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D2C (Direct to Consumer) Business Model: Efficacious Strategy for the Businesses to Grow During COVID-19 Scenario

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D2C (Direct to Consumer) Business Model: Efficacious Strategy for the Businesses to Grow During COVID-19 Scenario International Journal of Research and Review Vol.7; Issue: 11; November 2020 Website: www.ijrrjournal.com Short Communication E-ISSN: 2349-9788; P-ISSN: 2454-2237 D2C (Direct To Consumer) Business Model: Efficacious Strategy for the Businesses to Grow During COVID-19 Scenario Shikha Bhagat1, Shilpa Sarvani Ravi2 1Assistant Professor, School of Business Studies and Social Sciences, Bannarghatta Road Campus, Christ (Deemed to be University), Bannerghatta Main Rd, Pai Layput, Hulimavu, Bengaluru, Karnataka-560076 2Research Scholar, GITAM Institute of Management, GITAM (Deemed to be University), Endada Rushikonda Rd, Rushikonda, Visakhapatnam, Andhra Pradesh 530045 Corresponding Author: Shikha Bhagat ABSTRACT sectors are increasing rapidly, with FMCG goods accounting for 50 % of total rural Introduction: This paper aims to analyse D2C expenditure .1 No-one knows what the future (direct to consumer) e-commerce strategy used holds, not even the experts, for the first time by businesses or companies to sell to end- in a long time. Luckily, history and social consumers directly during Covid-19 in science provide an insight into how the organized retail. Background: The pandemic has fuelled an pandemic will shift the perceptions, explosion in online shopping, yet too many behaviours and buying habits of consumers. brands are only along for the ride, relying on Naturally, these developments would have a their retail partners to share glimpses of first- disproportionate effect on young people party data that show past demand rather than a during their formative years who are clear and predictive road map to future growth. witnessing the pandemic.2 With D2C The roots of direct marketing date back to trade marketing and D2C sale promotions, major catalogues, among the first tools of direct brands such as luggage manufacturer Away marketing. and office supplies manufacturer Quill have Methods: Existing literature on COVID-19 was already taken the plunge, and we expect analysed through secondary information to more manufacturers to sell in 2020 and identify an explosion of D2C (direct to 3 consumer) brands globally and India and its beyond. effect on business and commerce. Social distancing has increased e- Conclusion: D2C is becoming the strongest commerce adoption and digital platforms weapon of the businesses against counterfeiters for a range of needs will continue to be and growing their brand equity at the same time. embraced by customers. Businesses should also extend their partnerships with e- Keywords: COVID-19, D2C strategy, FMCG commerce sites from third parties while also sector, Organized Retailing. collaborating in new ways, such as deeper data sharing or shared warehousing.4 At the INTRODUCTION same time, they should develop their own There is a long history in the fast- direct-to - consumer capabilities and moving consumer goods industry of improve them. For businesses to have a producing reliable growth through mass strong online and offline presence is brands and undeniable success. The FMCG essential.5 market has risen at a faster rate in rural The pandemic is likely to cause two India in the last few years compared to conflicting social behaviours on an urban India. The semi-urban and rural individual level. COVID-19 offers a perfect International Journal of Research and Review (ijrrjournal.com) 499 Vol.7; Issue: 11; November 2020 Shikha Bhagat et.al. D2C (Direct to consumer) business model: Efficacious strategy for the businesses to grow during COVID-19 scenario. opportunity for a significant segment of the direct enhances customer service, improves population to re-evaluate their existing the voice of your brand, and influence lifestyle decisions, make changes and reset almost every part of the consumer journey.10 their lives. You just need to look at the Since 2016, more than 600 such brands have amount of people who have used their entered the market, gouging up over $1.6 newfound time to exercise, start a new skill, billion in funding. Some of these brands or transition to a profession. Sales of include Lenskart, Licious, Zivame, Boat, Peloton bikes, for example, have jumped Wow Skin Sciences, Healthkart, almost 66 percent and LinkedIn has Mamaearth, MyGlamm, Sugar, Country confirmed that A 3x rise in time spent Delight, Atomberg, etc. Avendus anticipates learning has been recorded.2 consolidation activity in the sector in the Brands are pivoting gradually to a next three-to-four years, either as roll-ups or direct-to - consumer (D2C) market model existing large consumer goods companies with the closing of physical stores. D2C buying D2C brands.11 brands have a streamlined proposition that With the restricted lockdown trend, cuts out stores, which is also an important more and more businesses that typically sell component of their omnichannel approach through third-party retailers are adapting by