D2C brands to drive India’s retail market growth as big players enter the space

The current D2C market in India is being driven by Gen Next enterpreneurs who are inspiring traditional conglomerates with their New Age approach. Tata and Reliance have already announced plans to launch super apps while the Aditya Birla Group has decided to increase focus on the D2C and e-commerce space. Aditya Birla Fashion and Retail (ABFRL) recently announced plans to set up a new subsidiary for building a portfolio of New Age, digital brands (D2C) across fashion, beauty and allied lifestyle segments. To be known as the House of Brands, the initiative will help it align itself with evolving markets, says an Inc4 report. ABFRL will join startups such as Globalbees, Mensa Brands, Thrasio, Good Glamm Grup, GOAT Brand Labs to build a new brand portfolio, says Ashish Dikshit, Managing Director, ABFRL.

New Age consumers in focus

Many of these brands may not be able to expand their operations in digital space. Yet, they can leverage ABFRL’s tradition, experience and network by acquiring a plethora of brands like the company. Most of these brands are launching products targeting a specific set of consumers. They aim to tap evolving group of New Age consumers by growing their digital operations over the next five to seven years. They also plan to help ABFRL grow its brand portfolio by investing in other selective brands, adds Dikhshit.

The House of Brands business of Aditya Birla Fashion subsidiary will initially include 8 to 10 brands acquired through own capital. These small companies will have the required potential to become large brands over the next 5-10 years.

E-commerce majors take to D2C

With an expected market size of $100 million by 2026, D2C brands are expected to be the biggest drivers of retail market. In 2021, these brands clinched around 174 deals to raise $1.81 billion capital. This not only resulted in the creation of thousands of new brands but also gave enablers and digital sellers new growth opportunities by launching new disruptive models such as ecommerce roll-ups, houses of brands, etc.

The first D2C Fulfilled by Amazon (FBA) brand was acquired by US-based Thrasio. The concept was later popularized by other models set up by Nykaa, GlobalBees, Mesa Brands, etc. In 2022, Mensa Brands acquired Florona, an aromatherapy D2C, Estalon, a Kolkata-based leather brand and TrustBasket, a gardening startup. Now, the D2C space is being coveted by even e-commerce majors like Flipkart which has launched the Flipkart Boost program for these brands. Last January, Amazon India also introduced the Amazon Global Selling Propel (AGSP) Accelerator with around 10 startups.

Best products at affordable rates

Through its D2C foray, Aditya Birla Fashion aims to become not just a marketplace or a platform for brands but also facilitate brand-building and provide consumers with best products at affordable prices. An expert in building brands, it plans to focus on building distinguished brands for consumers, adds Dikshit. ABFRL also plans to scale up existing brands with the help of Rs 1,500 crore investments made by Flipkart last year. Other plans include tapping emerging high-growth categories such as innerwear, athleisure, casual wear and ethnic wear.

The brands recently acquired by ABRFL for its D2C foray have already raised investments worth millions form VCs. The company plans to use these funds for expansion over the next 12-18 months. It will raise external funds once it manages to scale up its D2C operations.