Shoptimize estimates that the selected brands will be able to drive a combined annual GMV of INR 500 Crores via their D2C eCommerce channel.
Explain your business model? How does it work?
We are a SaaS company and have a subscription-based commercial model. The model includes a one-time setup/integration fee, a recurring monthly subscription fee and in addition, a revenue share component. The revenue share component is a unique business model that aligns with our clients’ goals and success, and has worked very well for our customers.
Industry insights on how the pandemic has accelerated e-commerce sales
India’s digital transition has been accelerated as a result of the pandemic. Consumer buying habits have shifted considerably. The amount of e-commerce orders in India surged by 36% in the last quarter of 2020 with the personal care, beauty and wellness segment being the top sought after category. This has resulted in a massive increase in D2C brands. When comparing pre-covid and post-covid times, our clients witnessed a 300 percent increase in GMV from their D2C eCommerce store. Social commerce also saw an uptick with an increase in usage of social media platforms by 50% during lockdowns.
Change in consumer behaviour – buying patterns and preferred mode of payments
Digital adoption was already gaining traction in India, primarily due to high level of internet and mobile penetration, the pandemic accelerated this shift. The consumer has moved to value-based purchasing and online shopping. Consumers are more aware of their health and are focusing on sustainable living more than ever. On our platform we noticed a shift in spending and choosing the right digital payment platform and options. A lot of consumers have now started opting for ‘Buy Now Pay Later’ or ‘Zero cost EMI’ options especially for high value products. We are heading towards a cashless society as digital payments are here to stay. One of our clients, who is India’s largest consumer durable brand, saw 40% orders opting for BNPL during the pandemic.
How D2C platforms can help brands in driving sales ahead of this festive season
The bulk of eCommerce action will happen during the upcoming festive season. We are forecasting a growth of 400% in GMV when compared to last festive season for our clients. D2C platforms can help brands optimize their websites for the increased volume of traffic. Once a brand has set up it’s website to drive online sales, the next challenge is to grow revenue and eventually to make this channel profitable. It is this journey that is a steep uphill battle for many. Once the first set of transactions have come in, brands look to scale their spends on digital marketing channels. But in order to ensure that you can keep your acquisition costs to as low as possible and eventually less than your margin on the product, you need the ability to process a lot of data. This data pours in from all sources and soon becomes overwhelming for internal teams as well as external marketing agencies to process. It is often a task just to view all of this data in one place to aid decision making. This is where a D2C platform like the Shoptimize Growth Platform becomes a game changer. It can collect and analyze data, deriving insights and recommended courses of action to drive growth. It can help optimize campaigns and also deliver personalized experiences for consumers
Current and expected D2C trends observed ahead of the festivals
Online shopping will dominate the retail ecosystem with more and more direct to consumer brands jumping on the bandwagon. For example, last year the 30 day Diwali sales period saw a 484% increase in the online store visitors and sessions. Few expected D2C trends can be seen with D2C brands leveraging the easy financing options or opting for roll-up eCommerce firms. From a consumer standpoint, users are looking for niche product lines and more robust payment options. A growing trend during the festive season is increased volumes of international orders especially in the FMCG & online gifting sector. D2C brands in the Food and Beverages sector saw a 152% growth in revenues last festive season. The overall industry has a very positive outlook.
Shoptimize’s role in driving brands’ growth – channels and strategies
As a company we believe in technology and AI as enablers for growth and have invested in it deeply to build scalable and sustainable solutions for our customers.
D2C growth is all about finding several growth opportunities and executing them at scale. Most of these growth cycles are short lived and if an opportunity is missed, it is hard to get it back. The Shoptimize Growth Platform drives growth strategies for D2C brand marketers and business owners, through one powerful engine. In addition to this, we recently launched the “Accelerator Program”, an exclusive program, aimed at helping consumer brands achieve exponential revenue growth. Through this program, Shoptimize estimates that the selected brands will be able to drive a combined annual GMV of INR 500 Crores via their D2C eCommerce channel.
This program is focused on maximizing revenue with zero risk to the brand. Participating brands are already seeing 300% growth month over month. Shoptimize plans to work with 100+ high potential brands over the next one year and is planning an investment to the tune of INR 100 Crores to fund this program.
However, beyond that, our endeavour is to bring about a cultural change in our customers’ organizations. For the first time, with access to all the data and with technology to infer insights from this data, they can now make informed decisions that will drive growth. Our aim is to contribute to this positive change among our customers.
How Shoptimize is ahead in this space?
A brand’s biggest ally in driving D2C eCommerce growth is data. But very often, this data is not actionable. It takes a very specific skill set to be able to process this data and find meaningful actions to drive growth. This skill set is short in supply and often hard to train and retain. Even if a brand is able to build a great team of analysts either within the company or with digital marketing agencies, the analysts are constrained in terms of how much data they can process. The Shoptimize Growth Platform just does that by driving growth strategies for D2C brand marketers and business owners, through one powerful engine. The Shoptimize Growth Platform enables this positive change, reducing the over dependence on gut feel and individual brilliance. Instead it encourages a data driven culture, focused on scientific and data backed decision making, resulting in predictable and sustainable growth.
Future of eCommerce and way ahead for D2C brands
India’s digital transformation has taken off in a big way over the last several years and it is expected to grow and emerge with large brands launching their digital first arms. These D2C brands need to stay in competition by leveraging AI to harness customer data and insights. By using technology and innovation, AI enabled decision making, advanced forecasting and recommendations, localised content and native language interfaces, conversational commerce and social commerce will ensure that brands succeed and lead their way to success in the coming years. Moreover, according to the Direct-to-Consumer Purchase Intent Index, over 80% of consumers worldwide are expected to buy something from a D2C brand over the next five years. Clearly, the D2C trend is here to stay and brands seeking to grow should capitalise on it. In fact, according to estimates by Avendus Capital, direct-to-consumer (D2C) brands could be looking at a $100 billion consumer opportunity in India by 2025.
Any new projects in the pipeline? & Further plans for the funding?
We recently launched the Shoptimize Accelerator program, An exclusive ‘by invite only’ program for high performing consumer brands. This program is aimed at helping eCommerce brands achieve exponential growth.
We are in advanced stages of discussion with investors for funding for product development, business expansion and hiring.
Source: Business World
