Traditional FMCG Giants Enter India’s Lucrative D2C Market: Acquisitions and Digital-First Strategies

India’s direct-to-consumer (D2C) market has experienced significant growth in recent years and is projected to reach a size of $100 billion by 2025. This market encompasses various sectors, including fashion, food and beverage, and logistics. As of 2021, India had over 800 D2C startups operating in the country, such as Nykaa, First Cry, BoAt, Chaayos, Coolberg, Dogsee Chew, DropKaffe, Happilo, and more.

The potential of this market has attracted traditional FMCG companies like Dabur, ITC, Marico, Wipro Consumer Care & Lighting, Parle Agro, who are venturing into this space through acquisitions or by establishing their own digital-first brands. ITC, for instance, has announced the acquisition of Sproutlife Foods Pvt Ltd, the parent company of the D2C brand Yogabar, as well as a stake in Mother Sparsh, an Ayurvedic and natural personal care brand. ITC is increasingly focusing on innovation and customization to drive growth. Within its food section, it has Aashirvaad ‘Meri Chakki’, while in personal care, it offers ITC Engage Fragrance Finder and Smart Skin Advisor. Similarly, it operates, a platform for customizing notebook covers.

Marico has made acquisitions in the D2C space by purchasing three brands: JustHerbs, True Elements, and Beardo. The company aims to achieve revenue of Rs.450-500 crore in FY24 from its digital-first portfolio.

Dabur India, a consumer goods company, has softly launched its own D2C channel called DaburShop. Initially, DaburShop offers a limited range of products and plans to gradually expand its assortment to provide consumers access to the complete Dabur product range, including Ayurvedic medicines. Some of their previous e-commerce launches include the Real Health range of Superfood Seeds, Dabur Baby Diaper, Dabur Cold-Pressed Mustard Oil, Dabur Ghee, and Vatika Select range of shampoos.

Wipro Consumer Care has made 10 investments in D2C brands, including MyGlamm (BPC), Ustraa (male grooming), Power Gummies (vitamin supplements), The Ayurveda Co (Ayurveda-based personal care), Soulflower (natural personal care), and Gynoveda (women’s health).

With approximately 700 million Internet users and 190 million online shoppers, India possesses the third-largest digital shopping base globally, following the United States and China. D2C brands can achieve efficient growth by maximizing returns on marketing investments through effective targeting, acquisition, conversion, retention, and advocacy. This approach will attract more customers, unlock larger sales potential, and increase market share in the long term.

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