In today’s fast-paced realm of commerce, new-age Indian Direct-to-Consumer (D2C) brands are sprinting ahead, leaving their traditional counterparts in the dust. The seamless process of purchasing from a user-friendly website and having your latest find delivered right to your doorstep is a testament to their efficiency. A significant portion of this success can be attributed to the indispensable services of Third-Party Logistics (3PL) providers. 

So, how do these innovative brands steer through the logistical complexities without burning cash? These behind-the-scenes players ensure your order moves seamlessly from the warehouse shelf to you without a hitch. Managing a seamless integration for all those products and shipments across logistics and tech stacks, while also providing exceptional customer satisfaction can be quite challenging. Our research team at Redseer dove deep into the data and uncovered various insights about how these 3PL providers are using innovation and meeting the new demands of rising D2C brands, accelerating their massive growth. 

These 3PLs are not just supporting Direct-to-Consumer (D2C) brands, but transforming the way they connect with shoppers leaving a long-lasting impression. They ensure that growth is not only sustainable but also scalable. Let’s take a look into the fast-paced world of logistics, where speed meets satisfaction! 

D2C Brands and their Exponential Growth in India 

But how are these new-age D2C brands outpacing traditional ones in achieving business milestones? Online platforms that were once specialized in specific verticals are now transforming into comprehensive hubs, offering a wide range of categories beyond their initial focus. Quick commerce services are leading this trend, going way beyond food and groceries to electronics, home décor, and more. 

Secondly, as disposable income rises, more consumers are seeking branded products that offer both quality and affordability. This is the ‘Masstige’ market, where luxury meets accessibility, for consumers who want a bit of both. Urban shoppers want immersive experiences and specialized items—they want their purchases quick and tailored just for them.  

Furthermore, even D2C brands making under INR 50 crore are quickly moving into offline channels, stepping away from the usual online-only approach. Going offline not only makes brands more visible but also helps build stronger connections with customers through local interactions, which in turn drives more online engagement. Furthermore, quick commerce has become a game-changer for brands aiming to get discovered and connect with a broader audience. The scene is set, and D2C brands are playing to win. 

Efficient Logistics: The backbone of D2C success

Well, logistics isn’t just a part of the brand; it’s practically the backbone of it! It encompasses services like—transportation, warehousing, packaging, inventory management, etc. For smaller brands (with an annual revenue < INR 250 Cr), logistics constitutes 10-18% of the overall expense, but this tends to reduce to approximately 6-14% as brands attain scale. 

Logistics costs stand as a significant expense following the Cost of Goods Sold (COGS) and Advertising. While COGS primarily hinges on pricing and advertising focuses on customer acquisition, logistics expenses are directly associated with enhancing the customer experience. In particular for emerging brands aiming to solidify their presence and cultivate a loyal customer base, high COGS and advertising costs become inevitable with a lower scope for cost reduction.  

Efficient logistics means shoppers’ orders arrive at their doorstep in perfect condition, right on time. That’s the kind of service that enhances customer experience. After all, in the competitive arena of branding, the best customer experience ensures customer loyalty.  

D2C brands have specialized logistics needs  

Now, as the demand for D2C products continues to surge, their logistics demands increase.  This was seen in annual D2C shipments which went from about 0.1 billion in 2019 to 0.6 billion in 2023. By 2028, we’re looking at a market that could hit around USD 2.2-2.7 billion shipments, at a 35-40% growth rate from 2023 to 2028.        

To keep up with this surging demand, D2C brands want their logistics partners to solve a variety of challenges and seek seamless integration across their entire tech stack, including warehousing, inventory management, shipment intelligence, and transportation.  

• Technology Integration: D2C brands use e-commerce platforms to manage their online businesses. Integrating these platforms with logistics services is crucial for efficient order management. They seek seamless integration across their entire tech stack, including warehousing, inventory management, shipment intelligence, and transportation. 

