This festive season’s top trend: online consumer brands comfortable in their own skin

Sales on the websites of direct-to-consumer companies have spiked during the ongoing festive season compared with sales on marketplaces such as Amazon and Flipkart, thanks to effective marketing campaigns and faster order deliveries.

Nestasia, a Kolkata-based maker of home decor and accessories, gets more than 70% of its sales from its own website and offline stores, lowering its reliance on online marketplaces to low double digits, co-founder and chief executive officer Anurag Agrawal, toldMint.

More than 50% of the sales of Shark Tank-fame oral care brand Perfora has been generated from its website in the festival months, signalling a major shift in strategy for consumer brands, founder Jatan Bawa said.

Consumer brands have outpaced marketplaces during the recent sale period, recording a 64% growth in orders from last year, compared to the 26% growth on marketplaces, according to estimates from GoKwik.

The e-commerce enablement platform works with over 10,000 consumer companies including Lenskart and Shoppers Stop and helps them with managing orders, expanding cash-on-delivery and reducing returns.

“This shift reflects growing shopper confidence and trust in D2C brands, making them inert to marketplace sales,” said Chirag Taneja, co-founder and CEO of GoKwik.

“The charm of marketplaces is slowly fading in the minds of consumers. Brands are also trying to build a moat through their own websites because it can be a key differentiator in a crowded segment,” Perfora’s Bawa toldMint.

Better visibility

India’s festival period is considered the busiest shopping season of the year and is critical for manufacturers and retailers of electronics, consumer durables and apparel, which unwrap new models, offer discounts, and roll out easy payment options to attract customers. Consumers, too, often give in to indulgences to celebrate festivals such as Raksha Bandhan, Dussehra, and Diwali.

Marketplaces including Amazon, Flipkart and Meesho have been integral sales channels for D2C companies, offering easy access to customers. However, with online shopping booming, users are far more comfortable shopping through brand websites, especially if they have tried the products before, according to Archana Jahagirdar, founder and managing partner at early-stage venture capital firm Rukam Capital.

“There are a lot more tools available for consumer brands today which can help with better visibility. This has also reduced dependence on marketplaces,” Jahagirdar said. Building a good product, effective social media marketing along with better audience positioning are expected to help bring down customer acquisition costs in the long run.

Many companies have trimmed marketing expenses on marketplaces this year. Perfora’s Bawa said that its marketplace spending is down 35% from last year, placing confidence in its website to convert customers.

Marketplaces charge commissions (ranging from 2% to 30%, depending on the category) on every sale that takes place through their platform, reducing the earnings of sellers. Companies are also required to spend on advertising their products to stand out in the clutter of online marketplaces.

Founders of D2C companies are now working towards building clear differentiators–usually through extensive marketing efforts or discounting—on their own websites.

Nestasia’s Agrawal said its promotional campaign with actress Sanya Malhotra helped lure users to make their homes a place they wouldn’t want to leave. Perfora introduced a ‘buy 1 get 2 free’ offer at the beginning of the festive season.

Need it now

This year, consumers’ need for quicker deliveries, often within 24 hours, has prompted companies to tie up with hyperlocal logistics players to satisfy their customers. Nestasia has inked partnerships with Shadowfax and Porter, significantly cutting down its delivery timelines, Agrawal said.

“More than 10% of all our orders are now delivered within hours. Customers are increasingly opting for the express delivery option on our website as well,” Agrawal noted.

Nestasia also expanded its offline presence to 10 stores this year, aiming to use them as hubs for faster deliveries. It aims to touch 15 stores by the end of the year, Agrawal said.

Perfora isn’t too concerned about delivering orders quickly but is willing to spend on effective social media marketing and consumer research, its co-founder Bawa said.

E-commerce volumes in the first 10 days of the festive season were 16% higher than a year earlier, while gross merchandise value too rose on similar lines, according to data by Unicommerce.

Growth was driven by categories such as healthy snacks and eatables, which expanded over 65% year-on-year, kitchenware order volumes that were 34% higher, and apparel volumes that increased over 22% during this period.

Overall, e-commerce companies expect sales to jump 35% this festive season, according to a report by recruitment and hiring services platform TeamLease, aided by the rise of quick commerce and consumer spending capacity.