A recent poll by MMA India and Publicis Commerce found that 63 percent of direct-to-consumer (D2C) enterprises are not profitable at all, and 80 percent have not yet achieved profitability. Twelve percent of Direct-to-Consumer businesses have declared profitability, according to the survey on March 6, 2024. Twenty-five percent of those same enterprises claimed they don’t track profits since they’re part of bigger ecosystems. Businesses and customers alike have taken notice of the Direct-to-Consumer (D2C) model in recent years due to the improved convenience and individualization it promises in online purchasing. As conventional retail outlets were forced to close or experience significant interruptions due to the COVID-19 pandemic, Direct-to-Consumer brands unexpectedly benefited. New data, however, cast doubt on the viability of the once-booming Direct-to-Consumer market.
People began spending more time online to purchase and have their customized goods delivered to their doorstep after the COVID-19 pandemic hit. This marked the beginning of the rise of the D2C market. During that time, Direct-to-Consumer enterprises seemed to be having a blast. They provided user-friendly digital platforms and encouraged direct communication with customers. There was a spike in demand for D2C products as a result of consumers going online to fulfill all of their purchasing needs during the nationwide lockdown.
In addition, Direct-to-Consumer businesses fostered client engagement and loyalty via individualized service, tailored products, and focused marketing. New evidence reveals that Direct-to-Consumer businesses may not have been as successful as expected, even though the pandemic presented a fantastic opportunity for them to solidify their position in the market.
A growing number of D2C brands have emerged in the past few years. The result is a saturated market where new players are finding it tough to carve out a niche for themselves. The proliferation of products and services available to consumers has made it more challenging for upstart businesses to win their trust and business. A pricing war has ensued as a result, making it more difficult for upstart brands to compete with more established ones that can take advantage of economies of scale.
Total Addressable Direct-To-Consumer (D2C) Market in India From 2015 to 2025
Cost Plays a Crucial Factor
The rising cost of acquiring new customers has made it more challenging for D2C firms to do so affordably in recent years. Brands have to spend more money on ads to stand out from the crowd when the competition heats up. This can be particularly challenging for up-and-coming firms without the resources to compete with more well-known names in the industry.
Brands now pour a lot of money into marketing and advertising to attract new customers. Many Direct-to-Consumer firms are new and have little marketing budgets, so they have a hard time getting their names out there and reaching people through paid advertising. To combat the high cost of acquiring customers, Direct-to-Consumer firms should prioritize increasing brand recognition through organic marketing channels, influencer marketing, and content marketing. To reach their target market, brands need to establish a distinct visual identity, craft a compelling brand story, and use social media to communicate with consumers. A great way to increase exposure and fuel expansion is to cultivate a group of dedicated consumers who will go out of their way to promote your business.
Due to their smaller product catalogs, Direct-to-Consumer firms can increase their exposure and attract more customers by teaming up with similar brands. To further broaden their consumer base, businesses can investigate other distribution methods like online marketplaces or pop-up stores. If they could be more adaptable, they could better respond to shifting market conditions and discover unanticipated opportunities for growth.
Minimal Means of Distribution
Brands that sell directly to consumers may have a smaller audience since they distribute their products through their channels. Many brands have a hard time growing their consumer base, in contrast to the few that have become industry leaders. Particularly for firms dependent on niche markets, which could be tough to expand into, this might be a significant obstacle.
When it comes to general trade in India, distribution is not as straightforward as simply putting a product out there and hoping for the best. Many years have been spent by businesses on the development of their distribution systems, which have become sources of competitive advantage for the major players in the industry.
The Way to Renovate and Recreate
Despite the difficulties, the direct-to-consumer approach is not even close to being extinct. To overcome the challenges that direct-to-consumer firms are currently facing, they need to innovate and adapt. Putting money into a process that is completely seamless in functioning is one possible technique. There is a lack of clear strategies among brands, which may be the reason why they are unable to effectively control their costs at present.
D2C brands ought to place more emphasis on product quality. It is also possible that a major cause of a brand’s collapse is the poor quality of the product, which does not meet the buyer’s expectations.
The article is contributed by Shashank Jain, Co-founder, Strawfit (Bourgeon Foods LLP)
Owing to a decade of technological advancement and the last few years of the pandemic, there has been a fundamental change in the way businesses and customers engage with each other. After the jolt that the traditional retail sector faced, there’s a rise in India’s currently growing direct-to-consumer phase, with D2C brands thriving as online channels have become the go-to destinations for almost every consumer. For those still struggling with the concept, Direct-to-Consumer, or D2C, is an emerging business model of a customised shopping experience where the product is provided directly to the customer by a business, bypassing any sort of middleman in between, hence being cost-efficient.
With an estimated 700-800 D2C brands valued at over USD 100 billion by 2025, India is expected to be a hotspot for startups. A plethora of emerging service providers in India indicates the total addressable D2C market growth by over 15 times from 2015 to 2025. According to research by Statista, this total addressable market was valued at 33.1 billion U.S. dollars in 2020, which by 2025 was forecasted to grow almost threefold, making India a hotspot for startups. Currently, the segments that are growing at an ever-increasing speed in the Indian D2C market include consumer electronics and FMCG, with an expected worth of USD 43.2 billion and USD 30.8 billion, respectively, by 2025.
The popularity of the D2C industry is booming and will continue to expand. To increase buyer-seller interaction, making purchasing more engaging, pleasurable, and long-term, brands in this space leverage certain market trends.
Some of these trends that we recommend entrepreneurs in their operations are:
● Sustainable Manufacturing: Consumers are increasingly sceptical of brands that generate revenue through unethical business practices. Brands that are transparent about their business practices, from sourcing raw materials to manufacturing and supplying, generate more goodwill. Transparency creates trust, and people are more likely to buy from brands they trust. Brands that fail to build sustainability into their business models risk becoming less relevant to this new generation of consumers.
● Data Analytics: Until recently, brands had little access to customer data beyond surveys or third-party data. D2C enables brands to understand customers and their demands like never before, thanks to their continual personal connection with their customers through their experiences or surveys. Brands have realised that customer data is a powerful instrument that, when combined with analytics and technology, can be utilised to provide personalised experiences for customers.
