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RetailTech & D2C

Advantage Tamil Nadu

  • Tamil Nadu is home to many successful D2C brands like Juicy Chemistry, TABP Beverages, Deyga, Supercluster PI and Ulavarbhoomi which have also raised significant funds to build category defining Startups.
  • It offers several compelling reasons for entrepreneurs and investors to consider it as an ideal location for building a Direct-to-Consumer (D2C) Startup. Here are some key advantages:
  • Large Consumer Base: Tamil Nadu is one of the most populous States in India, with a diverse consumer base that includes urban and rural populations. This diversity provides a substantial market for D2C Startups to target a wide range of consumer preferences.
  • Digital Penetration: The State has a high level of digital penetration, with a significant portion of the population having access to smartphones and the Internet. This digital readiness creates a conducive environment for online D2C businesses to thrive.
  • Educational Institutions: Tamil Nadu is home to renowned educational institutions, including the Indian Institute of Technology (IIT), Indian Institute of Management (IIM), and numerous engineering and management colleges. These institutions produce a skilled workforce with expertise in technology, marketing and business management, essential for D2C Startups.
  • Startup Ecosystem: It has a growing and supportive Startup ecosystem, particularly in cities like Chennai and Coimbatore. This ecosystem includes incubators, accelerators and co-working spaces that provide mentorship, networking opportunities and infrastructure to nurture early-stage D2C Startups.
  • Government Initiatives: The State Government has launched initiatives to promote entrepreneurship and innovation, offering incentives, funding opportunities and policy support for Startups, including those in the D2C sector.
  • Manufacturing Hub: Tamil Nadu is a manufacturing hub for various industries, including textiles, electronics and automotive. This proximity to manufacturing centres allows D2C Startups to source products efficiently and maintain quality control.
  • Logistical Advantage: The State’s well-developed infrastructure and logistical connectivity make it easier for D2C Startups to manage their supply chains, distribution and delivery operations.
  • Quality of Life: Tamil Nadu offers a high quality of life with access to healthcare, education and cultural amenities. This quality of life can attract and retain talent, making it an attractive location for professionals and entrepreneurs.
  • Cultural Diversity: The State’s cultural diversity and traditions provide opportunities for D2C Startups to create products and marketing strategies that resonate with different consumer segments.
  • Access to Ports: Tamil Nadu’s coastline includes major ports, facilitating international trade and export opportunities for D2C Startups looking to expand their reach globally.

In conclusion, Tamil Nadu’s combination of a diverse consumer base, digital readiness, Startup support, government initiatives, manufacturing infrastructure and quality of life makes it an attractive choice for entrepreneurs and investors looking to establish and grow a D2C Startup. The State’s resources and conducive environment provide a solid foundation for Startups in this sector to innovate, thrive and tap into a growing consumer market.

StartupTN-Team-Sai

Sector Incharge

Sai Ranganathan

sai@startuptn.in

8951221153

Retail Tech Sector Map

Introduction

Introduction

The e-commerce market in India is expected to grow at 19% CAGR in 2022-30. India’s D2C market has grown exponentially in the last few years and is likely to reach a whopping $100 Bn in market size by 2025.

Of this, fashion and clothing Startups have the highest potential and are expected to grow to $43.2 Bn by 2025.

Some of the emerging D2C brands, including mamaearthindia, CaratLane and Nua, merely took a couple of years to reach Rs 100-crore revenue mark. This is a testament to the success of D2C brands in the country.

Home to more than 190 Mn digital shoppers, India has the world’s third largest online shopping base in the world. It is this burgeoning ecosystem that the new-age D2C brands aim to capitalise on -– on the back of the growing appetite of Indian consumers for innovation and waning loyalty towards traditional players.

Direct-to-Consumer (D2C) Landscape in India

The Direct-to-Consumer (D2C) landscape in India has witnessed a significant transformation in recent years, reshaping the way brands connect with consumers. This business model, which involves selling products directly to customers without intermediaries, has gained prominence across various industries, from consumer goods and fashion to electronics and health supplements. The D2C approach has capitalised on India’s digital revolution and changing consumer preferences, leading to a thriving ecosystem.

Key Elements of the D2C Landscape

Digital Prowess: India’s growing Internet penetration, smartphone adoption and digital literacy have created a vast online consumer base. D2C brands leverage e-commerce platforms, social media and digital marketing to reach and engage with customers directly.

Consumer-Centric Approach: D2C brands prioritise customer experience and feedback, fostering stronger brand-consumer relationships. Personalization, product customization and responsive customer service are hallmarks of this approach.

