Over the last seven years, India has witnessed one of the largest consumer brand creation cycles in its history. Hundreds of digital-first brands have emerged across beauty, personal care, wellness, nutrition, apparel, food service, pet care, home products, and consumer electronics. What started as a niche online phenomenon has become a meaningful part of India’s consumption landscape.
Yet the narrative around D2C is beginning to change. The first phase was characterised by abundant capital, aggressive customer acquisition, rapid brand launches, and valuation expansion. The next phase is likely to be defined by capital discipline, profitability, omnichannel expansion, and strategic consolidation.
Importantly, this is not the end of the D2C opportunity. It is the beginning of its maturation. The categories that have witnessed the greatest D2C activity are those with high gross margins, low entry barriers, strong premiumisation opportunities, and high digital discoverability.
Beauty and personal care has arguably seen the highest degree of fragmentation, with hundreds of brands emerging across skincare, cosmetics, derma-care, Ayurveda, men’s grooming, and premium beauty. Wellness and nutrition have witnessed a similar trend through supplements, protein products, healthy snacks, and preventive healthcare offerings. Apparel has seen the rise of digital-first brands such as Snitch, Bewakoof, BlissClub, and The Souled Store. Food service has also experienced significant disruption through cloud kitchens and digital-native brands.
Despite this proliferation of brands, India’s D2C opportunity remains far from saturated. Several large consumer categories remain relatively underpenetrated from a digital-native brand perspective. The first generation of Indian D2C brands proved that consumers were willing to discover, trust, and purchase products online. Many brands scaled rapidly, achieving meaningful revenues and building strong consumer communities. However, scale and profitability often did not arrive simultaneously.
Customer acquisition costs have risen steadily as Instagram, Google, Amazon, Flipkart, and increasingly quick-commerce platforms became crowded channels. Brands spent heavily on influencer marketing, performance advertising, discounts, logistics, marketplace commissions, and inventory expansion. The original D2C thesis was built on efficient digital distribution, which ironically has become more expensive.
The challenge runs deeper than rising acquisition costs. Most D2C brands derive 60-80% of their revenue from just two or three platforms: their own websites (driven largely by Meta and Google advertising), marketplaces such as Amazon and Flipkart, and increasingly quick-commerce platforms. Each of these channels is controlled by a platform that determines algorithms, visibility, and economics.
The brands that have built greater resilience are often those where no single platform contributes more than 25-30% of revenue. Achieving this diversification requires expansion into modern trade, general trade, exclusive retail stores, and owned channels. It is operationally more complex and capital-intensive, but increasingly represents the most effective hedge against platform risk. The higher-cost-of-capital environment is making these economics far more important. Investors today are focusing less on top-line growth and more on contribution margins, repeat purchase rates, customer lifetime value, cash generation and channel diversification.
The question is no longer whether India’s D2C ecosystem can continue to create brands. The more important question is, can the next generation of brands create profitable, durable businesses in a world where capital is no longer abundant? That begins with understanding how the global cost of capital has changed, why investors are behaving differently, and why the rules of consumer brand building are being rewritten.
(This is the first of a two-part series)
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.