Our view on the D2C Enabler Sector

Our view on the D2C Enabler Sector

Ecommerce continues to expand in India, with both marketplaces and brands serving customers with new offerings, high-profile sales events and relevant content along with it. In tandem with the ramp-up of brands, data and customer touchpoints, we are seeing an equivalent acceleration in the number of exciting companies being born to service these ecommerce retailers and solve their pain points. Let’s take a high-level look at what we’re seeing in this emerging landscape:

  1. Creative Development and Management

While most brands rely on digital media advertising to acquire customers, it is the quality of their creatives, including social media advertisements, that is one of the defining factors for success. Typically, the process of creative generation can be time consuming and human capital intensive. In a way, that is in direct conflict with the “experiment and fail fast and fail cheap” approach of the Internet. New companies are now looking to tackle this challenge through either helping retailers with pre-built templates, which provide creative ideas and quick turnaround times, or through providing ‘generative AI’ tools, which can create quick photo edits, produce videos, and write compelling copy.

  1. The Rise of the Influencer-Led Stores

Influencer marketing is now a staple within the marketing mix for most brands, as the influencer’s ability to drive commerce at scale has been proven. While mega influencers like Kim Kardashian have launched their own brands, new startups are helping mid-sized and emerging influencers monetize followers by setting up multi-brand stores and receiving a commission on sales. These reduce friction by enabling creators to “pick and drop” from the catalogue of brands and then outsource all the backend activities (such as packing and logistics) to brands once an order has been placed.

  1. Sales on Alternative Channels

We are seeing brands increasingly explore alternative sales channels, aimed at providing more convenience to customers. Startups are enabling brands to either set up stores and sell directly on Instagram/WhatsApp, or even buy from content/media websites, where relevant products can be made available for purchase. Start-ups like Mailmodo are enabling customers to purchase within email itself, thus cutting down a significant number of steps for users.  

  1. Stores Designed for the Smaller Retailers

There are also startups focusing on getting small merchants online and enabling them to sell. While Shopify is the gold standard, it is still complex and time consuming for smaller merchants with lower sales volumes. We are seeing two divergent models emerge: a self-serve model for merchants that are selling only to their acquaintances/offline customers; and full stack solution model for more broader sales efforts. The full stack bundled solutions which combine online store/marketing/logistics reduce the learning curve and go-to-market time for merchants in this cohort.  

  1. Rewards/Loyalty

Loyalty programs are a driving force for most large retailers globally. Now startups are enabling online retailers to implement similar kinds of schemes/programs across their stores on a plug and play basis. We think this is particularly interesting, considering the large amount of variations possible, the core value of data to the end result, and the channel complexity of omnichannel retailers.

  1. Mobile Apps for Retailers

Ecommerce is mobile-first in India, and new startups are allowing retailers to replicate their online stores as mobile apps. Mobile apps could be a potentially lucrative channel to onboard brand loyalists and create a space for new product testing and community engagement. We are seeing multiple models emerge with different product nuances depending on the size of the retailer and customizations required.    

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Examples of up-and-coming companies in these segments 


  1. Visual Merchandising for Conversion Optimization

While most brands are focused on driving traffic towards their website/app, successful brands convert a high proportion of online visitors into customers. A key component of conversion is the quality of visual merchandising, which is essential for success, whether in offline or online retail. New apps and other solutions are helping retailers use data to implement better visual merchandising, drive pricing/discounts and optimize the product mix. This is an aspect where human judgements will be difficult to fully replace by AI, so there is strong potential for a combined human and software approach here.       

  1. The new Cafes: Community Platforms

We are seeing an emergence of platforms which allow brands/retailers to manage their online communities in one place. Currently, brands may be interacting with their followers across a host of disjointed platforms – including Zoom, Telegram, Reddit and Clubhouse to name a few. By centralizing them all on one platform, brands are able to engage more deeply through a number of activities – such as hosting live events and chat forums, running webinars and courses, uploading media and doing product drops.