● Leveraging Social Media: Social networking is a strong tool for new businesses. Platforms like Facebook, Instagram, and Twitter can assist you in reaching an untapped worldwide audience and assist in developing a brand image in the market with existing competitors. Influencers have a strong and tailored hold on specific audiences, making them one of the newest and most powerful marketing tools. A product like a milk flavouring straw for kids, for example, can’t be directly promoted to them and is instead marketed to mommy bloggers and health bloggers. More than just following these trends, it takes a lot of work to create a solid revenue model for your business. Running a business at any stage of development is not easy. For this, it is essential to have proper planning. Here are some of the key takeaways that we believe can help these entrepreneurs make more informed decisions and develop more refined products, especially in the early stages of a business.
● Bring forward a solution: Consumers are smart these days, searching for products that solve their current problems. The most common reason for a startup’s failure is a lack of market demand. You have a market need if your product solves an unpleasant, common, and repeatable problem for a large number of people. If not, then it can be easily overlooked by the customers.
● Focus on the product: The product you create is what makes up the face value of your brand and it’s a crucial task to make your product stand out in the market. Your main focus should be to at least give your product a competitive edge over the current competitors, so it seems like a convenient and better choice.
● Detailed Research: Before starting a business, thorough market research is essential. You have to research current trends, learn about the product, and understand its potential market and what your customers need. It also allows you to visualise your competition by telling you what other products and services like yours are available, customer reactions to them, their prices; etc.
● Financial Modelling: Managing monetary resources can be a tricky part that needs close attention. It is essential to have a well-developed financial model. From funding operations to having precise financial projections for the next few years, having a robust financial model is crucial for a business to grow. Don’t mind taking professional guidance to help you out with these things to avoid any major setback to your business.
● Keep trying and learning: Starting a business requires being inspired, motivated and willing to take risks. While every successful entrepreneur makes many mistakes, that doesn’t stop them from experimenting with their concepts and learning from their own and others’ mistakes. With that said, care also needs to be taken so that there is no undue waste of resources due to this experimenting.
Conclusion
With more people choosing to be independent buyers due to fading technological barriers, we believe that D2C is here to stay. It is an exciting time for entrepreneurs in the country to enter the market, especially with the boom in the startup culture. The times demand that entrepreneurs rethink how they interact with customers and their relationships with them. If played well, D2C can be the most powerful weapon a retail-based entrepreneur can hold.
Whether you like Tesla or not, you can’t deny that it’s changing the automobile industry. A few years ago, people would have thought of electric cars as toy cars. However, thanks to Tesla, electric cars are not a dream anymore. The awareness about electric cars has increased around the world. Many car manufacturers are also planning to step into the production of electric cars.
Through this article, we will come to know about the essential strategies of Tesla and how it makes money. We will also know what differentiates Tesla from other car dealers around the world.
Tesla is an American automobile company that specializes in Electric Vehicles (EVs). Martin Eberhard and Marc Tarpenning founded Tesla Motors in July of 2003. It was named after the inventor of electricity, Nikola Tesla. Later in 2004, Elon Musk invested $6.5 million in Tesla. He became the largest shareholder and the chairman of the company. Musk has been the CEO of Tesla since 2008.
The aim of Tesla, according to Elon Musk, is to accelerate the advent of sustainable eco-friendly transport through electric vehicles and solar power.
Areas of Operations
Tesla, the American electric and clean vehicle company, is headquartered in Austin, Texas, United States. Currently, Tesla has almost 438 stores all around the world with 100 service centers. As of mid-2021, Tesla has around 160 stores in the USA, 38 in Germany, 31 in China, 29, etc. Soon, Tesla is also expected to launch its cars in India in 2022.
Main Products and Services:
Tesla primarily sells Electric vehicles.
There are four models of Tesla EVs, namely:
Model 3
Model Y
Model X
Model S
Besides cars, Tesla also manufactures and sells various energy solutions like
Batteries for energy storage
Solar Panels
Solar Roof Tiles
Target Audience:
Tesla has manufactured vehicles for every type of customer starting from mid-range products with affordable pricing to highly developed luxury and sports cars. The target audience of Tesla includes eco-friendly car enthusiasts and of course, Elon Musk’s followers.
Business Lessons by Elon Musk
Business Model of Tesla
The Tesla business model works as a Direct-To-Consumer (D2C) model as it cuts off middlemen and sells its products directly.
This allows Tesla to foster customer relationships and improve its product simultaneously. The company has service centers all over the world through which it sends technicians to customers’ houses for the service. It actively seeks to decrease CO2 emissions into the environment and thus, has the support of the government too.
Tesla provides a sustainable transport option. The cars of Tesla are sleek in design, smarter in functionality, and provide low-cost charging.
The key activities of Tesla are manufacturing cars, research, and development, design, maintenance, software development, sales, and marketing.
Tesla generates revenue from three main sources: Car sales, Energy Solutions, and Servicing. These are discussed as follows:
Car Sales
Tesla is well-known for the electric vehicles they manufacture and sell. It had recorded a revenue of $17.7 billion in Q4 2021, a 65% increase year over year. It delivered 936,222 cars in 2021, which is an 87% increase from 499,647 cars in 2020. Tesla generates the most revenue from Model 3 and Model Y. Model 3 was the best-selling car in Europe in September 2021. Tesla’s revenue also has a tremendous upside potential because of the expected arrival of Cybertruck.
Services
Tesla generates around 8.6% of its revenue from the services it provides. Tesla technicians are the only people who are trained and allowed to work on Tesla vehicles. They have access to the important and proprietary parts that are needed even for basic repairs. It uses its proprietary system to control the maintenance and repair of its cars. This allows Tesla to claim most of the revenue generated by repairs.
Energy Generation and Storage
Besides cars, Tesla manufactures and sells batteries used for grid power storage. They can be used for both large-scale and small-scale purposes. They are also used for energy generation in Solar Panels or Solar Roof Tiles. This amounts to around 4.8% of Tesla’s total revenue.
These are the three streams through which Tesla generates revenue. The services and the energy generation aspects are some of the lesser-known revenue streams as compared to car sales. Tesla recorded a profit of $5.5 billion after its deliveries soared in 2021.
Advertising: While other car manufacturers spend big bucks on advertising, Tesla spends none. Tesla doesn’t need to spend even a single penny on advertising because of the massive popularity of its CEO, Elon Musk.
