Direct commerce, often synonymous with direct-to-consumer (D2C) eCommerce, is growing at an unprecedented pace in India. With the rise of digital-first brands, robust digitization, and a more evolved consumer base, SMBs are increasingly adopting this model to thrive in a competitive market. Traditional retail models are taking a backseat, paving the way for a bright future for direct commerce in India.
Why is Direct Commerce Growing?
Direct commerce is outpacing horizontal eCommerce due to its unique advantages for both merchants and consumers. It provides early entry opportunities for merchants, enabling them to own their brand, data, and customer relationships while de-risking from over-reliance on marketplaces. Consumers benefit from personalized shopping experiences, access to unique products, and competitive pricing.
Benefits for Merchants
- Control Over Brand and Customer Experience: Direct commerce allows merchants to maintain a direct relationship with their consumers, ensuring consistent and personalized interactions. Unlike marketplaces where brand identity can be diluted, direct commerce empowers merchants to build a stronger connection with their customers. It also reduces channel concentration risks, protecting businesses from marketplace dependency.
- Higher Profit Margins: By bypassing high marketplace commissions, merchants can design their own margin structures and marketing strategies, optimizing profitability. Direct commerce also enables merchants to execute multichannel customer acquisition and service strategies.
- Data Ownership: Owning buyer data is a critical advantage, enabling merchants to build long-term monetization strategies. This data allows for better customer insights and targeted marketing, creating opportunities for sustainable growth.
Benefits for Consumers
- Personalized Shopping Experiences: Direct commerce offers niche storytelling, 360-degree brand presence on social media, and access to exclusive products, fostering brand authenticity and emotional connections with consumers.
- Better Product Information and Engagement: Consumers receive detailed product information, direct testimonials, and insights into brand ethos. Direct commerce brings the product to the consumer across multiple channels, enhancing convenience.
- Competitive Pricing and Exclusive Offers: Brands often run loyalty programs, bundle deals, and exclusive offers, bypassing marketplace commissions, which allows them to provide better value to consumers.
Current State of Direct Commerce in India
India’s direct commerce ecosystem has immense growth potential, supported by the following dynamics:
- Market Size and Growth: India is home to over 185 million online shoppers, making it the third-largest digital shopping market globally. The direct commerce space is expected to reach $100 billion by 2025, with 600+ D2C brands already operating.
- Merchant Base: There are an estimated 2 million online merchants in India, but only about 75,000 have their own websites making sales. This indicates significant headroom for growth as more merchants adopt direct commerce strategies.
Challenges of the D2C Model
While direct commerce offers compelling benefits, merchants face several challenges:
- Customer Acquisition Costs: With high competition and advertising fees on platforms like Meta and Google, acquiring customers can be expensive.
- Logistics and Supply Chain Management: Ensuring on-time delivery and reducing delays require robust inventory management and reliable logistics partners.
- Building Brand Visibility: In a crowded market, creating a distinct brand identity demands a strong USP and omnichannel strategies.
- Technology Management: Selecting and integrating the right tools for CRM, payments, and analytics can be stressful, especially for SMBs without technical expertise.
Key Trends Shaping Direct Commerce
The evolution of direct commerce is driven by emerging consumer behavior and technological advancements. Here are the key trends shaping the sector:
- ONDC – Open Network for Digital Commerce: A government-backed initiative, ONDC aims to make digital commerce accessible to SMBs, expanding to 236 cities with 36,000 merchants onboarded.
- Generative AI: AI is transforming consumer engagement by offering personalized recommendations, dynamic content, and automated customer support.
- Social Commerce: Platforms like Instagram and Facebook are becoming vital for consumer discovery, with 55% of young shoppers finding D2C brands through social media.
- Sustainability: Eco-friendly practices and sustainable products are reshaping consumer preferences and supply chains.
- Omnichannel Presence: Consumers now expect seamless transitions between online and offline channels, with omnichannel strategies driving 3.5X higher engagement.
The Future of Direct Commerce in India
India’s large population and rising digital adoption make it one of the world’s most promising markets for direct commerce. Entrepreneurs are leveraging global aspirations and local insights to create impactful D2C brands. The growth of SMBs, which contribute 30% to India’s GDP, is being catalyzed by digital tools and direct commerce strategies.
Direct commerce not only helps SMBs reduce costs and bypass intermediaries but also enables them to build strong customer relationships and scalable businesses. With platforms like Shiprocket offering advanced tools for logistics, marketing, and analytics, SMBs are better equipped to thrive in this evolving landscape.
Why Shiprocket is a Must-Have Direct Commerce Platform
As India’s leading enabler of direct commerce, Shiprocket empowers SMBs with technology-driven solutions to streamline operations, enhance customer satisfaction, and scale globally. By simplifying logistics, optimizing costs, and providing actionable insights, Shiprocket ensures that merchants can focus on achieving their business goals. In fact, according to Shiprocket’s CEO, with Direct commerce now making up 15% of the e-commerce market—up from just 2-3% in the past five years—it’s clear that this shift is reshaping the future of business for SMBs. SMBs are the future of India’s digital economy, and Shiprocket is their trusted partner in growth.