• Warehousing: D2C brands require warehousing solutions that enable efficient scaling of operations. Shared warehousing solutions offer both flexibility and cost-effectiveness. 

• Transportation: New-age brands require comprehensive transportation solutions across first, mid, and last-mile services. Emerging brands are volume-constrained and rely on options like Partial Truckload (PTL). PTL allows brands to share truck space and pay only for the space occupied. 

• Expedited delivery times: Driven by customer expectations and heightened competition across all product categories, there’s a rising demand for same-day or next-day deliveries. 

• Value-added services: D2C brands also seek value-added services like returns handling, customized packaging, predictive analytics, real-time order tracking, MIS tools, barcode scanning, etc. to streamline their support functions while they focus on their core activities.   

Multiple Options for D2C Brands 

Over time, a diverse array of specialized logistics providers has emerged, offering tailored solutions to cater to the abovementioned brand needs and tackle the growth effectively. These innovative companies have now become indispensable partners for young D2C brands handling logistics complexities and enabling these brands to concentrate on their core operations..  

While 3PL providers offer comprehensive end-to-end solutions, from warehousing to transportation, aggregators act as intermediaries, connecting businesses with various logistics service providers on a single platform, which is especially useful for smaller D2C brands and local businesses. On the other hand, vertical service providers specialize in niche logistics services, catering to specific logistics needs, such as last-mile delivery, hyperlocal service, etc. 

Emerging D2C brands often partner with aggregators for several reasons. These aggregators offer a full range of services, including warehousing, shipping software, packaging, and marketing. They provide access to different shipping options by connecting with multiple 3PLs and related services. This allows brands to seamlessly compare and select service providers based on their specific logistics requirements. 

How do 3PL providers cater to D2C brands and lead the way? 

However, today’s new-age D2C brands often look to partner with 3PL providers directly. Hence these providers, in turn, are adapting to cater to their evolving needs. 

Tech-stack tailored for your brand.com: 3PL players offer integrated technology solutions, crucial for young brands using multiple software across their value chain They ensure seamless communication between your order management system (OMS) and warehouse management system (WMS), streamlining operations. And when it comes to shipping, there are no gaps in speed. 3PL providers are investing heavily in technology and infrastructure to offer expedited shipping options, including same-day or next-day delivery services. With offerings such as real-time tracking, non-delivery reports, and predictive analytics for returns, they excel in enhancing customer satisfaction and ensuring customer loyalty.  

SLA parity across the board: 3PL providers ensure that your service level agreements (SLAs) are consistent across young D2C and large enterprise brands, and brand.com and marketplaces. Whether it’s delivery times or dispute management, 3PL providers maintain consistency in SLAs. This ensures a uniform brand experience for consumers regardless of where the order originates. 

COD solutions made easy: Young D2C brands often have a high rate of COD (cash-on-delivery) shipments, especially until they establish customer trust. But with 3PLs, there is assurance of seamless COD solutions, ensuring swift and hassle-free remittance of cash collected, typically within 48 hours.  

Streamlined offline expansion: 3PL partners also guide you through the complexities of offline markets, providing partial and full truckload solutions and streamlining distribution. By centralizing first-, mid-, and last-mile logistics and coordinating distribution, 3PLs simplify the expansion to offline sales channels for D2C brands.  

Superior account management: Offering personalized account servicing, 3PL partners offer convenient dispute resolution by facilitating direct communication with brands for any issues encountered from order pickup to delivery and returns. 

The explosion of e-commerce has led to an increase in the requirement for logistics services, especially in the crucial areas of warehousing and transportation. In this fast-paced environment, 3PL providers are emerging as game-changers, introducing tech-driven solutions tailored to the unique needs of D2C brands. Their innovative approaches are not just transforming the landscape but propelling brands towards unprecedented levels of growth and efficiency. 

Curious to delve deeper into the world of 3PL logistics? Connect with our industry expert, Kanishka Mohan, for invaluable insights. Don’t miss out—subscribe to our newsletter today for the latest updates and trends in the industry! 

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