe shape with a rubber sole.
The fastest way is to run the design concepts by early adopters and consumers before they jump into making them as large-scale designs. A more regular process that they follow is that whenever they do a small drop of a new concept or design, they typically do a very small & controlled launch and get feedback before pushing it across at a broader scale.
“To develop a new product we indulge in thorough market research; like what our audience is looking for, their lifestyle, their eating habits and preferences. Based on the research we develop a product suiting their taste and preferences. Then it goes out for tasting and sampling. This process takes around two to three 3 months before it goes for lab testing. Post the lab testing, our product goes for packaging. The entire process starting from R&D to packaging takes 6 -7 months,” said Rohit Mohan Pugalia, Founder & CEO, Munchilicious Granola, a SOCH Foods LLP Product.
Packaging, The Key Differentiator
The right product packaging is one of the crucial factors that determine whether a brand gains a loyal advocate or a disappointed customer. It plays a vital role in the development of the product and positioning it correctly in the eyes of the buyer. Effective packaging can do wonders in highlighting a product’s features and creating a distinct brand recall in the market as a brand and so we pay special attention to our product packaging with decent budgets, noted Plush’s Kapoor. The brand’s target audience are women and it is ensured that it fully reflects the brand ethos.
For many food and beverage brands, packaging design and printing are outsourced to expert agencies. Many months are spent on packaging by covering each aspect in detail, from design strategy to choosing the right substrate that helps secure the shelf life. For instance, the design theme of Munchilicious leverages educating how granola is made from scratch, detailing each ingredient that goes into making it a wholesome and delicious snack.
“Our design used the flat-lay execution to showcase a deconstructed granola pack highlighting every ingredient. The pack also showcases a bowl full of our products right in the centre to draw consumer attention and create a sense of intrigue” explained Munchilicious founder and CEO Rohit Mohan Pugalia. The brand spends around 5% with respect to the design and packaging cost.
For any customer, the packaging is the ice-breaker. It plays a vital role as it is the first thing that a customer/buyer looks at. Packaging has the power to build a perception of any product/brand in the minds of customers. It is also the first step in converting a potential consumer into your buyer. Packaging is given as much importance as product formulation. Packaging needs to be aesthetically appealing as well as compatible with the product inside. Innovation in packaging/applicators also goes a long way in making the usage of the product more effortless, and in differentiating the product from the competition.
Attractive and sustainable packaging is likely to increase the sales of a cosmetic product as that is a way of gaining the trust of consumers regarding the credibility of the product.
“Price becomes secondary if the customer is confident of the cosmetic product. A good packaging in an attractive design with the right placement of the logo and a good description of the cosmetic product helps in creating a lasting identity of the brand in the minds of people. It is usually this high-quality packaging that causes a potential consumer to buy the product,” said MyGlamm’s Baishakhia.”
Feature Image Credit: MyGlamm