Direct-to-consumer companies clocked sales growth of 2 to 3.5 times this festive season as revenge shopping and faster delivery times spurred buying, following the second wave of Covid-19.
After a muted festive season sale last year, the companies had been cautiously optimistic because of mixed consumer sentiments.
However, a shift to offline sales, higher frequency of orders and bigger discounts were some of the key trends that dominated this season, according to brands such as WOW Skin Science, Sugar Cosmetics and Bombay Shaving.
“We grew 40 percent this October,” said Manish Chowdhary, cofounder of WOW Skin Science, which sells hair and skin products. “Consumers increasingly shopped from offline stores as there is an online fatigue. Seeing this, we plan to focus more on offline activities for the coming months.”
Beauty and personal care brand Plum clocked 2.5-times growth in sales compared to last festive season, with offline retail emerging stronger.
Tanvi Malik, cofounder of High Street Essentials, which owns online fashion stores FabAlley and Indya, said that while offline sales had fallen dramatically during the pandemic, it has recovered now.
However, she added, consumers are now getting increasingly comfortable with online purchases and easy return policies. Malik did not foresee offline sales going back to pre-COVID levels.
With people returning to offices, and an increase in community gatherings and social activities, D2C companies have noticed a strong recovery in certain product categories that had little traction since the pandemic. For Sugar Cosmetics, the lip category of products, a core business, registered strong sales.
“We are seeing a strong recovery. We achieved 50 percent growth this month with offline sales performing better than online,” said Vineeta Singh, CEO of Sugar Cosmetics.
As restrictions on movement are lifted, categories such as sunscreens, travel wear and make-up items are picking up, D2C founders said.
“With things opening up, people travelling, returning to offices and gearing up for the festivals, there is positive sentiment across,” Malik said. “We see that reflected even in the buying patterns, with people picking more radiant and vibrant colours.”
Malik said High Street Essentials products clocked 100 percent growth in October month-on-month.
Costs going up
The cost of customer acquisition has gone up with D2C companies onboarding celebrities and tying up with influencers. However, it seems to be paying off with Sugar Cosmetics and Bombay Shaving Company getting 50-60 percent of their business from new customers and non-metros.
With competition intensifying, brands and marketplaces have upped their game of discounts, said Deepak Gupta, COO of Bombay Shaving Company.
The companies have also ramped up their supply chains, and set up more fulfilment centres and warehouses to cut down on delivery time.“Certain categories are delivering in an hour or 30 minutes and hence it is becoming a focus for us as well,” said Gupta. “We are now delivering at the most in a day or two, depending on the location, but we are also looking if there is a growing customer demand for same-day delivery. If so, we also need to be ready to do it.”