From big spends to budget cuts, what defined India’s D2C in 2024?

We’re in the midst of a D2C revolution. Close to five years after the pandemic, which fuelled the .com culture, most brands we see today in India’s rich retail landscape are new-age D2C players leveraging big ad spends, innovative marketing efforts and celebrity endorsements.

Their aggressive all-rounder marketing game plan has even challenged legacy brands and their time-tested products. Furthermore, numbers suggest that India has become a hub of emerging startups and D2C brands . There are already 800 or more D2C players in India, and the market is believed to be valued at over $80 billion in 2024.

However, this rapid growth has also brought challenges, as brands navigate rising costs, changing consumer behaviours, and increasing competition. While the year has undoubtedly been successful for some D2C brands , others have experienced muted revenue growth and adopted more conservative ad budgets.

Eyewear giant Lenskart increased its ad spend significantly, jumping from Rs 294 crore in FY23 to Rs 352 crore in FY24, marking a rise of nearly 20%.

Personal care brand, Mamaearth of Honasa Consumer Ltd, saw a substantial boost in its advertising budget, allocating Rs 664 crore in FY 2023-24 compared to Rs 546 crore in the previous year, an increase of 22%.

Caratlane, the jewellery retailer ramped up its advertising efforts, increasing its budget from Rs 172 crore in 2022-23 to Rs 225 crore in FY24, posting a 31% growth. Bluestone, which operates in the same space, spent Rs 124.4 crore on advertising and marketing, registering a 47% jump from Rs  84.1 crore in the prior fiscal.

Bombay Shaving Co too saw a slight uptick in its advertising and promotional spends by dedicating Rs 84.7 crore in the recent fiscal, a 3.3% hike from FY23.

The Souled Store has also seen a 33% growth in its ad spends at Rs 68 crore. This figure was Rs 51.1 crore in the preceding year.

Industry analysts suggest that brands like Mamaearth, Lenskart, and Caratlane have significantly increased their ad spends, possibly to capitalize on market demand and strengthen their market positioning.

But a few brands have also tightened their purse strings to recalibrate their boardroom decisions.

Boat, for example, known for its audio and wearable devices, reduced its advertising expenditure from Rs 428 crore in FY 2022-23 to Rs 366 crore in FY 2023-24, reflecting a decline of approximately 14%.

Rival brand Noise maintained a steady advertising spend, with a marginal increase from Rs 285 crore in FY 2022-23 to Rs 286 crore in FY 2023-24.

On the food and beverage side, Licious spent Rs 102.2 crore in FY24 on advertising and promotional activities. This was a notable drop of 20% from Rs 128.5 crore in the preceding year.

Interestingly Zivame, the lingerie and innerwear brand saw a dramatic reduction in its advertising spend, dropping from Rs 146 crore in FY 2022-23 to just Rs 42 crore in FY 2023-24, a steep decline of 71%.

Experts suggest Boat and Zivame reduced ad budgets indicate a possible shift in marketing strategy or a focus on cost optimisation. Whereas, Noise, with its stable ad spend, reflects a cautious yet steady approach.

The revenue game

While some D2C players achieved remarkable revenue growth in FY24, others faced setbacks. Lenskart achieved a significant revenue surge to Rs 5,610 crore, up from Rs 3,928 crore in FY 2022-23, reflecting a 43% growth.

Mamaearth reported a revenue of Rs 1,920 crore, up from Rs 1,493 crore in the preceding year, marking a 29% growth.

Similarly, Caratlane saw its revenue climb from Rs 2,169 crore to Rs 3,081 crore, a robust growth of 42%. Bluestone earned a total revenue of Rs 1,303.4 crore, a whopping 65% jump from Rs 787.8 crore in FY23.

Bombay Shaving Co also saw a healthy trajectory in its total revenue with 30.5% growth, summing up to Rs 217.3 crore.

Noise posted a slight revenue increase from Rs 1,433 crore to Rs 1,439 crore, reflecting a marginal growth of 0.4%.

On the other hand, Boat’s total revenue stood at Rs 3,118 crore, down from Rs 3,377 crore in FY 2022-23. This represents a revenue decline of approximately 8%, highlighting potential challenges despite cost optimization in marketing.

Zivame’s ad spend drop was also accompanied by plummeting revenues. It saw a sharp revenue drop from Rs 328 crore in FY23 to Rs 192 crore in FY24, marking a decline of 41%.

Licious earned Rs 686.8 crore in the recent fiscal which was 8.8% lesser than Rs 747.7 crore in FY24.

Influencer marketing, premiumisation, online-offline and global expansion have been the main reasons why some D2C brands have seen their revenue charts skyrocket.

Mamaearth also specified that out of Rs 38.3 crore of revenue from the sale of services, it earned almost Rs 4 crore worth of business from content creation and influencer marketing, which is almost 10.5%.

In its annual report, Titan said CaratLane continued its expansion and sharp omni play, while innovating in technology, product catalogue and marketing. The brand attracted over 10 million monthly visitors to their respective website and app. Moreover, they recorded double-digit growth in retail sales. The brand added 50 stores in the year to take the store count to 272 with a recent branch opening in the USA.

Bombay Shaving Co’s content-to-commerce strategy and the founder’s personal branding have played out well for the brand. Their podcast titled The Barber Shop has created a strong presence on social media, adding a sticky brand recall.

The success of Lenskart's dual online-offline business model, which enables it to reach a larger client base, especially in tier-1 and tier-2 cities, is reflected in its steady growth. The company's market reach and brand recognition have been strengthened by its quick development to over 320 locations in about 90 cities, including major metropolitan areas.

But for brands like Noise and Boat, the stiff competition has made the numbers suffer. According to industry analysts, pricing is the only differentiator in this segment now and innovation in the audio segment in particular has stalled.

“Once a product becomes widespread, sales are driven primarily by replacement demand, leading to slower growth,” stated an analysis report.

Other brands like Pepperfry and Licious have been able to reduce their losses in FY24 with little or no growth. Rising input costs and inflationary trends have led to price hikes, which can deter price-sensitive consumers. Licious also attributed the revenue drop to the closure of channels like Dunzo, among other reasons.

Moreover, after years of funding boom, the venture capital space is tightening, forcing D2C brands to focus on profitability over aggressive expansion.

All in all, to thrive in FY25, Indian D2C brands need to strike a balance between growth and profitability. Innovating in product offerings, investing in technology for operational efficiency, and enhancing customer retention strategies will be critical for overcoming these challenges.