The landscape of consumer goods in India is undergoing a significant transformation, primarily driven by the surge of digital brands. This transformation is shaped by various trends and economic factors, as evidenced by multiple sources.
- Growth of Digital Brands: Digital brands, particularly in the Direct-to-Consumer (D2C) sector, are experiencing rapid growth in India. In recent years, the D2C sector has seen significant milestones, including the emergence of its first unicorn, Licious, and several brands like boAt, Mamaearth, Wakefit, and Country Delight crossing Rs 100 crore in revenue in a short span. The D2C sector in India is projected to be worth $100 billion by 2025, up from $44.6 billion at the end of fiscal year 2021. This growth is driven by a digital-first consumer mindset and the proliferation of digital-native brands that offer exclusivity, personalized engagement, and products that are more conscious of communities and the planet.
- Investment and Marketing Dynamics: There has been a 65% increase in Indian brands developing their own websites, leading to more self-shipped orders. However, with the rise in customer acquisition costs and changes in digital marketing due to privacy updates and the phasing out of third-party cookies, brands are facing challenges in maintaining profitability and growth. To adapt, brands are focusing on creating a unique identity through content, community, and commerce.
- Technology and Infrastructure: The technological infrastructure supporting these digital brands is also evolving. Traditional commerce tech platforms are being replaced by modern, agile, full-stack technologies purpose-built for digital-native brands. The global D2C market is expected to reach $1.1 trillion by 2025, with the US and India contributing significant shares.
- Government Policies and Economic Growth: The 2023-2024 Union Budget of India is set to improve consumer demand, with initiatives aimed at increasing the disposable income of the middle class and enhancing farmer incomes. The government’s focus on AI and digitization is expected to drive shifts in consumer behavior. Additionally, increased infrastructure development and a focus on rural infrastructure are likely to stimulate rural demand for branded consumer goods.
- India’s Internet Economy: India’s internet economy is projected to reach $1 trillion by 2030. This growth will be underpinned by a shift in consumer behavior and the business ecosystem, including the digitization of traditional businesses and a thriving startup ecosystem. With India’s internet users increasingly adopting digital platforms, sectors like B2C e-commerce, HealthTech, InsurTech, and SaaS are expected to see substantial growth.
- Consumer Preferences and Digital Adoption: Around 80% of consumers now prefer digital-first experiences, signaling a significant shift towards online platforms. This preference is particularly notable in India’s smaller towns and Tier 2+ locations, where consumers are demonstrating a greater openness to new brands and personalized services.
In summary, the digital brand ecosystem in India is experiencing rapid growth and transformation, driven by evolving consumer preferences, technological advancements, and supportive government policies. This trend is reshaping the landscape of consumer goods in India, presenting both challenges and opportunities for businesses and investors.