D2C vs Marketplace: Which is More Effective in India?

Here’s a fun exercise of selling platform

If you were to launch an e-commerce brand, would you prefer to go the marketplace route or would you prefer the D2C approach?

If you go the D2C route, you could become the next Sugar or the Boat. But you could also crash and burn into oblivion. On the other hand, the marketplace can be a safe option to get started and increase your customer retention before striking out on your own.

With the rise of e-commerce, small and medium-sized enterprises (SMEs) in India have gained unprecedented access to a large customer base, which was not possible before the advent of e-commerce. But there is still no resolution to the debate of D2C vs marketplace.

D2C vs marketplace: Understanding the difference

Before we compare D2C and marketplaces, let's first understand what these terms mean.

D2C refers to a business model where companies sell their products directly to customers without the involvement of intermediaries. You create and maintain your own website, and you have complete autonomy over the order fulfillment process.

If you’ve been following Shark Tank India, you are no stranger to the potential of D2C brands. If they take off, they can set you up for life.

At the other end of the spectrum, marketplaces are e-commerce platforms that connect buyers and sellers. Amazon and Flipkart are the biggest marketplaces in India. Myntra and Nykaa are next on the list.

You essentially list the products on the marketplace website. Any orders that come through are fulfilled by the marketplace itself. You don’t have to worry about the logistics or delivery or even maintaining a digital storefront. In exchange, the marketplace charges a commission for every sale.

Now, whether your brand is more suited for a marketplace or a D2C model will depend upon the type of product that you create.

For instance, if you’re into art and craft and you want to sell handcrafted products, then you might be more suited for the social commerce route.

Social commerce: The preference of smaller brands and artists

Social commerce makes use of social media platforms like Facebook, Instagram, and WhatsApp to sell products directly to customers. According to a report by Bain & Company, the social commerce market in India is expected to reach $20 billion by 2025.

When it comes to social commerce, D2C has several advantages over marketplaces. Since D2C companies have complete control over the sales process, they can leverage social media platforms to build a loyal customer base and engage with customers directly. By building a community of loyal customers, D2C companies can generate repeat business, which is crucial for long-term success.

It’s only logical, after all. If your products are unique, you need to share their stories. You need to use the product creation process to market them. Social media content can play a huge role here.

In fact, the story-telling approach and good social media marketing can also help promote Indian handicrafts. As this sector faces several challenges, including lack of access to markets, low profitability, and stiff competition from cheap imports, they need all the help they can get.

In recent years, e-commerce has provided a new lease of life to Indian handicrafts. By selling their products online, artisans and small businesses can reach a wider audience, generate higher revenues, and improve their livelihoods.

Now, please keep in mind that not everything is rosy with D2C brands. With more control comes responsibility. If you have to deal with the entire order fulfillment process, will you really have time to create content for social media?

Don’t rule out the advantage of marketplaces. They can go a long way to making your life easier.

D2C vs marketplace: Which is more effective for Indian handicrafts?

When it comes to Indian handicrafts, both D2C and marketplaces have their pros and cons.

D2C can offer a more personalized experience and showcase the uniqueness of Indian handicrafts. This has a two-fold benefit. Firstly, you create a direct relationship with customers. Secondly, you can create awareness about the art and craft and create a sense of appreciation for the artisans and their work.

Marketplaces, on the other hand, provide access to a large customer base and can help small businesses and artisans reach new markets. As they are a plug-and-play solution, they can fit easily into your business. It’s almost like delegating your logistics to a third-party service provider.

However, marketplaces also have their downsides for Indian handicrafts.

They may not be the best platform for showcasing the uniqueness of Indian handicrafts. With thousands of products listed on these platforms, it can be challenging for small businesses to stand out and differentiate their products from the competition.

I mean, take the product discovery process for instance. Consider the difference between Instagram and Amazon in this respect.

Unless you get a platform that can truly combine the benefits of both and truly offer you a social commerce marketplace, it won’t work.

What is the role of social commerce in Indian handicrafts?

In this case, social commerce can play a huge role in bridging the gap between D2C and marketplaces.

Social commerce can also help in promoting the uniqueness of Indian handicrafts and the art and craft behind the products. By sharing stories and pictures of the artisans and their work, it can create a sense of appreciation among customers and build a community around Indian handicrafts.

Also, social commerce can help small businesses and artisans overcome the challenges posed by marketplaces. By leveraging social media platforms, businesses can differentiate their products from the competition, showcase the uniqueness of their products, and build a direct relationship with customers.

To End

Well guys, that brings me to the end of this blog. Please don’t waste your time looking for an answer to the D2C vs marketplace debate — there is none. Instead, let’s use our time to focus on how we can help promote sustainable, made-in-India products.

Think about what would make the ideal social commerce platform. And keep watching this space for more updates. [We’re working on something exciting and will be ready for the grand unveiling soon!]

In the meantime, you can check out a special collection of handcrafted, made-in-India products here.

Please do share your views in the comments, and share this blog with your friends and family.

If you are into product making and start selling your unique products with us, register now!