CarDealers: Tesla sells its product directly to the customers and thus, cuts off any third person or middlemen in between. People have to visit their website or the company showrooms to buy Tesla’s products.
Giga Factories: The Giga factories established by Tesla follow the principle of Economies of Scale. According to the principle, the larger the scale of production of something, the lower the cost of production of it. In the past, it was difficult to produce electric cars as the cost of batteries was very high. So, Tesla has established these giant factories for manufacturing the batteries of their cars and thus, reducing its cost of production.
Technology: The most unique factor about Tesla is the type of technology they use in their cars. The self-driving technology or the autopilot mode used in their cars has never been seen in another car before. Moreover, the safety features in their cars are one of the best in the entire world.
Conclusion
Tesla is one of the most successful automobile companies and it is certain that Elon Musk and his peers are working hard to provide newer means of transportation. It not only invented electric cars but also made sure to shed light on the fact that they are very much possible. It implemented a unique business model by leveraging direct sales to foster customer relationships. It is bringing innovation to the world and producing sustainable transportation through electric vehicles and solar power.
FAQ
Who is the CEO of Tesla?
Elon Musk is the CEO and co-founder of Tesla.
What is Elon Musk’s Net Worth?
Elon Musk’s net worth stands at 26,460 crores USD as of April 2022.
How much did Elon Musk pay to buy Twitter?
Elon Musk bought Twitter for an amount of 44 billion USD.
What is Tesla’s business model?
Tesla operates as a Direct-to-Consumer business model as it sells directly without any middlemen.
What are Tesla’s major business segments?
Tesla’s major business segments involve automotive, energy generation, and storage.
The initiation of every Ponzi scheme starts with a promise of unusual and supernatural returns. We all know that there are no ‘get rich quick schemes, they are a hoax. If you see or hear about these schemes, you should quickly assume that every quick rich scheme is someone else getting rich from (off) your money. Even then too, people fall for these tricks.
You too must have somewhere or sometimes must have seen these, a friend or a relative coaxing you to follow a trend in marketing, direct selling or some network marketing thing. You must have heard about these, but never thought too seriously about them, now is the time. This is the article about the same unsaid industry, we will find meanings, laws and eventually reveal how they operate. Read on to find if these are real or a mere Ponzi scheme?
Direct selling is a type of distribution channel used by global brands and not just that, it is used by small and medium-sized brands too. It is a retail channel that they use for that matter.
Small companies and even entrepreneurial companies use this method to market the product that they have to offer to the general public. As the name suggests, it is direct and strictly consumer focussed. Direct selling enables all types of goods and services, that includes expensive jewellery and low selling products like cookware, everyday used cosmetics, items used in a. Houses like housewares, energy and insurance supplements and more and more. Tupperware is a great example of one of the leading direct selling companies in India.
Tupperware Direct Selling
The direct selling channel avoids all the middlemen in between a product selling cycle. The model is to offer a broad retail channel in a slight differentiating way. It is not only about getting a great value-adding product and getting it in the hands of a consumer, but more than that.
This model of business is primarily sold with the hope of business minds people will take on this venture. Every Indian who is entrepreneurial in his thinking capacity takes up this work of direct selling, it is a form of a low startup with low overhead costs. Thus, this business model while eliminating the middleman helps the business-minded person take on and build his/her own venture of selling and building business.
Having said that, we can claim that these people who work under this umbrella and ubiquitous sort of academy work on their own. They not only work with their time, but they also affiliate it with the company that uses the personal channel, this retains the freedom to run the business on their own terms.
This opportunity of running their own business is often regarded as the most lucrative opportunity that makes people get into the Direct Selling business. Thus, the main or the focus point of direct selling is the affiliate income that one can generate from the parent company. The purpose or goal of volunteers or joiners is only one and singular in nature.
The purpose or goal above all the work is to forge personal relationships with prospective customers. Anyone can be a prospective customer if he/she fulfils the need or want of the product or the designation, whatever the executive finds easy off.
Product Demonstration
Consultants have to build and forge relationships with clients/customers mainly through face to face discussions and demonstrations. In this time when social media is predominant in quite every field and the walls between industries are defusing, it is easy to go with.
For people at this age, direct selling is an easy market shift and a go-to strategy for marketing their products and generating customers with networking. This method is more looked at as a better and effective way of selling than that of traditional marketing of advertisements or securing shelf space.
Speaking of direct selling, it is quite famous in foreign and abroad countries. In India, the concept is relatively new than that of abroad. When we discuss direct selling, MLM is just the other round of it. The full form for MLM is Multi-level marketing, we should discuss it at this point to make it count on our path of learning about new marketing and distribution channels.
Multi-Level Marketing – Connecting networks
This might seem a new term to many but it is not new at all. Although the concept of direct selling and multi-level marketing is still in the early stages of growth, the concept is widely accepted and has a lot of users in India (The second most populous country in the world). If any of the concepts find a place here, it will most probably generate huge returns.
The term Multi-level marketing refers to a strategy that is operated and equipped by some companies. By some companies, we mean companies that dominantly are direct sales companies, in the field of any product or service.
Difference Between Multilevel marketing and Direct selling
MLM and direct selling may seem the same but there are some differences that are key to the definitions and working of both models. In a multi-level marketing strategy, the existing members try to promote and sell the products that the parent company offers to other individuals. Not only this selling aspect, but it also has the faculty to bring in and add on new recruits to the business.
The head is known as the distributor and is responsible for adding members and networks. The distributors are paid some percentage of the sales that their recruits (newly added) people make. These new recruits make and become what we call the distributor’s network or down team. These recruits are encouraged and motivated to make sales and as an outcome of those sales, earn money.
Multi-level marketing is a legal thing but there is one aspect that is added to it and is illegal by its nature. The illegal aspect is known to the world as “pyramid schemes”.
Do Multilevel marketing Companies Make Money?
It is reported and there are many actual proofs to prove this, that companies operating with this strategy earn a handsome amount. Multi-level marketing companies often generate billions in annual profits. However, these profits that they earn accrue to the majority of the workforce (who are constituents).
Often referred to as MLM participants. Out of all the distribution made, only a little profit is shared with individuals who are at the top tier of the MLM pyramid scheme. The fact that only the top tier people earn a handsome amount then becomes a new strategy of marketing for itself.
