Accel and Fireside will no longer invest in online-only D2C brands in India

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Mint. “Investors are looking to fund companies and entrepreneurs who are willing to be not only just digital D2C but omnichannel." There are currently about 10,000 D2C brands in India. Buying behaviour changed during covid, and in 2021 about 100 Indian D2C companies raised more than $2.1 billion dollars.

But what founders and companies perceived to be the new normal did not play out, and in 2022 and 2023, investors were wary of backing these digital-first companies. Also read: Centre now plans to rein in direct selling industry, tightens reguations The funding winter has made things harder for D2C brands, which now have to figure out not only how reach customers but also how to deliver a sticky brand experience that reduces their customer acquisition costs. Stuck with investments that will take longer than expected to deliver returns, investors are following the more traditional approach of being where the customers are.

To avoid being capital-intensive, startups are adopting the franchisee-owned, company-operated (FOCO) model, in which franchisees take on the risk while the company delivers the brand experience, Prakash explained. Accel, Fireside and consulting firm Redseer published a report on Thursday titled ‘Decoding Omnichannel: Strategies for D2C Brands’. It said around 90% of the market will be delivered offline, though a significant portion of purchases are expected to be influenced online.

In 2023, India's offline retail market was worth $1.1 trillion, while online retail stood at $65 billion. By 2030, offline retail is expected to grow to more than $2 trillion while online retail will grow to $150-200 billion, the report said. Also read: Rise of tier-II online shoppers: Can they change Indian e-commerce? “We