  1. Marketing Tools

Ecommerce has long been a key source of innovation in marketing tools (e.g. Klaviyo) and we are seeing this tradition continue with the emergence of new tools which cut across siloed offerings like customer data platforms and channel specific marketing tools – such as email, SMS and Whatsapp. For smaller merchants which are less sophisticated, there are new social media ad serving platforms which allow them to run ads across platforms based on simple parameters (such as audience and type of creative). Some players are also using artificial intelligence to increase the efficiency of ads.        

  1. Data Platforms

Brands have data sitting across multiple platforms, such as Facebook, Google, and various other sales platforms. Usually, to harness and extrapolate this data into meaningful content, expensive human resources are required to manually pull data, analyze it and derive insights. No code data platforms are looking to automate this process through integration with various sources to source and process the data and then display it in automated well-structured reports. 

  1. The Efficiency of Video Commerce

Video commerce has been a key driver of ecommerce in China, and many tools are now giving brands in India a chance to experiment with this without the need to invest in building this functionality from scratch. These plugins allow brands to embed either one to one real time virtual shopping where customers can directly talk to a sales/store executive, or enable live streams which allows many people to virtually share in the shopping experience.  

  1. One Click Checkout, Ecommerce Made Easy

Have you ever felt frustrated by entering your customer/shipping data for each new website you buy from? One click checkouts solve for this, resulting in improved conversions for retailers. They also support multiple other functionalities such as reminding customers when they leave items in a cart without checking out, offer rule-based discounts, work with loyalty points, and perform specific actions based on customer behaviour (like browsing a particular page, watching a particular video, first time visitor, repeat visitor, and so on).. Some players also offer RTO protection, which is a leading cause of high returns. [Note: RTO refers to a condition where the package is not delivered to the buyer and gets returned to the seller. This could be either due to genuine reasons, such as the customer being out of town, or due to fraudulent cash on delivery orders.]      

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Examples of companies in these segments 

  1. Logistics Aggregators

Logistics aggregators onboard multiple couriers on their platform and then help the brands choose the best option for fulfilling an order depending on cost, time, and reliability. Since a large volume of orders flow through these platforms, they are able to access better volume commitment-based pricing from the courier partners. They also help deliver faster to customers through smart inventory placement, based on parameters like order density, SKU velocity and seasonality. Other value adds include tracking of orders for both customers and brands, and detailed reports on delivery performance.        

  1. Scaling Growth as a Service

A successful ecommerce business has multiple moving parts – including inventory management, channel management, logistics, customer service, marketing (creative/content management) across channels. The businesses may or may not have the desire to build capabilities in all of these functions, and therefore maybe outsourcing multiple parts of this to other players. Different players are offering a different range of services aimed at specific client target personas, with some examples being large offline enterprises going online, solo entrepreneurs with sizable businesses, and startups looking to outsource a few channels and/or functions.

To succeed, in our view, companies should also keep the following in mind: 

  1. Identifying the Right Segment for your Product/Service offering: Online retailers can be classified in various segments depending on their size, channel mix and product portfolio, and the workflows for each of these can vary drastically. Hence, a product which works for one segment is unlikely to work for the other. It’s therefore essential to choose a finely tuned target segment, figure out their pain point and then build the product. 
  2. A Strong Go-To-Market (GTM): Products and services in some of these areas will become commoditized over time, as demonstrated by multiple apps for similar functions in the Shopify App store. It’s therefore essential to build a strong GTM which is repeatable and has strong unit economics. 
  3. Pricing Discipline: Companies have the ability to charge brands and retailers either through SaaS license fees or as a percentage of GMV (gross merchandise value). The pricing should take into account the brand/retailer growth trajectory and the breadth of the product (i.e. single or multiple independent/stacked modules). 

At Sorin, we love hearing from people building companies in this rapidly emerging industry. 

To speak with our Sorin team, contact anshul@sorininvestments.com