Multilevel Marketing
These earnings by those at the top tier in leadership are advertised and marketed in seminars and conferences. This sort of emphasis on the earnings of a few top earners motivates the new joiners. This in turn creates an illusion of financial indolence and the financially successful nature of the job. These small amount of earners are the marketing face of the MLM company that helps in generating more workforce under the whole organisation.
This pyramid scheme of MLM marketing makes people win companies with wrong assumptions. More and more distributors join the scheme with unrealistic and abnormal returns in earning margins. These sorts of earnings in real reality are just theoretical and merely improbable.
Multi-level marketing, as previously mentioned, holds few top individuals as evidence of how it can lead to success and great financial earnings. This top shining tier of the brand is not what the issue with the scheme is. The issue is about a whole new perspective and dimensional shift.
The multi-level business model depends on the failure of the majority who fails in this pursuit of financial independence. They either fail to earn even a little or worse, they inject their own money from their own pockets to join and even then fail to earn a little amount, forget the unnatural amount. This is the main locus point of the business model at any MLM based company.
Volunteers who inject their own money into MLM becomes the reason why these companies become big and earn big in numbers, out of the received money from people, the MLM corporation only shares a little sum with the top tier participants.Thus, to enable the whole multi-level marketing organisation to work, the largest or majority of participants must operate at loss.
Only when those at the lower level of hierarchy operate in loss, the uppermost level of the MLM pyramid can derive their abnormal earnings. Those earnings then are emphasised and overemphasised by the MLM company to all other new joiners and this encourages them to participate at a financial loss.
We can clearly see that MLM or multilevel marketing is just about selling empty dreams to people who are unaware. The hope of high returns and easy income leads people to fall for these Ponzi schemes. In fact, this method of selling empty dreams is the focal point of their business model. The whole organisation is built on selling fake and empty hopes that appear really shiny.
Selling Dreams of Financial Independence
Sales Pitch Presentation
The main and even the primary face of an MLM company is the sales pitch. The sales pitch is obviously not the products and services. The products or services that the multilevel marketing company offers are only to the edge, or are just a fake face that they wear.
The products or services are largely peripheral to the MLM marketing model. Rather than a valid and sensible sales pitch, the company offers free confidence to the participants. The goal of that hyped up confidence is the promises of fake promises.
They have all sorts of techniques that they use to lure young people into the pyramid scheme. They will lure people with hopes of a “luxury lifestyle” or a lifestyle that you deserve. The basic sales pitch is that of financial independence and that all your dreams will come true.
You get the designation of “Independent distributor” and everything seems so good. You are hyped up by fellow young entrepreneurs and people would call you a ‘business partner’. MLM marketing companies don’t just sell you the idea of some financial and monetary benefits, they do more than that. MLM companies sell you dreams, that is what is known to us as “Selling the dream” in the real world.
We now know that Multi-level marketing people lure you to join by showing proof of income of the topmost tier level of the pyramid. One should not take that emphasised earning amount as a basis of hope for the same future earning prospects.
Structure of a Multi-level marketing Company
We looked at the business model of multi-level marketing, now let us see that in action. An MLM company mostly operates with the same structures as the business models.
Once a person is recruited in the scheme, by hook or by crook, they are given a designation of independent non-salaried participants. They can be known as many names, it can be associates, business owners, agents and whatever more that builds confidence.
Once they are boarded, they are authorised to distribute products or services that the company makes. Once they start selling the products and get some revenue from the company, they get some share of the income generated by the sales. It is here to note that they are just rewarded their share of the immediate retail profit from the customer and not downlines. The compensation paid is through a predefined compensation plan that is based on the products sold with the volunteer’s own efforts.
After this simple transaction, business owners or those independent distributors try to develop their organisations by either building an active consumer network, who buy directly from the company or they recruit newcomers. This starts a new chain of independent distributors who also build their network base. This expands the whole organisation at the overall level.
This is the basic structure of a multi-level marketing company.
Pyramid Scheme – The illegal scheme
A pyramid scheme is the formal name given to the same effect that we read up till now. A pyramid scheme is a scheme (and scam) that is based on a hierarchical setup of marketing networks. It is illegal by the way in every place of the world. The most famous pyramid scheme is nothing but a clean and clear Ponzi scheme.
Every new recruit who is recruited makes up the base of the structure and provides funding for the operations of these big scams. The funding that these innocent people provide become the abnormal return that the top tier of executives gets.
A pyramid scheme usually does not include selling off anything or any product or even service. It is based on the inflow of cash by new entrants, it is based on these additional investors that want to earn abnormal returns. Those are the very people who lose up the invested money to the people who are at the top of the pyramid. This means that multilevel marketing schemes are not classified as pyramid schemes and are not necessarily fraudulent if a product is being sold at the place.
In India, there was a lot of scope for direct selling by business people. The reason is the fact that India is an immensely populous country. Moreover, here the average age is about 28 years, which is relatively younger than even most of the developed countries. Here we will discuss a report about the Annual Survey of India’s direct selling industry in 2011-12.
India’s Direct Selling Industry
“At a time when most businesses faced a downturn, direct selling has recorded a significant increase in gross sales in back-to-back quarters of the current fiscal,” said IDSA chairperson Rini Sanyal
A new report by industry body Indian Direct Sellers Association (IDSA) said the sector saw 53 lakh, new entrants of direct sellers and consumers, in the first six months of the present financial year. Let us discuss some statistics for the Indian Direct selling, it is here to be noted that these reports are from the latest published survey of yr 18-19.
The Indian Direct Selling Industry stood at around INR 1,30,800 million in 2018-19 growing at approximately 13% from INR 1,16,700 million in 2017-18. The industry showed a Compounded Annual Growth Rate of approximately 16% growing from INR 83,085 million in 2015-16 to INR 1,30,800 million in 2018-19. Amway continues to be the leading Direct Selling organisation with global revenue of USD 8.8 billion in 2018. Avon Products IncHerbalife, Infinitus and Vorwerk along with Amway comprise the top 5 Direct Selling organisations in 2018 based on their global revenue.
Growth of Sales in India’s Direct Selling Industry
The straight-line graph is simply the CAGR that the India Direct Selling Industry provided in the following years. CAGR here means compound annual growth rate, The Indian direct selling industry produced a cagr returns of about 16 percent. 16 percent is even greater than what most equities offer (About 12-14 percent is given by equities). This growth even surpasses the equities market in India. We can see why this is a growing investment area for investors.
