Spending

Change in consumer consumption pattern driving the D2C segment

The covid-19 pandemic has not only changed the definition of ‘normal’ for all of us, it has also created its own ‘new normal’. In 2020, when the lockdown was announced, there was massive panic among people. This panic has forced people to think about their survival, their families, their health and their well-being. Many people feared it would be the “end of the world”. The thing about being human is that we are adaptive in nature. Earlier evolutions were how we became an intelligent breed, but today’s evolution is also centered around rapid changes like people’s buying behaviors.

Today we live in a time that has seen a change in people’s behavior, psyche and understanding in the recent past. The mindset, priorities and nature of consumer spending have changed and this has also impacted the D2C segment. As consumers changed, so did the goals, the nature and the way businesses work, and so did the products offered to consumers.

Major changes in consumer buying behavior before and after the pandemic:

  1. Hoarding and Impulse Buying:

We heard a lot about the “hoarding” of goods when COVID-19 hit India in March 2020. People stocked up on groceries, medical supplies, toiletries, kitchen items and all other essentials. This led to rapid behavioral training among the new generation. A generation that was about to graduate from college, about to start their own professional life and under the heavy influence of social media, has now learned what is called impulse buying.

  • Online shopping for essentials:

With added purchasing power and independence, comes another aspect of life that we could all fall victim to: convenience. Yes, we live in a time where you don’t have to run to the grocery store for every little need, instead we have apps that help us pick up items in less than 10 minutes.

As soon as going out and traveling became impossible during lockdowns, consumers started spending more on necessities compared to the pre-pandemic era. With the growing captivation of social media, influencers have suddenly become essential to “recommend” better essential products like herbal personal care products, home hygiene products or self-care tools etc. With the increase in disposable income, consumers are slowly getting the main thing by replacing mass-marketed products with D2C’s natural and herbal niche brands.

Health is booming like never before in the field of D2C. There are hundreds of new brands that have emerged during and after the pandemic that have focused on the promise of improving the health of the consumer and their entire family. They not only offer health supplements but also innovate with the forms of the products to make them more convenient and desirable for consumption.

  • Increase in disposable income:

This impulse buying comes from increased purchasing power and increased purchasing power is the result of a gig economy we live in. As the pandemic hit us. Many people have lost their jobs. But many people scrambled to find alternatives to survive and thrive. We were already on the verge of becoming an economy with lots of freelancers, but with the advent of COVID, the economy of freelancers, popularly known as the gig economy, gained its final momentum. People started doing freelance work alongside their full-time jobs. They also launched their independent start-ups and some started working as direct sellers for extra income. Working from home has allowed people to save on fuel, office rental, or any additional costs like eating out or socializing. Thus, the purchasing power of individuals has increased. And convenience came into play.

Changes facing D2C companies post-pandemic:

Changing consumer buying behavior has started to have a huge impact on the D2C segment. The D2C segment is popular for quality products addressing targeted issues over mass-produced products.

  • Social trends and building desirability:

The introduction of social media has led to the growth of the influencer community, which has extended to increased buying power and impulse buying habits that have benefited the D2C segment. Because in this segment, the quality produced was better and it was produced for a more niche audience. Anything produced for a niche is always desirable. So, in a sense, niche quality D2C products became more sought after by the masses because of the quality they exhibited.

  • Technology & Digitization:

The smallest brand has an app or e-commerce presence. Most start-ups have taken the “online only” route to retailing products by establishing a strong brand presence on the web. Direct Selling industry players have worked hard to bring all of their business – for consumers and their direct sellers – to the web and apps. This spared them the loss of business during the pandemic, as people could continue to work online and earn money remotely even during the toughest days of shutdowns. D2C brands, with better quality and better results, have entered the digital segment, and this has helped D2C to benefit immensely from this digital shopping trend. India has an internet base of 639 million, with a strong 24% year-on-year increase in users. Now, all D2C brands have appeared on popular social media websites, resulting in greater consumer change. Convenience is a basic assumption, but loyalty is very hard to achieve.

Strong growth during the pandemic for direct selling activities:

The business of direct selling companies flourished as the country faced an economic downturn and massive layoffs. And it was a win-win situation, as many people joined this company to start earning extra income in the shadow of layoffs and job uncertainties. As mentioned earlier, this business was online and could be managed remotely by working from home.

Changes to product offerings:

As mentioned earlier, consumers have shown a willingness to spend on high-end essentials during the shutdowns. Companies started introducing products that were essential, such as health products that help build a strong immune system, natural home maintenance products, kitchen essentials, personal care products, and more.

Moreover, the pandemic has also taught us to return to the roots of Ayurveda. Consumer awareness of ingredients, preservatives and their side effects is increasing. As a result, there has been a sudden surge in demand for Ayurvedic, herbal and natural health and personal care products.

In short, I feel that the consumer is constantly looking for better, more convenient and results-oriented products. Digitization by D2C companies has facilitated platforms that will help consumers quench their thirst for products. D2C companies don’t have to be big unicorns or multinational corporations, they just have to offer great products to grab consumers’ attention. This is how every direct-to-consumer business and every direct selling company is advancing in the Indian consumer market these days.



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Disclaimer

The opinions expressed above are those of the author.



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