DTC (Direct To Consumer) – The New Hotness

DTC (Direct To Consumer) or D2C (Direct 2 Consumer) refers to selling products directly to customers, bypassing third-party retailers, wholesalers, or any other middlemen (according to Wikipedia). This way of selling is not new, there are brands such as Bose that have been selling directly to consumer for decades. What has really gotten people excited are markets like India where new brands can be created by cutting out the middlemen and marketing directly to the consumer via the internet.

Top of mind is boAt which is now one of the largest wearable electronic brands (earbuds, earphones) and set to IPO on the Indian exchanges with an estimated market cap of $1.5 billion. This has kick started an avalanche of funding for DTC startups and DTC aggregators. What really caught my attention was a Bombay based startup called Elevar Sports that is selling cricket bats and running shoes. Honestly, 3 years ago I would have been like good luck to them…now I can see these guys have a chance to really breakout and make a name for themselves.

Their website explains how they compare against international shoe brands (cough, cough, Nike, Adidas, cough). I haven’t ordered any products from them, but I plan to since I’m an avid runner and I want to see how it stacks up against the brands I know.

I’m rooting for them, because the more companies like this that succeed it can only help this country grow. Just like the whole world looks to India for pharma, we should be like that for many other products and industries.

Some of the existing product categories where you have DTC include – jewelry, cosmetics, skincare, clothing, shoes and small electronics to name a few. What I find missing are the categories where you need servicing of the product as well.

Products such as cars, water purifiers and air conditioners (AC) are at the top of the list. The two players I see that will go down this path are Tesla and Aquaguard. Everyone knows about Tesla so I will talk about Aquaguard the water purifier that is sold by Eureka Forbes. Aquaguard has been around for decades and has the lock on the water purification space in India for good or bad. They most likely manufacturer their own products and/or use a contract manufacturer like Dixon when their production goals can’t be met. Then they traditionally sold via offline stores like Croma and Vijay Sales. Once you buy the product you would get it installed by a Aquaguard dealer who would also service the unit.

Moving forward, I can see more and more of a push by Eureka Forbes to have customers by the product from their own website or an e-tailer like Amazon or Flipkart. This would increase their margins and also give them direct access to their customer base. They of course will need to really spend on their technology such as their app and field services team. Currently, when a maintenance service call is requested 99% of the time the technician will call and ask “where do you live” and “what is the problem”. Obviosuly all the information is in the system but their technicians are not trained. Everyone wants that Swiggy, Uber or Ola experience where the product just shows up at the requested time.

The other product category is white goods such as ACs. After the AC is bought, installed and the warranty expire you search for a local AC company that can provide an annual maintenance contract and/or repairs of the AC. The idea situation is that you buy an AC unit and the same company installs and maintains the servicing of it through the life of the unit and will even buy it back to complete the lifecycle of the product. So the full-stack product would look like: manufacturing -> selling -> installing -> servicing -> buyback. No excuses, no bullshit and the product just works.

I love the marketing campaign from Elevar for their shoes

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