The total sales of the Direct Selling Industry in India grew to INR 1,30,800 million (INR 13,080 crores) in 2018-19 from INR 1,16,700 million (INR 11,670 crores) in 2017-18 registering a ~13% year-on-year growth in the sales. The Direct Selling Industry showed a CAGR of ~16% from 2015-16 to 2018- 19. These figures include the sales of 21 members of the Indian Direct Selling Association (IDSA) and the non-member Direct Selling entities.
India’s Direct Selling Sales by Product Categories (2018-19)
The share of IDSA members in the total sales of the Direct Selling Industry in India stands at approximately 60% as compared to the 40% share of non-members in 2018-19. Wellness products (which include products such as weight management supplements, meal replacement bars & drinks etc.) contribute more than half of the Indian Direct Selling Sales by IDSA members.
This is followed by cosmetics and personal care (which include products such as cosmetics, skincare, fragrances etc.) which contributes more than one-fourth of the sales by IDSA members during 2018-19. The Indian Direct Selling Industry’s contribution to the exchequer stood at around INR 2,500 crores in 2018-19. The number of active direct sellers (i.e. those who have ordered at least once in the last 3 months) in the country was around 5.7 million growing at ~6% from 5.4 million in 2017-18.
We can see that wellness products are the most used and directly sold products. However, the government did something related to this big industry in India.
The Government of India has banned companies from pyramid and money circulation schemes. The government brought out new rules and regulations for such a type of business marketing model, these are strict and needed to be followed. It is forecasted that these new rules will separate some entities, like that of Amway, Tupperware and Oriflame from operators that are likely to be called Ponzi in nature and feature.
According to the new rules, Direct sellers must have at least one physical location as their registered office within the country. They moreover, have to make a public declaration that they are not involved in any pyramid scheme or any sort of money circulation scheme as per the Consumer Protection (Direct selling) Rules 2021, notified by the Ministry of Consumer Affairs, Food and Public Distribution.
The first noted pyramid scheme was coaxed by Charles Ponzi (Italian-American) in 1919. He founded the Securities Exchange Company that year with the promise to investors of doubling their money in about 90 days. As this scheme continued to attract new puppets, he used that money to pay the earliest investors to double their investment. As the company came to light, Ponzi was bringing in $1 million a week.
Direct Selling Rules and Guidelines 2021
The Ministry of Consumer Affairs, Food and Public Distribution, and the Department of Consumer Affairs have made strict and clear rules for direct selling, Multi-level marketing and pyramid schemes in India.
They have struck guidelines that have to be followed by every company that tries to include direct selling as a mode of their product distribution. Here in the article, we will get to know what are these rules and guidelines that companies have to follow in order to directly sell their products,
These guidelines may be called the Direct Selling Guidelines 2021. These are issued as guiding principles for State Governments to consider regulating the business of Direct Selling and Multi-Level Marketing (MLM) and strengthen the existing regulatory mechanism on Direct Selling and MLM, for preventing fraud and protecting the legitimate rights and interests of consumers.
Conditions required for every Direct Selling entity (Guidelines 2021)
These Rules shall apply to all goods and services bought or sold through direct selling, all models of direct selling, all direct selling entities offering goods and services to consumers in India, all forms of unfair trade practises across all models of direct selling and also to a direct selling entity which is not established in India but offers goods or services to consumers in India.
Existing direct selling entities need to comply with these rules within 90 days from the date of publication of these rules in the Official Gazette.
The direct sellers, as well as the direct selling entities using e-commerce platforms for sale, shall comply with the requirements of the Consumer Protection (e-Commerce) Rules, 2020.
Direct selling entities and direct sellers are prohibited from:
Promoting a Pyramid Scheme or enrol any person to such scheme or participate in such arrangement in any manner whatsoever in the garb of doing direct selling business;
Participate in money circulation schemes in the garb of doing direct selling business.
Rules provide for Monitoring by State Government.–– For ensuring compliance with these rules by direct selling entities and direct sellers, every State Government sets up a mechanism to monitor or supervise the activities of direct sellers and direct selling entities.
The Rules provide for certain obligations upon Direct Selling Entities which inter alia include:-
Incorporation under the Companies Act, 2013 or if a partnership firm, be registered under the Partnership Act, 1932, or if a limited liability partnership, be registered under the Limited Liability Partnership Act, 2008;
Should Have a minimum of one physical location as its registered office within India.
Make self-declaration to the effect that Direct Selling Entity has complied with the provisions of the Direct Selling rules and is not involved in any Pyramid Scheme or money circulation scheme;
Have a prior written contract with its direct sellers in order to authorise them to sell or offer to sell its goods or services, and the terms of such agreement shall be just, fair and equitable;
Ensure that all its direct sellers have verified identities and physical addresses and issue identity cards and documents only to such direct sellers;
Create adequate safeguards to ensure that goods and services offered by its direct sellers conform to applicable laws;
Be liable for the grievances arising out of the sale of goods or services by its direct sellers.
Every direct selling entity to provide the following information on its website in a clear and accessible manner
Registered name of the direct selling entity; registered address of the direct selling entity and of its branches; contact details, including email address, fax, landline and mobile numbers of its customer care and grievance redressal officers;
A ticket number for each complaint lodged through which the complainant can track the status of the complaint;
Information relating to return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism and such other information which may be required by the consumers to make informed decisions;
Information on available payment methods, the security of those payment methods, the fees or charges payable by users, the procedure to cancel regular payments under those methods, charge-back options, if any, and the contact information of the relevant payment service provider;
The total price of any goods or service in a single figure, along with its break-up price showing all compulsory and voluntary charges, including delivery charges, postage and handling charges, conveyance charges and the applicable tax;
Provide correct and complete information at the pre-purchase stage to enable buyers to make informed purchase decisions, No direct selling entity shall adopt any unfair trade practice in the course of its business or otherwise and shall abide by the requirements specified in any law for the time being in force.
A direct selling entity and a direct seller shall not induce consumers to make a purchase based upon the representation that they can reduce or recover the price by referring prospective customers to the direct sellers for similar purchases.
