Domestic D2C market likely to reach GMV of $35 billion by 2027: Redseer

The report said that third-party logistics (3PL) would ride on the back of the Indian D2C market growth

With brand creation becoming more straightforward and incentivised, the Indian D2C (direct-to-consumer) market is expected to achieve a gross merchandise value (GMV) of $30 billion to $35 billion by 2027, according to a report by Redseer Strategy Consultants. This represents a compound annual growth rate (CAGR) of around 40 per cent for 2022-27, over three times that of the broader retail market and 1.6 times that of the e-commerce market for the same duration.

The report emphasises the logistics needs of the burgeoning new-age D2C brands in India and their inclinations towards third-party logistics partners. One of the primary beneficiaries of the D2C market expansion comprises third-party logistics providers (3PLs). In 2022, the D2C shipments totalled approximately 0.5 billion, with projections indicating a significant surge to 3 billion D2C shipments by 2027.

 

"3PL solutions align well with the D2C segment as demand fluctuates across cities and regions, and the requisite logistics investment is considerable," commented Mrigank Gutgutia, partner at Redseer. "Brands are in search of dependable logistics collaborators with extensive reach throughout India to guarantee a uniform experience."

To decipher the essential success components for 3PL entities catering to D2C brands, Redseer Strategy Consultants curated the report with insights from over 60 emerging new-age D2C brands in India. For instance, within the fashion domain, return management is pivotal for numerous brands. However, smaller D2C brands prioritise low-cost shipments and high shipment protection to curtail losses from damages.

In the beauty and personal care (BPC) segment, given the product's distinct nature, there's a need for a cold-storage supply chain capable of handling delicate items. Medium to large BPC brands also vie for expansive reach and swift delivery, making these elements particularly significant.

The report noted that for the home and general merchandise category, a straightforward insurance process with minimal hassles is essential, which also demands significant shipment protection against potential damage.

In the packaged foods and beverages (PFB) sector, due to slender margins, economical shipping is vital. Moreover, with brands seeking prompt deliveries in cities, dense networks facilitating swift deliveries are crucial.

The study also revealed that the requirements of D2C brands diverge considerably, and they select 3PL partners that resonate with their specific context and demands. The needs of these brands span several considerations, such as shipment protection, cost, punctuality, geographical coverage, and return management.

Among the 3PL participants, the Redseer report identified Delhivery, followed by Bluedart, as the brands' preferred partners, given their superior technology and prompt, trustworthy deliveries across a broader array of pin codes. Additionally, entities like Shadowfax and Xpressbees are chosen by brands for whom cost-effective shipping is a primary consideration. Notably, Shadowfax's reach is predominantly metro-centric. Another provider, Ecom Express, is recognised for its expansive presence, particularly in Tier 2 and beyond cities.