Digital transformation in the past two years has pushed DTC eCommerce brands to the forefront. 2022 will be the year when these brands see immense growth and the customer becomes more empowered. If you want to prepare your small business for a prosperous year, read about the 6 trends that will dominate this space in 2022.
6 DTC eCommerce trends for 2022
The ‘Indian DTC brands eCommerce outlook 2022’ report released by Instamojo, draws upon the experiences of over 20 lakh small businesses in 2021. It lays out 5 major trends that Instamojo, Shiprocket, Klub and Adyogi foresee in the upcoming year. Here’s a small outline:
Trend #1: Consumers become more DTC brand conscious
2022 will be ruled by consumer sentiment. As eCommerce grows, the experiences of the consumer will be at the forefront of this growth. 2022 will see brands directly creating new experiences for their consumers and also adapting to the ever-rising demand for sustainability, morality, and quality of the product. We are going to be seeing brand and product conscience like never before.
The ‘consumer’ today knows what they want and how they want it. There will be a heightened focus on sustainability, not just for the product but for the entire supply chain.
As an example, consumers are choosing to buy indie wearable art from small DTC brands like Madraskarri. This is a creative accessory brand that designs and handmade wearable art that has been created by upcycling, repurposing and restyling textiles and textures.
Trend #2: DTC brands will take control over the customer journey
These brands are also going to be gaining a competitive edge this year, as they take more control over the customer’s journey. They will invest in resources that make the entire customer experience frictionless and hassle-free.
Brands are moving away from aggregated marketplaces to directly entering into commercial relationships with their customers for the real-time realisation of sales and a deeper connection with customers. This allows a brand to access deeper insights, and keep more control over business processes.
In addition to technological advancements contributing to large-scale transformations, 2022 will no doubt be a year of growth and evolution in the DTC segment.” – Shiprocket‘s CEO & Co-founder Saahil Goel.
Trend #3: SEO will become a formidable DTC brand superpower
Brands will also invest more in the power of SEO. As these businesses form connections directly with the consumers, SEO is going to be their superpower for discovery.
Here are a few reasons why DTC brands need to work on their search engine optimization (SEO) skills:
- Avoid hefty commissions or ad spending on aggregated marketplaces or social media platforms
- Build long term relationships with customers
- Ensure higher visibility for your brand on Google search results
The goal for every eCommerce brand is to reach #1 on the first page of google search results.
Here are some SEO factors that the Indian DTC brands will make a priority
- EAT (Expertise, Authoritativeness, Trustworthiness) Strategy
- High-quality product visuals or videos
- Page speed
- Social share
- Relevant keywords, alt text, meta descriptions
- Product descriptions
As more people invest in their own website and enter a crowded market no matter how niche their products are, SEO is going to be the moat that floats their boat.
Trend #4: Social commerce will be all the rage
Along with SEO, social media will play an even larger role in aiding brand discovery by larger audiences.
According to the Bain and Company report, social commerce could be worth $16-$20 Billion by FY25 with a CAGR of 55-60%!
DTC brands need to be present on as many social platforms as possible. They need to leverage the reach that social media platforms can offer by redirecting a part of their customer acquisition efforts to social media.
An important underlying trend that will play out in social commerce is that Influencer marketing will lead the way for organic growth.
Trend #5: Revenue-based financing takes centre stage
As homegrown and independent businesses rise in number, there will also be a significant shift to revenue-based financing over traditional venture capital. Most small brands usually do not get access to institutions or legacy venture capital firms for funding. They need to have a vast network to be able to connect to VCs. Another disadvantage is that the due diligence in traditional methods of VC funding takes longer. Brands also stand the risk of diluting equity in a traditional VC funding set-up.
Klub, a DTC financing platform, recently raised ₹200 Cr for their first revenue-based financing fund. They facilitated over 250 investments in small businesses so far and has a community of more than 5,000 investors.
Revenue-based funding is not just a more practical way of keeping operations smooth for DTC brands but also a faster, safer option for businesses to get access to capital. In 2022, we will see more brands discover this new model and raise multiple rounds of funding.
Trend #6: DTC brands to spend 40% more on performance marketing
Homegrown independent DTC brands are leveraging the power of digital ads to widen their brand reach. AdYogi, a performance marketing software designed for eCommerce brands, saw clients collectively increase their spending by as much as 100% in 2021.
Small online businesses will also demarcate a larger chunk of their budget for performance marketing and YouTube will be spearheading this growth.
Brands will have to continue to spend more for the same visibility. Customer retention that will be based on product quality and an optimum mix of marketing opportunities and platforms (especially YouTube) will be the key differentiator.” – Rohin Mittal, Co-founder, Adyogi.
More brands have begun to realise the true power of YouTube as a channel. In 2022, YouTube might just overtake Facebook and Instagram in terms of ad spending over the next 2-3 years.
An increased consumer consciousness coupled with the rise in social commerce will make 2022 a golden year for Indian DTC brands. Along with the trends mentioned above, there are several other interesting trends that will play out in the coming year:
- There will be heightened care to preserving data transparency
- Consumers want more packaging and eco-friendly products
- More women-led DTC businesses come into the spotlight
At Instamojo, we power over 20 lakh small businesses and hope to keep adding more DTC brands to our roster with our platform offerings. We, along with our partners, are on a mission to enable entrepreneurs that can not just create great businesses but also generate thousands of jobs and support the livelihoods of India.
Read our FREE eBook report to understand these trends in-depth and take your DTC eCommerce business to the next level!