Clause 8: Prohibition of Pyramid Scheme & Money Circulation Scheme
No person or entity shall promote a Pyramid Scheme, as defined in Clause 1(11) or enrol any person to such scheme or participate in such arrangement in any manner whatsoever in the garb of doing Direct Selling business.
No person or entity will participate in the Money Circulation Scheme, as defined in Clause 1(12) in the garb of Direct Selling of Business Opportunities.
Quick Points to Remember (according to the Direct selling rules 2021)
Both Direct sellers, as well as the direct selling entities using e-commerce platforms for sale, shall comply with the requirements of the Consumer Protection (e-Commerce) Rules, 2020.
Both Direct selling entities and direct sellers are prohibited from promoting the Pyramid Scheme or money circulation scheme.
State Government to set up a mechanism to monitor or supervise the activities of direct sellers and direct selling entities.
Well laid down duties and obligations for both direct selling entities and direct sellers to safeguard the interests of consumers.
Direct selling entities are to be liable for the grievances arising out of the sale of goods or services by their direct sellers.
It is quite clear and evident till now that pyramid schemes are illegal and they are banned specifically in ‘clause 8’ of the Direct Selling Guidelines 2016 and then in the updated versions of the Direct selling guidelines 2021. We can clearly see that our ministry of consumer affairs has clearly shut the case for “Multi-level marketing” and any sort of money circulation schemes.
The reason behind this is that these schemes are based on hopes of supernatural profits. In real life, there is nothing as easy as money. Innocent people who volunteer who fall for these types of schemes are misguided into investing their hard-earned money and they lose even that. It is to be noted that the latest guidelines (for direct sellers) were released on the 28th of December 2021, this article is based on those press releases.
Watching all the issues that ‘Pyramid schemes’ brings to the table, it has been banned and prohibited by the law. But we all know that clever people always find loopholes and then continue to run these schemes of direct selling and money circulation.
Most of these clever executives follow a pyramid scheme in the name of “Selling a product”, which is just a mask to protect the real predator. The products are super cheap and are of no use, these products are just used to legalise the otherwise illegal business of pyramid schemes. It is a loophole and we alert our readers not to fall for these “Get rich quick” schemes.
FAQ
Why is MLM bad?
Many people who join MLM in the hope of getting rich quickly end up losing all the money they invested and leaves them in debt.
What is an MLM example?
MLM is a business model where companies recruit sales representatives to sell their products who work full- or part-time. Tupperware is an example of MLM.
What is the biggest MLM company?
Amway is one of the biggest MLM companies with a revenue of 8 billion dollars as of 2019.
The consumer electronic sector in India is one of the major sectors of the country. India is set to become to the largest electronics market in the world by 2025 with a turnover of USD 400 billion, according to Invest India.
The consumer electronics goods industry is estimated to become the 5th largest by 2025. In the below article let’s look at some of the top Indian companies involved in the manufacturing of consumer electronics.
Bosch is one of the leading consumer electronics companies in India. The company was founded in the year 1951 and has its headquarters located in Bangalore, India. The company is also a leading supplier of technology and services such as industrial technology, mobility solutions, consumer goods, energy, building technology. The company has its manufacturing facilities in Karnataka and Tamil Nadu. The development center of Bosch in India is the largest.
Havells India is one of the biggest electrical equipment manufacturing companies in India. The company was founded in the year 1958 and has its headquarters located in Noida, India. The company also has a leading market share in a wide range of products such as industrial and domestic circuit protection devices, motors, fans, cables and wires, modular switches, and many more.
Operating revenue for Havells India Limited from financial year 2015 to 2020
The company has around 6,000 facilities and manufacturing facilities in Alwar, Baddi, Guwahati, and many other places. Havells India also owns famous brands such as Lloyd, Crabtree, and standard. The company has around 40 branches in India with a network of around 4000 professionals and more than 7000 dealers.
Godrej and Boyce
Godrej and Boyce are a subsidiary company which is owned by the well-known company Godrej group. The company was founded in the year 1987 and has its headquarters located in Mumbai, India. The company has its presence in around 14 diverse verticals. The company initially started with the manufacturing of locks and later moved to other domains.
Some of the sectors the company is part of are electricals and electronics, aerospace, AV solutions, construction, tooling, process equipment, batteries, appliances. The company also has its presence in global markets such as Africa, Middle East, Asia, the U.S, and Europe.
Whirlpool is a U.S based consumer electronics manufacturer. Whirlpool entered India in the year 1980 as part of its global expansion strategy. In India, the company has its headquarters in Gurugram. The company entered into the market as a joint venture with the TVS group.
Whirlpool’s net sales worldwide 2010 to 2020
The products under Whirlpool India include washing machines, refrigerators, air conditioners, and microwave ovens. The company has its manufacturing facilities in Faridabad, Puducherry, and Pune. The company has around 92,000 employees globally.
Voltas
Voltas is one of the largest air conditioning companies in India. It is also one of the most reputed providers of engineering solutions, specializing in project management. Voltas was founded in the year 1954 and has its headquarters located in Mumbai, India. The company has more than 5000 employees and manufacturing facilities in Thane and Dadra.
Some of the products and services of the company include consumer electronic appliances, technology, engineering, construction, textiles, mining and manufacturing, cooling and ventilation, etc. The company had begun with a collaboration with Tata sons and Volkart brothers.
Crompton Greaves Consumer Electricals Ltd.
Crompton Greaves Consumer Electricals is one of the leading companies in the manufacturing of consumer electronic goods in India. The company was founded in the year 1878 and has its headquarters in Mumbai, India. Crompton Greaves Consumer Electricals Ltd was formerly known as Crompton Greaves (CG).
The company has manufacturing facilities across the country some major places include Bangalore, Madhya Pradesh, and Goa. The company has around 8,000 employees and products such as Transformers, Pumps, DC motors, HT and LT motors, railway signaling systems, switches, and electronic appliances.
Blue Star is also one of the leading companies involved in the manufacturing of consumer electronic goods in India. The company was founded in the year 1943 and has its headquarters in Mumbai, India. The company specializes in the manufacturing of refrigeration and air conditioning systems.
The products and services of the company include Plumbing, electronic appliances, electrical and firefighting, etc.
Bajaj Electricals
Bajaj electricals is a company under the Bajaj group. The company was founded in the year 1938 and has its headquarters located in Mumbai, India. The company was founded by Kamalnayan Bajaj and has its manufacturing unit in Pune.