marketing directly to customers across going direct-to-consumer (DTC) to the 'next smartphone and digital platforms.6 A host of normal'. With legacy brands such as conventional FMCG brands have sprinted PepsiCo, Kraft Heinz and Nike taking a towards a D2C plan since the pandemic. slice of the pie alongside younger, perhaps New entrants include Kraft Heinz at Home more agile competitors such as Glossier and with Heinz and Snacks.com with PepsiCo. Dollar Shave Club, the DTC model is DTC brands have a unique benefit because completely expected to take off to an even of their ability to have one-to-one greater extent this year than last.12 relationships with their customers while gathering useful information that would be LITERATURE REVIEW difficult to gather in conventional retail. Several countries around the world This progressively looks like a two-way resorted to lockdowns to "flatten the curve" partnership in which members of the group of the infection during the coronavirus work with brands to co-create new goods pandemic. These lockdowns meant that and services, something that Pattern Brands millions of residents were confined to their calls "direct with".7 homes, industries were shut down and Adopting Direct to Consumer (D2C) almost all economic activity ceased. The strategies provides many opportunities with global economy is predicted to contract by limited investment for consumer brands to over 3 per cent in 2020, the steepest expand to newer markets, increase sales and recession since the Great Depression of the reap higher margins. There are challenges, 1930s, according to the International of course, too. Due to relatively low entry Monetary Fund (IMF).13 Economies like the barriers to competition as well as the United States, Japan, the United Kingdom, adverse effect it produces on the supply Germany, France, Italy and Spain are chain with the current distributor and projected to contract by 5.9, 5.2, 6.5, 7, 7.2, retailer network, this strategy poses major 9.1 and 8% respectively this year. In the risks.8 Unsurprisingly, Forrester's May 2018 first quarter of 2020, China's GDP fell by study indicated that customers can directly 36.6 percent, while South Korea’s purchase specialised goods from brand production declined by 5.5 percent, as the manufacturers to ensure authenticity9. country did not implement a lockdown but In short, the D2C model implies that pursued an aggressive testing, touch tracing you sell your goods directly to the customer and quarantining policy (IE, 2020). In as a company, and in the process, going Europe, France, Spain and Italy's GDP fell International Journal of Research and Review (ijrrjournal.com) 500 Vol.7; Issue: 11; November 2020 Shikha Bhagat et.al. D2C (Direct to consumer) business model: Efficacious strategy for the businesses to grow during COVID-19 scenario. by 21.3, 19.2 and 17.5 percent respectively.14 Figure1: Global Economic Impact across the world due to Covid-19 Source:https://www.bigcommerce.com/blog/ecommerce-trends/#14-ecommerce-trends-leading-the-way Figure2. Global ecommerce sales 2014-2023 The global ecommerce sales will hit a core pillar of their growth strategy and are $4.2 trillion and make up 16 percent of aggressively scaling up investments to overall retail sales. And these numbers are expand their online offerings and only expected to go up as we progress into geographical reach. This model has its the ‘20s. It is important to keep up with the inherent advantages and disadvantages.16 In latest e-commerce developments, including doing so, they are rethinking their whole both backend efficiencies and frontend brand strategies and reshaping them.17 DTC conversion-optimizing experiences, to businesses will need to implement an expand in the 2020 retail landscape.15 omnichannel approach to retool, establish The FMCG companies will attempt closer links with their communities, and to remove all the intermediate stages integrate vertically to maximise margins.18 between themselves and the customer in A first-difference model is used for D2C. The firm will seek to contact the direct-to - consumer (DTC) agricultural retailer or the customer directly. Most major production in two food and beverage retail FMCG players already have e-commerce as sub-sectors in Arkansas, Louisiana, International Journal of Research and Review (ijrrjournal.com) 501 Vol.7; Issue: 11; November 2020 Shikha Bhagat et.al. D2C (Direct to consumer) business model: Efficacious strategy for the businesses to grow during COVID-19 scenario. Oklahoma, and Texas.19 E-commerce and $24 billion in 2017 to $84 billion in 2021. home delivery will assume a much higher The study ties e-commerce market growth prevalence of customers in the purchase to factors such as increased internet pattern. Years will advance the pace of penetration and increased smartphone use, digitalization of the future market. among others, according to a latest joint Therefore, in the long term, businesses that report by Deloitte and the Retailers digitally transform their route to market and Association of India (RAI). develop robust direct to consumer capabilities, like e-commerce, will win.
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