In India, FMCG brands rethink online only DTC

Major brand owners are diversifying their approaches to some of the fast-growing new brands that had blossomed during the pandemic by trying out their draw in brick-and-mortar retail.

Why it matters

The story, based on reporting by the Economic Times on several Indian fast-moving-consumer-goods firms including Dabur and Hindustan Unilever, points to a deeper trend in direct-to-consumer (DTC) brands.

The opportunity for DTC brands in India remains vast, even though around the world a digital advertising-driven boom in these kinds of brands is slowing in a more complex, more mature competitive environment. In that case, physical store or supermarket presence becomes increasingly important.

What’s going on

While DTC, and e-commerce more broadly, has grown fast in India, physical retail including Kirana stores still dominate revenues at 85% compared to e-commerce’s between 5-6%.

It’s also critical to remember that e-commerce is inherently more costly. Physical stores can help to protect margins.

• Speaking to analysts, Dabur India’s CEO Mohit Malhotra explained that by bringing digitally exclusive brands to physical stores, the firm is looking to “connect with younger consumers and then shift them back to traditional trade to build a larger business.”
• Other executives quoted by the Economic Times note that e-commerce has been incredibly useful to test new product ideas without having to embark on a national roll-out.

Another headache, however, is whether DTC’s growth is helping to find new buyers or whether it’s the same buyers switching to online channels. Ultimately, this is all about convenience.

Sourced from the Economic Times, WARC. [Image: Unsplash]