Why D2C brands will spring from niche opportunities

Direct To Consumer (D2C) provides opportunities for founders with conviction to build a brand in niche areas where large companies cannot scale at speed, said Rishi Vasudev, Co-founder of G.O.A.T Brand Labs, on Friday.

"You have the opportunity to be a big fish in a small pond in categories like home, kitchen, health and wellness," said Rishi at the launch of Brands of India, a YourStory initiative to power the growth of India's D2C economy.

He cited the women’s wear category, where buyers look at new options as they are averse to mass-made apparel. "The reality is that every cost other than the usage of fabric is the same. And for big brands, the challenge is to manage costs and unit economics," Rishi explained.

However, in an online model, D2C brands in apparel can focus on solving a unique problem in niche segments, and scale-up that niche base into a growing market. "Look at the need-gap in the smaller categories, and see if it can be filled," Rishi asserted.

Rishi Vasudev, a key leader in ecommerce giant Flipkart's fashion vertical between 2014 and 2020, and Rameswar Misra, former Senior VP at Voonik, founded G.O.A.T Brand Labs in May this year. It supports D2C brands in areas like analytics, operations, brand-building, digital marketing, and product development.

"This is the best time for D2C brands to go global," Rishi said. "Being e-commerce driven, D2C brands can follow an online model to go into different markets. There are many handicraft brands that are global, as there is demand for niches," he explained.

Rishi said D2C brands on the G.O.A.T Brands Labs radar will have three things in common:

1. The foundation of first 1,000 customers

"If the founder and people building the brand have solved for a unique need, we see if customers keep coming back to the brand," he said. The D2C economy has the capital and infrastructure (logistics, e-commerce platforms) for new brands to reach more people. "But such a brand should have established a connect with the first 100 to 1,000 customers—and prove its ability to scale," Rishi noted.

The metrics that matter are repeat buyers, engagement levels on social media, customer-acquisition cost, and the spends made on performance-marketing to reach scale, he added.

2. Founders find a long-term problem to solve

If a category cannot be built over time and brands have emerged suddenly, needing large amounts of money to acquire the opportunity, then it isn't the right deal. "We believe if a brand can be built in three months, then why should we pay for it, and not build something on our own," Rishi says.

3. Skin in the game

"We want to work with great founders, and fill gaps where they are missing something," Rishi asserted. G.O.A.T Brand Labs doesn't want to just invest money, but bring complementary skill-sets to its portfolio of D2C brands. “We are looking to partner with D2C brands as a co-founder,” Rishi added.

Brands of India is a YourStory initiative to catalyse the growth of India's D2C economy. It will bring together D2C ecosystem stakeholders, including brand builders, D2C startups, investors, corporates, and policymakers, to discover, build and help daring entrepreneurs create an additional 500 Brands of India in the next three years.

To know more about this initiative and the D2C ecosystem, visit brandsofindia.yourstory.com.