eCommerce 3.0: Decoding the rise of D2C brands

eCommerce 3.0
(Last Updated On: April 21, 2023)

Welcome to eCommerce 3.0 – the third stage where eCommerce sees a whole new level of sophistication. First we had offline goods, that were simply sold online. Then we had marketplaces that offered to bring your products to a wider audience. The third stage is marked by:

  • Refined digital infrastructure and penetration
  • A whole host of payment and platform solutions that power D2C channels
  • Building your own online identity

Want to more about what industry leaders are saying about eCommerce 3.0?

The #D2Ctech conference hosted by Instamojo wanted to celebrate the advent of eCommerce 3.0. The event was marked with intense discussions around the tech, data and design that is powering the next million D2C brands in India.

Here is a highlight reel from the panel discussion where we were joined by Supriya Donthi, (Founder – Leafy Affair), Arjun Vaidya (Co-founder- V3 Ventures, ex-founder of Dr. Vaidya’s), Rishi Vasudev (Co-founder – Goat Brand Labs) and Sampad Swain (CEO & Founder – Instamojo)

Want to know more about what we learnt from these industry experts? Here are our top 8 favourite takeaways from this discussion.

D2C brands have the advantage of achieving ‘mind to market’ at a much higher speed

Legacy brands are slow in moving from what’s trending to really launching, whereas D2C new-age digital brands study and predict trends from a year in advance to be able to capitalise on them. This is why there has been this high penetration of D2C brands in this industry.

“The market penetration for D2C by 2030 is going to be 7 or 8x”. Rishi Vasudev, Co-founder, Goat brands labs.

So even if you have not cracked it yet, don’t lose heart. There’s enough and more opportunity and headroom available for everyone to grow and build an exciting business by 2030. 

Want an effortless way to start? With Instamojo you can launch your own online store in 5 minutes.

“D2C brands need the right technology stack to thrive” 

New-age digital brands start with a high-end technology stack and then end up getting overwhelmed by all the plugins and integrations performance marketing etc. In the end, it results in slowing down their app and a worsened CX.

Technology should be able to help you optimise what little manpower and resources you have.

Start adopting technology stacks when you have the resources to do so. Till then, research and find out tech stacks that are giving you what you need for free.

For example: Start with what’s offered for free – social media, then transition to growth marketing tools and D2C solutions aggregator platform like Instamojo.

Access to technology is what sets D2C brands apart. They are structurally built to incorporate and leverage technology, unlike legacy brands that need a mindset shift.

“In a world of abundance, reducing the time you take to execute a data-based optimal decision is critical” Sampad Swain, Founder – Instamojo.

eCommerce 3.0 belongs to those who can adapt to speed and agility – the fundamental trait of a D2C brand.

The basic tech trinity that every D2C brand needs 

Pre-checkout, checkout, post-checkout.

Now 10 years ago, to sell online, you would have needed to purchase software for each three of these. You would have needed landing pages, product catalogue displays in the pre checkout phase. You would have needed a payment gateway for checkouts, and then order fulfilment, inventory management, customer service for the post checkout tools.

10 years ago, you would have had 30 tabs open just to achieve this one action. Today – it’s all one-click, one-stop solutions. D2C brands in the new age have the advantage of collating all three under the umbrella of one singular platform!

Related read: How to start an eCommerce business in India: 8 steps from 0 to launch

D2C brands can achieve hyper-scale once they achieve product-market fit

Another reason D2C brands are changing the eCommerce ecosystem is because of their ability to achieve hyper scale after breaking even.

This is how Arjun Vaidya, the co-founder of V3 Ventures explains it!

Once your online business breaks even and you reach the stage where you are making money on your orders even if you do the same things over and over again, you will be able to scale predictably.

This is what a product market fit essentially looks like.

Getting the playbook right takes time. But once D2C brands have understood what pattern of behaviour works for them, it’s easier for them to start scaling up by just repeating what they are already doing but with larger sample sizes.

A positive contribution margin is essential in wooing investors 

All D2C brand owners want to become profitable. But chasing growth blindly can be fatal. With the correct analytic tools, you should be able to constantly monitor your unit economics.

Once your fundamental metrics are in place, and your contribution margin is positive, you can start scaling. What is contribution margin? Here –

For D2C brands that are growing, you need to know your revenue which is left over AFTER you have eliminated logistic costs, performance marketing costs, marketplace or eCommerce platform costs and other overhead costs. This is your contribution margin.

This leftover part of your revenue is your contribution margin. The bigger the margin, the better your business health. An essential factor of consideration for investors today.

Businesses built on a high-burn model are really dependent on a flow of capital. So unless you’re market value proposition is not strong and robust, your customers are buying from you because it’s too good to true (deep discounting) but that’s not sustainable at all.

Setting the price correctly so that your contribution margin is healthy is crucial for a thriving eCommerce D2C brand.

Related read: D2C eCommerce: Everything you need to know

What are investors of eCommerce 3.0 looking for in a brand? 

Arjun Vaidya also broke down what investors like are looking for, especially during the current funding winter that D2C brands are experiencing. Here is the most basic breakdown:

  • 50% – Qualities of the founder
  • 30% – Business growth velocity, revenue gross margin, contribution margin, profitability, long-term lifetime value of customers, the team (Super important)
  • 20% – Market size, the ability for the business to scale even in a super niche

Want to hire and build a rockstar team? Enroll in the free course with our mojoVersity partner Springworks. 

Mentorship is key for early-stage D2C brand owners 

D2C new-age founders need direction. They may have been able to achieve mind-to-market but then what? How do they get the playbook right?

Solopreneurs do face the challenge of getting the team right – especially when it’s an intricate handmade business where the team’s creativity and operations should be in sync.

“All of these people form a puzzle. And as you grow bigger, you need more and more puzzle pieces to fit it. That’s when you start looking for mentors, investors, accelerators, incubators etc. Because D2C brand building is also ” Supriya Donthi, Founder, Leafy Affair

Related read: mojoStores: Once on Instamojo, now featured on Shark Tank 🦈

AI for eCommerce D2C brands as a gamechanger

Sampad Swain sees AI becoming potential co-founders for the next generation of D2C brands. Why? They can be “Huge productivity booster”. According to Sampad, newer AI tools will mushroom and the smartest founders will be able to adapt to those tools.

Here are some basic ways AI will be a gamechanger in eCommerce 3.0:

  1. AI will be used to create personalised messages at scale. Imagine being able to send videos to 500 customers, all personalised for celebrations, product launches, announcements etc. All this with minimum effort!
  2. Content is going to be driven by AI. From copyrighting, product descriptions, graphic designing, AI will be able to help you bring your A game.

Here is our list of top AI tools for your eCommerce business (free + paid) for your eCommerce business.

“We all have to pull up our socks as brand owners and start understanding the powerful impact of AI. The ship is here, either catch it or get left behind” – Supriya Donthi, Founder – Leafy Affair. 

Be a part of eCommerce 3.0 with Instamojo 

This is the BEST time for you to start a D2C business. With the right technological tools and an agile entrepreneurial mindset, there is no way to go but up. Build a business the right way.

Access a host of D2C eCommerce solutions like an online store, payment gateway and landing page builder at a one-stop destination. Start for free on Instamojo.  

Sign up now

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