D2C consumer brands are turning to bulk procurement, supply-chain efficiencies, while taking selective price increases where cost pressures cannot be absorbed, to manage rising input costs, founders of Plum, Open Secret and Kapiva said at a Flipkart roundtable on Wednesday.
“There is no denying that there is pressure on input costs,” said Shankar Prasad, founder, Plum. The company, he said, has focused on buying at the right time and bulk procurement to manage costs. Where these measures have not been sufficient, Plum has taken a price increase this year. Prasad said the company hopes inflationary pressures remain under control, given the impact they could have on consumers.
Open Secret founder and CEO Ahana Gautam said the company has focused on procurement timing and supply-chain efficiencies to limit the impact on consumers. The brand has stocked raw materials and packaging material ahead of cost increases, while also identifying inefficiencies in its P&L. It has expanded from one warehouse serving the entire country to three warehouses to manage supply-chain costs.
Kapiva founder Anuj Sharma said logistics and cost of goods have become more expensive. The company has also worked on procurement and packaging efficiencies, while resorting to price increases as a last measure. “The last resort was obviously to increase prices, which is also something that we have done,” Sharma said.
The founders also pointed to easy financing options such as buy-now-pay-later (BNPL) as one way of managing the impact of higher prices without putting the entire burden on consumers.
Sharma said Kapiva had initially been reluctant to introduce BNPL given its average order value of around ₹1,000, but launched the option about six months ago. Around 20% of its prepaid transactions subsequently shifted to BNPL, he said.
Sharma said the BNPL option was introduced partly after price increases, as the company sought alternatives to passing the entire cost increase on to consumers.
On further price increases, the founders indicated that there were no immediate plans, and any increase, if implemented, could take time to reflect in the market because of available inventory levels.
The brands also said they had not seen a significant slowdown in demand following recent price increases, which have largely been in the single-digit range. Flipkart’s Nishant Dalal, vice president, consumables, FMCG and healthcare, said festive-period promotions and deals could also support consumer demand despite price increases.