Starting small, going big: How the D2C model is helping MSMEs go global

As consumers have become attuned to the new norm of contactless shopping, the D2C model has managed to stand out for its customer-first approach and has enabled MSMEs to venture beyond the Indian markets.

Starting small, going big: How the D2C model is helping MSMEs go global

Saturday May 08, 2021,

4 min Read

For India’s retail industry, the fifth largest in the world, shopping was for long time synonymous with brick-and-mortar stores. The shift towards ecommerce has skyrocketed on account of the COVID-19 pandemic, but had been picking up pace well before that too. 

MSMEs, in particular, have been hit hard by the pandemic, and the key to the long-term growth of the MSME sector (beyond national stimulus packages) is through digitisation and finding new ways to connect with customers and expand reach. With consumers increasingly attuned to their own needs, businesses have adopted new operating models that can better cater to those needs, among which the D2C model stands out for its customer-first approach.

Why the D2C model is ideal for MSMEs

The fear of the pandemic has seen customers in India move away from physical retail stores and shop online. Physical stores may continue to have utility as a pick-up point for goods bought in advance - the bulk of the shopping, however, will happen on virtual storefronts.

For MSMEs with limited budgets, this allows them to set up shop and start promoting their brands at much lower costs.

And by adopting the D2C model, MSMEs can cater to their customers in a personalised way and get the competitive edge they need.

Manufacturing on-demand 

For MSMEs to have huge stocks of goods piled up is neither affordable nor healthy for business. By adopting the D2C model, the business can stay in tune with what their end consumers need and in what quantities, and manufacture as per market demand. Plus, by keeping a finger on the pulse of consumer behaviour, the business can make accurate predictions about upcoming spikes in demand (such as during the Holi festival) and accordingly manufacture bigger quantities in advance.

Technological agility 

In a D2C business, the costs of making changes to the digital storefront are exponentially lower than comparable changes in a brick-and-mortar store. This agility allows MSMEs to respond quickly to changes in consumer needs, such as expanding business to new PIN codes or adding an extra product category for seasonal specials. 

cloud technology

Getting feedback 

Perhaps the biggest advantage of the D2C model is that it provides the business with direct feedback on user experience, website conversion rates, and other relevant metrics. With the right D2C platform in place, MSMEs can benefit from valuable real-time data insights on how customers are interacting with the brand, and promptly implement new strategies.

Helping with global expansion 

MSMEs currently account for about a third of India’s GDP and about half of India’s exports, a share that the government is looking to increase. Supply chain complexities and the high associated costs have traditionally deterred MSMEs from going the international route.

However, research shows that MSMEs using ecommerce platforms are about 5X more likely to export their product than those in the traditional economy.

The D2C model, with its emphasis on building a robust online platform that puts the customer-first and enables direct conversations with customers, is thus ideal for MSMEs looking to take their business across geographical borders.

Incorporating futuristic technologies  

In the wake of the pandemic, technology such as augmented reality has gained popularity in optimising the virtual shopping experience for customers. Augmented reality, for instance, allows customers to virtually try products before making a purchase decision.

This, in addition to the fact that consumers even in Tier 2 and 3 cities have access to the internet, makes it the ideal time for MSMEs to adopt cutting-edge technology and rapidly expand their presence.

For today’s digital-first D2C brand looking to make an impression on the customer’s mind, having an efficient online storefront is as important as having an attractive product. By partnering with ecommerce, MSMEs can seize new growth opportunities and set themselves apart as globally competitive brands.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

Edited by Teja Lele