Newer direct-to-consumer (D2C) brands are getting into the omnichannel mode at a much faster rate as consumers increasingly prefer a touch-and-feel experience apart from convenience.
Startups such as Snitch, Solethreads, Pilgrim, BlissClub and Mokobara are making an offline foray in less than three years or even earlier, as compared to the 5-9 years on average that D2C brands such as boAt, Mamaearth, Bluestone, Licious, Melorra, Plum took.
Toys brand Jammbo, for instance, has expanded to more than 20 states within a year of starting its operations. Fashion brand Snitch,founded in 2019, already has 25 stores operational across Bengaluru, Hyderabad, Pune, Dehradun and Mumbai. “By 2025, we plan to launch more than 40 stores,” Siddharth Dungarwal, founder and CEO, Snitch, told FE. Herby Angel, a D2C brand that manufactures ayurvedic products for babies, was founded just last year but already runs more than 1,300 retail stores across 13 states.
While many startups were reluctant to go offline as they felt it would be asset-heavy and expensive, they now realise that the economics eventually works out. As Vikram Gupta, founder and managing partner, IvyCap Ventures, points out, there is a multiplier effect. “Also, there are many offline models with different economics one can choose from, such as COCO (company-owned, company-operated) and FOCO (franchise-owned, company-operated) models,” Gupta said.
Surabhi Sanyukta, vice president, investments, BlackSoil, believes offline stores help reach traditional consumers and establish credibility.
“Reports show that in-store average order value (AOV) is two-to-three times higher than online,” she said, adding that offline stores also tend to have a 50-60% higher conversion rate.
Gaurav VK Singhvi, co-founder, Avinya Ventures, an early-stage VC firm, points out that the success of the early D2C brands paved the way for newer brands in offline markets. The incumbents had already tried and tested different offline models across different geographies and product categories. Distributors were also more willing to partner with these new-age brands early in their journeys due to the success of established D2C players like SUGAR Cosmetics, Mamaearth and boAt.
GIVA, Beco, Nat Habit, Tagz, Hair Originals, Nestasia, Minimalist, Jimmy’s Cocktails and The Sleep Company are some of the other D2C startups founded in or after 2019 and are fast expanding their offline presence. GIVA currently operates more than 130 outlets, The Sleep Company recently opened its 100 outlet, Beco has a presence in 10,000 retail stores and cricketer Shikhar Dhawan-backed D2C snack brand Tagz sells through 5,000 retail stores across 22 cities.
Entrepreneurs today are also more aware that an offline presence is key for growth as it offers touch and feel, brand visibility and trust, which eventually drive online sale as well. Beauty and personal care D2C startup Pilgrim was founded in 2019 as an online-first brand. But post-Covid, there was a strong demand for retail experiences and thus it decided to jump into the offline space by early 2023.
Today, it has four exclusive outlets in Nashik, Hyderabad, Mumbai and Mohali and a presence across 4,000 general trade and modern trade stores in 200 cities. By the end of 2024, it is aiming to open 11 more exclusive outlets and have a presence across 10,000 outlets. At present, offline contributes 22% of the total business and by this year end, it expects 35% contribution from offline.