Bajaj Electricals has expanded its business from consumer electronic manufacturing into lighting, luminaries, LPG-based generators, fans, appliances, engineering projects, etc. The company has around 36,000 employees.
FAQ
Who is the Founder of Havells?
Qimat Rai Gupta was an Indian entrepreneur, founder, former chairman and managing director of Havells.
Is bosch Indian company?
Bosch Ltd is an India-based auto component manufacturer company.
How much did the global consumer electronics market size account for in 2019?
The market size of consumer electronics valued at USD 1 trillion in 2019.
Conclusion
These are the list of top Consumer Electronic manufacturing companies in India. The demand for consumer electric goods such as refrigerator and fridge is going to increase in the coming future. We will be able to see a lot of demand for consumer electric goods from the rural areas of India.
The pandemic has majorly affected startups around the globe. It has entirely changed the perspective of consumers towards brands and the marketplace. Consumers are widely preferring well-established brands and raising great concern towards hygiene, sanitation, convenience, quality and health.
In these times, the Direct-to-consumer (D2C) brands are gaining great profit and upraise in the market. On this note, tons of conventional brands such as LG, Havells, Ajanta-Orpat and Piaggio picked up the D2C model and applied it in their business.
Brands across the globe are shifting towards the D2C business model, removing the middle source. These brands are launching their native stores so that consumers could directly contact them. In India, D2C startups are running to a great extent.
However, in pandemics, these D2C brands suffered as well. As the D2C brand’s investment rate declined by 69% as compared to previous records. Meanwhile, the total funding was raised around $117.6 million throughout the year.
The D2C brands from all sectors including home decor, fashion & cosmetics, FMCG and electronics experienced advancement in numerous aspects. In this article, we have listed the top 24 D2C brands in India. Let’s get started!
D2C brands are companies that build their offering around direct digital marketing channels as opposed to selling through an online marketplace, retailer, or auction site. D2C business model in India eliminates middlemen to reach the end consumers and thus saves a lot of costs spent on distribution.
How Does the D2C Business Model Work?
In the D2C model, Any seller or manufacturer willing to sell his products directly to his customers can set up an online website or store and promote the products on various social media platforms. This business model completely eliminates the middleman.
A study revealed that around 55% of consumers prefer to buy products directly from a brand or manufacturer’s website rather than retailers and distributors. This is a benefit for D2C brands in India and gives them an edge over conventional methods that involved middlemen.
Advantages of D2C Business
Increase in Sales
As more and more consumers are finding it convenient and reliable to buy products from the manufacturer’s website, it assures a rapid increase in sales.
Understanding Consumer’s Needs
Establishing a direct relationship with consumers enables the companies to clearly understand their needs and in turn, personalise their experience so that they visit their store again.
Cost Reduction
When the company is self-sufficient in reaching its customers, it negates the role of any third-party distributors who earlier had to be paid.
Diverse Catalog of Products
Now that the companies do not require a physical area for selling their products, they can sell from a diverse catalogue of products, enabling them to offer extensive variety to attract customers.
Top D2C Brands in India
1. Bombay Shaving Company
Bombay Shaving Company is a prominent men’s grooming brand based on the D2C model. This is one of the leading D2C brands in India. Bombay Shaving Company is the first-ever personal care brand that fulfils all the requirements of the consumers, globally. The Company was founded by Shantanu Deshpande in 2016 and is headquartered in Delhi NCR.
Today, Bombay Shaving Company have over 2 million users and has around $3.4 billion market value.
2. Mamaearth
Mamaearth Website
Mamaearth is a well-distinguished brand that received huge customer engagement and loyalty. As the consumers are putting generous efforts into fulfilling personal care needs, Mamaearth made its appearances over all the e-commerce websites such as Amazon, Flipkart, Firstcry and Nykaa, which resulted in the company with huge profitable deals.
The users are widely preferring Mamaearth for their skincare and that’s why the company grew a huge consumer base. The revenue of Mamaearth has increased by around 3 times from the last 2019 records.
3. The Moms Co.
The Moms Co.
The very amazing personal healthcare brand for mothers. The Moms Co. sells personal care products, for all purposes like mom and baby care and postnatal, certified toxin-free by Australia. Its products are available on all e-commerce as well as physical shops. And its major source of revenue directly comes from its selling. The Moms Co. holds a market value of $6.5 billion.
4. Plum
Plum Website
Plum is an organic omnichannel clean beauty brand. Plum has experienced great profit since the consumer shift to the internet. The brand holds a value of around $23 billion by the year 2022.
Plum’s team size has heightened twice that of actual and catering of over 250M+ consumers per month.
5. Loom Solar
LOOM SOLAR is a D2C startup, a manufacturer of Solar Panels and Lithium batteries in Renewal Energy space based out of Faridabad, Haryana. It is founded by two brothers Amol and Amod (Ex- Schneider, Airtel) in 2018.
The Company helps Home Owners to reduce electricity bills in urban areas, while in small towns, it helps consumers to have 24X7 electricity by putting solar panels and Energy Storage Systems on the Rooftop
Recently, it reached a milestone of powering 50,000 homes from Solar Power across India.
During the pandemic, people have put immense concern and time into the style of their houses. And for this, the innovative sleep & Home Furniture Solutions Startup has experienced extensive growth. As of 2019, Wakefit had revenue of INR 80 crore and by the time of 2023, it has targeted up to INR 10,000 crore.
7. Wow
Wow Website
Wow is a widely famous skincare pharmaceutical D2C brand founded by Arvind Sokke and Ashwin Sokke; Manish Chowdhary and Karan Chowdhary. Wow is a total of $50 million worth of business.
Wow has its products in over 5,000 stores and pharmacies across India.
8. Sugar
Sugar Cosmetics Website
The immensely growing beauty and makeup startup, Sugar Cosmetics was founded in 2015 in India. Sugar Cosmetics mainly targets women between the age of 18 to 25. Today, it has more than 2500 retail locations in over 130 cities across India. Its products are easily available at Lifestyle, Health & Glow, Shoppers Stop and NewU.
9. BoAt
BoAt Website
BoAt is a very famous and distinguished electronic lifestyle company that provides stylish and high-quality electronic devices, at reasonable prices. BoAt’s products are available on every e-commerce website including Amazon and Flipkart. The company sells over 10,000 products every day and has more than 20 million users in India.