Data-Driven Decision-Making: Data analytics plays a crucial role in D2C strategies. Brands collect and analyse consumer data to understand preferences, purchasing behaviour and trends, allowing for data-driven product development and marketing.

Product Innovation: D2C brands often introduce innovative, niche or premium products that cater to specific consumer needs and preferences. This focus on innovation sets them apart from traditional retail.

Supply Chain Control: D2C brands maintain control over their supply chains, ensuring product quality, reducing costs and minimising dependence on third-party distributors.

Cost Efficiency: By eliminating intermediaries, D2C brands can offer competitive prices to consumers while maintaining healthy profit margins.

Sustainability and Transparency: Many D2C brands in India emphasise sustainability, ethical sourcing and transparency in their operations, aligning with the values of socially conscious consumers.

Rapid Scaling: D2C Startups can scale quickly by leveraging online channels, digital marketing and efficient logistics. This agility allows them to adapt to changing market conditions swiftly.

Impact of D2C

Disruption of Traditional Retail: D2C brands have disrupted traditional retail models, challenging established players and reshaping the retail landscape.

Digital Commerce Growth: The D2C model has fueled the growth of e-commerce in India, attracting investments and spurring the development of digital infrastructure.

Market Expansion: D2C has enabled brands to reach consumers in Tier II and III regions, expanding their market reach beyond metropolitan areas.

Entrepreneurship and Innovation: The D2C boom has encouraged entrepreneurship and innovation in product development, marketing and supply chain management.

Customer-Centric Focus: The customer-centric approach of D2C brands has elevated consumer expectations, pushing traditional retailers to improve their offerings and services.

Economic Contribution: D2C brands contribute significantly to India’s economy, creating jobs, fostering innovation and boosting manufacturing and exports.

In conclusion, the D2C landscape in India represents a dynamic and disruptive force in the retail sector. With a strong digital foundation, consumer-centric approach and emphasis on innovation, D2C brands are well-positioned to continue shaping consumer preferences and the future of retail in India. As the D2C ecosystem evolves, it is likely to create new opportunities for Startups, investors and consumers alike, further propelling India’s e-commerce and retail sectors.

Initiatives

Initiatives

Union Government

Digital Payments & Technology

The government is backing technologies such as UPI, RuPay, DigiLocker and eKYC to help promote digital transactions, increase adoption in smaller cities, as well drive innovation in this space. In the Budget 2023-24, it was declared that in 2022, digital payments showed an increase of 76% in transactions and 91% in value. Further, it was announced that fiscal support of Rs 1,500 crore for this digital public infrastructure will continue in 2023-24.

Digital Infrastructure

E-commerce is set to benefit from government initiatives to boost rural broadband penetration within the ambit of Digital India. BharatNet is one such programme, with an outlay of Rs 61000 crore, aimed to bring broadband connectivity to India’s 2,50,000 gram panchayats

One District One Product Programme

The government has launched the ODOP programme with the aim of selecting, branding and promoting One Product from each district of the country to enable holistic socioeconomic growth across all regions.

Consumer Protection (E-Commerce) Rules, 2020

These rules delineate roles and responsibilities for marketplace and sellers and reinforce competition and efficiency within the Indian e-commerce market

Open Network for Digital Commerce (ONDC)

An open network protocol for e-commerce in India, ONDC, is an initiative backed by DPIIT, Ministry of Commerce and Industry. Its aim is to change the market from an operator-driven ecosystem to a facilitator-driven network. Presently, it is available in 273 cities and has 35,000 sellers on the network.

State Government

Tamil Nadu Single Window Portal: This is a one-stop shop for obtaining all business-related licences/clearances/approvals in a time-bound manner.

Tamil Nadu Skill Development Corporation offers skilling programmes to enhance the employability of youth and match the expectations of the industry.

Fame TN has signed an agreement with Flipkart/Walmart for promotion of e-commerce among MSMEs through a supplier development programme. The objective is to expand the capabilities of MSMEs through intensive training and support and equip them to scale up their businesses to be part of domestic and global supply chains.

Fame TN has also entered into an understanding with the Indo-German Chamber of Commerce for collaboration between MSMEs in Tamil Nadu and businesses in Germany to facilitate interaction, linkages, technology collaboration and export opportunities.

Resources

Resources

Several deemed universities and colleges offer courses in retail management. Retailers Association of India is an advocate for retailing in India and operates with the objective of supporting employment growth and career opportunities in retail, promoting and sustaining retail investments and enhancing consumer choice and industry competitiveness.