How D2C Brands Are Gaining Edge in the Market by Betting Big on ‘Personalization’ 

Consumer behavior has changed a lot in the last two years. Factors like increased competition (particularly in the D2C space), the need to differentiate in the market, and increased consciousness among consumers for sustainable environmental products, among others have leveled up the challenge to keep up with the changing demands. Consequently, the brands have been trying out different strategies to make sure they have the right line-up of products and services in the market. 

Of all the strategies, an effective one that is being used by D2C brands is to bring in 'personalization and customization' to their product offerings for the consumers. Almost every D2C brand to get an edge over mass-market products relies on some sort of personalization (various reports suggest that there is a clear relationship between personalization and an increase in sales which the brands tend to be aware of). 

Understanding Personalization and Customization

Owing to the diversity among consumers, there is a wide diversity in the demand. Brands bring in their market intel, generally aided by technologies, to make their products available for a wide range of consumers. This is called personalization, which consists of tailoring a service or a product to accommodate their consumer’s needs. 

Whereas, very similarly, customization is what a consumer chooses for himself/ herself given the list of options available from the platform or interface to suit one's preferences. This all enables a product clear differentiation from other mass-market products. 

Susmitha Lakkakula, Founder of D2C fashion platform Cloudtailor said, “We want to ensure every woman has the outfit that fits her need, as opposed to the readymade garments that have a mass approach. We also offer ‘Lifetime Free Alterations’ and a ‘Stitch Anywhere – Alter Anywhere’ benefit to all our customers. All orders are fulfilled at our company-owned centers manned by our full-time staff including the tailors, masters, hemming, and special embellishments team members." 

Cloudtailor in fact over the last 9 months has served over 15,000 personalized fashion orders across India, US, UK, Australia, and Singapore. Their repeat customer ratio is over 75 percent and the average order value is much above the industry average, the company stated. 

Sanjay Desai, Director of D2C apparel brand Fabcurate stated, “Customizing provided an opportunity for our customers of being their fashion designers. This freedom of wearing whatever they desire inspired us to deliver better. Customization is the new trend. It lets us interact directly with our customers and we guide them on every detail and they love it.”

Again, for Fabcurate, in the financial year 2021-22, the revenue is between Rs 15-18 crore and the company is positive that the revenues will increase by 20 percent in the financial year 2022-23. Similar results have been from other brands that have relied on personalization to improve their performance. 

A study by consulting firm Mckinsey shows that 71 percent of consumers expect companies to deliver personalized interactions. And, 76 percent get frustrated when this doesn’t happen. 

Finding the right set of products is true of utmost importance for consumers, and in many cases, they are willing to pay more for more personalized products. The Mckinsey report backs this up: " If consumers don’t like the experience they receive, it’s easier than ever for them to choose something different - three-quarters of consumers switched to a new store, product, or buying method during the pandemic."

The surge in online interactions since the onset of the pandemic has escalated consumer expectations - giving them more exposure to the personalization practices of e-commerce leaders in the online ecosystem and thus raising the bar for everyone else. From web to mobile and in-person interactions, consumers now view personalization as the default standard for engagement.

Role of Technologies

In the last two years, the surge in online interactions has increased a lot leading to escalated expectations in terms of personalization from the brands. This has led to brands relying heavily upon emergent technologies like AI, data analytics, etc. to figure out the demand and even needing great expertise in basic design technologies like Photoshop, Illustrator, and so on. 

Market intelligence and tech firm Sciative Solutions, which has experience working with the top D2C brands in India, the US, and southeast Asia, helps D2C businesses to build their personalization interface in multiple steps.

Vijeta Soni, Co-Founder & CEO, Sciative Solutions said, "First is customer achievement which involves machine learning, the behavior of the first-time potential customer who visits the site and recommending the products to potential customers ultimately improving product recommendations and increasing the chances of first purchase by 28 percent. The second is customer sustainability which deals with the identification of customers’ re-login or no-login after the first purchase. Hence, recommending the category team of pricing and promotions (personalized as per the customer. This activity increases the chances of repeat purchase by 15-30 percent)."

To gain an advantage in the market, brands have been relying upon such market intelligence experts, service providers, and of course a strong in-house team to bring their interface up to speed for the market. 

Sakshi Bawa, Founder, Mutt Of Course stated, “We use technical support to gather, analyze and categorize the data we receive from the customers. It would be very difficult to provide the option of customization without the strong technical support we have in the house. An example of how we use technology is represented by how we sell pet beds – they allow for a name to be added on the bed cover."

“We are using various technologies to customize the products. It starts with Photoshop software to make the desired design by a team of experts. After the design is made, it is then inserted into the machine software," Desai added. 

What Lies Ahead

In the constantly changing market with a new trend taking over every other day, the need for personalization is going to increase going forward. Likewise, the brands have no choice but to keep building upon their personalization tools to keep up with the consumer demand. 

Desai added, “Categorically we keep on expanding our customization. For example, if a new pattern/design is in trend then we immediately update it on our website. This process is done by a team of experts, that looks on for such things and analyzes each fashion-related trend. Our collection is already embedded with distinct categories, shop by the range and also upload individual designs. Anyone can send their desired designs to us and we will get them imprinted on the fabric, it’s that simple.” 

However, rather than seeing it as sort of a hassle, the D2C brands can in fact, and rightly so, see it as an opportunity: to build a long-term satisfied consumer base who gets the right personalized product that he/she may not get anywhere else. 

Again, the Mckinsey report is in alignment with that shared: “Companies that achieve the best results from personalization approach it differently. Rather than seeing personalization solely as a marketing or analytics problem, they view it as an organization-wide opportunity. Rather than focusing solely on short-term wins, they look for long-term drivers of growth and emphasize customer lifetime value.”