India-born financing service Velocity has unveiled an INR 400 Cr fund for D2C and leading e-commerce businesses as India starts preparing for the festive season. The MOT has proposed this tactical adjustment to support D2C companies in the next upswing in sales. Earlier, Velocity had begun a Rs 250 crore fund to support the festive season in 2023. Through it, over 1,500 e-commerce brands such as Koskii, Power Gummies, Bella Vita Organic, and Bewakoof among others have been equipped.
Cash Flow and E-Commerce Growth
Velocity’s fund is cash-flow based, so it permits brands to invest in inventory, marketing, and other operating costs without giving up equity. It offers debt financing for e-commerce founders without equity ownership or diluting its stake. The findings of this study also show that retail sales through e-commerce are expected to rise by 20% during the 2024 festive season, while they reached 13% in e-commerce GMV (Gross Merchandise Value) last year.
Target Sectors and Investment Landscape
Velocity working with prominent online marketplaces such as Amazon, Flipkart, Myntra, and Shopify. It also encourages new-age quick commerce players like Blinkit, Instamart, and Zepto. It helps brands to better understand trends, such as the shift towards premium products, and improve their product portfolios. Order delivery cycle time needs to be shortened especially during the festive season.
As a form of financing, Velocity effectively allows brands to grow to greater heights without impacting their value considerably through debt financing. Velocity has been able to secure $30 million in equity funding and this puts it in direct competition with GetVantage, Klub, and Clearco.
Vision and Mission of D2C Brands
Bold D2C brands have been leading tremendous changes in the retail industry with their unique strategies. D2C strategies disrupt traditional retail because consumers can shop D2C brands with ease, can customize products, and can often get the products at a cheaper price than than getting them from a traditional retailer.
They seek to manage their supply chains, covering all the operational processes and interacting directly with customers. As consumers shifted their shopping habits online, D2C brands ensured they provided valuable experiences to consumers. They cut out the middleman, concentrating on the quality of the product, and customer experience, and analyzing trends to improve customer satisfaction.
Some challenges faced by emerging D2C brands
D2C brands face numerous issues as they operate in a rapidly evolving environment and compete with other players. The competition in the D2C space is continually intensifying and creating a difficult environment for new brands to differentiate themselves. Differentiation becomes important in order not to get lost among all the noise. It might also cost much to attract new customers through marketing and advertising expenses. Sound customer acquisition processes are crucial to the long-term success of an organization.
One of the main problems around direct-to-consumers is that many companies can provide almost the same services or goods. It is crucial to concentrate on emerging value propositions and brand image. It is not easy to manage inventories, products, and the delivery process. Effective supply chain management leads to timely delivery and customer satisfaction. Thus, the issue is not that D2C brands are solely reliant on the Internet, but it can be difficult, for instance, to fit into physical retail or pop-up stores. There is an important task to find a middle ground when it comes to using electronic and traditional methods.
Conclusion
Velocity’s focus on direct-to-consumer brands underlines the need for capital to help grow India’s e-commerce sector. Velocity Visions, Inc. offers fast-paced professional and personal enrichment sessions with interactive scenario-based training in the non-profit, business, and government sectors. D2C companies can transform themselves by adopting the appropriate strategies and focusing on their customers.