10. Noise
Noise Website
Noise is a D2C startup with a duo partnership with Chinese manufacturers to develop smartphone cases and sell them in India. Noise has a total revenue of INR 430 crore.
Licious is a distinct meat and seafood d2c brand that provides absolutely clean fish, eggs and meat. The company runs on a farm-to-fork model and provides its customers with the highest quality and totally fresh meat and seafood.
Licious has over 3500 employees and receives millions of orders every month. Its customer base is over 1 million.
12. Sleepy Owl
Sleepy Owl Website
The cold-brew coffee brand, Sleepy Owl caters for the demands for brewed and epicurean coffee across India. Sleepy Owl has numerous outlets in different cities and also, many online channels for selling its amazingly flavorful brewed coffee.
13. Country Delight
Country Delight Website
Country Delight is a leading startup for supplying fresh and pure milk at the doorstep of customers. It runs on the D2C business model and refers to consumers immediately.
Country Delight improves the wholesome practice of Indian farmers and pays the price before its date in order to beat the competitors.
14. Pepperfry
Pepperfry Website
Pepperfry is known to be India’s biggest and very famous online furniture startup. It provides furniture, kitchen equipment, bath, housing and dining appliances. Today, the startup has over 3.5 million active users and more than 5 million visitors per month.
Pepperfry holds over 20 studio locations across India and 500+ vehicles for delivering the furniture consumer’s houses.
15. Healthkart
Healthkart Website
Healthkart was founded by two IITians: Sameer Maheshwari and Prashant Tandon in 2011. This D2C brand offers great quality fitness products and assistance to help the consumer in attaining their fitness purpose.
Healthkart offers customers to order fitness products online as well as from offline stores. Its products are available in over 110 offline stores in 40 cities across India.
Lenskart is known as the biggest organised eyewear brand in India. The company offers over 5,000 designs of frames and around 45 different types of personality lenses. Lenskart has over 600 outlets in more than 66 cities across India. Its revenue as of 2020 is INR 967 crore.
17. Melorra
Melorra Website
The first-ever lightweight jewellery startup, Melorra, was developed by Saroja Yeramilli. Melorra is a Bengaluru-based leading D2C company in India that offers jewellery in a wide range at affordable prices.
Melorra is known as the biggest distributor of jewellery in India, which has delivered its jewellery in more than 1,700 towns.
18. Flatheads
Flatheads Website
Flathead is a prominent Indian footwear startup that offers very stylish as well as comfortable footwear, suitable for every occasion. Flathead was founded by Ganesh Balakrishnan and Utkarsh Biranda. It follows the D2C business model and has grown extensively.
19. Bewakoof
Bewakoof Website
Bewakoof is a very popular clothing brand that widely targets the young generation in India. Bewakoof has over 10 million active users every month and has revenue worth INR 200 crores as of 2020.
Bewakoof generates ML models to optimise their customer’s accession channels and enhance broad customers’ accession costs.
20. Candes
Candes Website
Candes is one of the top D2C brands in India that recently raised its funding up to $3 million. Candes is a Delhi-based startup founded by Sandeep Agarwal and Vipin Agarwal in 2015.
The annual revenue of Candes is around INR 200 crore. And have sales worth INR 10 crore every month.
21. MyGlamm
MyGlamm has recently opted for the most intriguing way of reaching more consumers. It has adopted the lifestyle content platform POPxo, in order to enhance the digital reach and create the 3C funnel.
Today, the company has over 2 million active users. MyGlamm generally targets women between the age of 16 to 25 and through this, it has witnessed a growth in its revenue up to INR 200 Crore.
22. Zissto Sauces
Zissto Website
Zissto Sauces is a Mumbai-based company that offers a selection of convenient, tasty, and authentic sauces. Launched by Kanhai Porecha in 2017, the company aimed to save cooking time, especially for bachelors and working couples.
Kanhai started Zissto after returning to India from the UK where he did his graduation. He said he wanted to introduce authentic and easy-to-go Indian cooking sauces.
Today, the brand sells 50,000 sauces bottles across Mumbai, Chennai, and online portals like Amazon and Flipkart.
23. Everpret
Everpret Website
Everpret is one of the top Indian D2C brands. It manufactures and sells designer bags for working women. The founder, Yashas Alur, worked in a Bengaluru-based company before starting his own business. There, he noticed many women employees carrying more than one bag which was highly inconvenient that didn’t suit their work attires.
From there, the idea of redesigning workbags to fit all essentials seeded inside him. So he quit his job and raised funding of Rs 8 lakh for his idea from his former boss.
Yashas launched the Everpret website in January 2018 and started selling designer bags for working women that had enough room to fit all their essentials and also complimented their work clothes.
24. Super Smelly
Super Smelly Website
Super Smelly is India’s first and only certified zero toxinspersonal carebrand that offers products specially formulated for teenage skin. The company was launched by Dipali Mathur and Milan Sharma in 2018.
As the brand is still too young to have its own manufacturing setup, Super Smelly products are manufactured at third-party facilities located across other parts of India. However, R&D is done in-house. They only use fragrances that are completely free from any toxins and allergens. The product is effective and completely toxin-free as well.
Super Smelly is available across all major e-commerce channels. The brand also serves US and UK customers through Amazon. It is now witnessing a month-on-month sales growth of 70 percent.
Conclusion
The internet has brought people closer than ever before. Today, with theinternetnot just being a luxury for a few, but turning into every household commodity, we have seen the emergence of direct to consumer (D2C) brands in India and as a commerce model in the consumer arena. D2C Model is the future of Indian trade and retail.
FAQs
What are D2C brands?
Direct to consumer companies in India have created a new methodology for eCommerce success which is taking their products directly to their buyer. Direct to consumer is a term that means when brands sell directly to their end customers eliminating the role of retailer, distributor, wholesaler, or other outlets.
What are some of the top D2C brands in India?
MyGlamm, Wow, MamaEarth, BoAT, Bewakoof, Noise and Licious are some of the top D2C brands in India.
Why are D2C brands successful?
Most D2C brands are successful because they don’t have to share first-party data with retailers as they directly sell the products to consumers.
Pratyusha Srivastava
