D2C Predictions 2023
short & to the point
Almost every funded D2C business is overvalued.
Expect most D2C stocks that decide to IPO to be valued 2 years post euphoria similarly or less than their last private valuation.
Mamaearth’s 3 billion $ valuation is crazy ! In a good market I would say it should be around 1.5-1.6 , a great one maybe close to 2 and a challenging one barely a unicorn. (All assumptions on ipo are 1.5-2.5 years after ipo beyond the initial euphoria)
Most D2C brands in India will continue to struggle but more D2C brands will emerge
D2C brands will consolidate,most will aim to be bought out by large FMCG players.
The acquisitions in this case will often be undisclosed (“meaning my investors will get ashamed if I tell you how much money I lost..but hey I got rich nevertheless”)
D2C aggregators like 10 Club & Mensa will also struggle and will also consolidate.
Mensa is massively overvalued and the basic challenge is you cant build a decacorn /unicorn on top of Amazon without Amazon waking up one day and disrupting you.
Good Glam group-it may skyrocket or start sinking.The extremes because there business model is still a mystery to me. But my guess is they will start their steady descent (I hope I am wrong since they acquired a friends company too).
D2C brands will expand their product lines -to justify valuations.
There will be very few D2C brands going for an IPO in 23. But a few may be acquired especially by offline players (online will be too smart to acquire, in desperate times they will just consolidate)
Performance marketing spends in D2C will decrease & three Cs -Content, Community & (hopefully) CRM will become more important
source: source: https://unsplash.com/@rodlong?utm_source=unsplash-chrome-extension&utm_medium=referral
D2C will also start dropping new buzzwords in order to justify their valuation.
Be prepared to hear phrases like 'omnichannel', 'decreasing CAC', 'Direct to Store (neighbourhood)' or D2C as a service
Brand -yes Brand will become critical in D2C. Those who do 499 and 999 for 3 will find it difficult.
Those like some coffee brands, cosmetic brands like minimalist or ice cream brands like NIC-who deliver quality and brand..will thrive!
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Written by: Saurabh