D2C brands have disrupted the e-commerce industry. With the rise of digital infrastructure in India over the years and the capacity to handle customers’ problems firsthand, the D2C model has become the preferred business model.
The communication gap between the brand and the customers has been an unmet customer need for years. D2C brands have the intrinsic agility and savviness to bring their products directly to customers through their online stores and are competing head-on with retail giants in every industry.
According to Statista, India’s D2C market is predicted to rise more than 15 times between 2015 and 2025. The total addressable D2C market was valued at $33.1 billion in 2020 and is forecast to grow almost threefold and reach $100 billion by 2025.
D2C brands have the potential to grow exponentially. However, we can not turn a blind eye to the fact that D2C space is still nascent and needs funds to grow and survive. Revenue-based financing platforms have given a ray of hope to D2C brands to secure funds and grow.
In the blog, we’ll talk about how Revenue Based Financing platforms help D2C brands satisfy their need for capital and how D2C brands can increase their revenue to secure funds from them easily.
Securing funds for your D2C brand from revenue-based financing platforms
Direct-to-consumer growth has not escaped the attention of investors. This has been confirmed by the staggering amount of funding raised by leading D2C brands in India. We can’t deny that uncertainties in global marketing conditions are rising, and India is under the clutches of a growth slowdown. The onset of the fall season and the so-called “funding winter” has only added to the challenges faced by D2C brands to secure VC funding.
Seeking growth capital has been a unique notion in India due to the high cost and time required. Revenue Based Financing mitigates these obstacles, allowing D2C brands to secure funds more quickly and easily. Revenue Based Finance, a successful fundraising strategy in the United States, is gaining traction in India too. The process enables entrepreneurs to raise capital from investors in exchange for a share of the company’s profits.
Revenue Based Financing gives businesses much-needed flexibility. It does not demand ownership or control, nor do the brands have to bow to the demands of private equity groups that seek “growth at all costs.” While banks have always been a lending option for businesses, new federal rules have made them increasingly unwilling to lend to small firms since the 2008 financial crisis. Revenue Based Finance has opened avenues for D2C brands to secure growth capital and use it to expand.
Klub, India’s leading Revenue Based Financing platform, seeks to ease the biggest hurdle impeding D2C growth. It provides digital businesses with fast and flexible growth capital without diluting equity. Brands can use this capital for marketing execution, inventory management, and asset financing. Recently, Chumbak, a design-focused retail brand, has raised Rs 3 crore to expand during the festive season through Klub.
Brands obtain credit through revenue-based financing by leveraging their estimated revenue. This is another reason for brands to increase their revenue and guarantee their scope to get significant funds easily and swiftly.
Let’s look at how D2C brands can increase their revenue.
Solving the conversion and retention puzzle to increase revenue
Conversion rate optimization and retention are the essential factors impacting D2C revenue and growth.
Personalization is the key to increasing conversions. D2C brands can send hyper-personalized targeted messages and reach customers on their preferred communication channels. To achieve this, D2C brands should strengthen omnichannel engagement to seamlessly manage all customer interaction across platforms like Email, SMS, WhatsApp, Push, and Onsite to push conversions and revenue. D2C brands can leverage customer data and analyze it to discover customer behaviour and needs. This helps brands send personalized recommendations and move them forward in the conversion funnel.
In addition, customer segmentation helps segregate customers into different cohorts, making it easy for brands to launch laser-targeted campaigns. All these strategies assist D2C brands in seamlessly reaching customers with the right content at the right time and help skyrocket conversions.
More conversions build successful D2C brands. But to build a sustainable brand, D2C brands should focus on getting more repeat orders from existing customers. This is where customer retention peeps in. Existing customers spend 67% more on average than new customers. Therefore, it is essential to retain them. D2C brands should focus on adopting a robust customer engagement strategy and delivering a consistent customer experience to garner more repeat orders and double their revenue.
Revenue Based Financing is a way forward for brands seeking growth capital to expand. It is flexible, easy to get, and does not require entrepreneurs to sacrifice ownership or control. Brands should work towards elevating their revenue through conversions and retention to easily secure significant funds.