The D2C Dilemma: Why homegrown brands still rely on marketplaces for scale

The answer lies in a combination of logistical bottlenecks, consumer trust deficits, and skyrocketing customer acquisition costs

New Delhi: When a 27-year-old IT employee based in Bengaluru shops online, she heads straight to Amazon or Flipkart or other prime marketplaces. “There are more offers, faster delivery, and I know I can trust the return process if something goes wrong,” she said. In Pune, a 24-year-old software developer echoes the sentiment. “Marketplaces are just easier—everything’s in one place, the UI is familiar, and prices are usually better.”

Their preferences—price, platform trust, fast delivery, and easy returns—mirror the shopping behaviour of millions across India. This raises a critical question: in an era where owning the customer journey is seen as retail’s Holy Grail, why do so many Indian D2C (Direct-to-Consumer) brands still lean heavily on marketplaces?

The answer lies in a combination of logistical bottlenecks, consumer trust deficits, and skyrocketing customer acquisition costs.

Last-mile delivery remains the weak link.

For all the digital optimism, infrastructure remains a persistent hurdle.

“Marketplaces have raised consumer expectations with their quick deliveries and seamless return systems. D2C brands are still building the capabilities to match that, particularly in Tier 2 and Tier 3 cities,” says Chirag Taneja, Founder and CEO, GoKwik, a New Delhi-based e-commerce enabler.

Manveen S Sharma, Co-Founder and CEO, PinqPolka, a personal care brand, acknowledges the challenge: “Logistics are always a work in progress in India, especially when you’re committed to pan-India service. We work with multiple logistics partners, invest in streamlined packaging, and provide proactive communication.”

Rahul Mittal, Founder and CEO, Granos, a dry-fruit brand, adds, “We’ve onboarded multiple logistics partners via Shiprocket and experimented with zonal fulfilment. Still, marketplaces like Amazon and Blinkit beat us on delivery turnaround time.”

Trust: The intangible advantage of marketplaces

While D2C players invest heavily in brand-building, gaining a consumer’s trust is often a slow and uphill task.

“Even if our products are better, convincing someone to buy from a relatively unknown website over Amazon or Flipkart is hard. Trust is built over time,” says Ritika Jayaswal, founder of Nourish Mantra, a New Delhi-based personal care brand.

Manveen S Sharma agrees, adding, “Our website is not just a shop—it’s an experience, filled with real reviews, education, and guidance. Every customer gets direct attention, whether it’s a WhatsApp query or a call from our team. That’s how PINQ builds trust, one customer at a time.”

Vipen Jain, Co-Founder of Fitspire, a New Delhi-based fitness service brand, notes, “Failed deliveries and fake COD orders hit us hard. Marketplaces have solved these problems at scale. That’s a trust layer we still can’t fully replicate.”

The cost of acquisition is getting unbearable

The digital advertising landscape has turned cut-throat, with Meta, Google, and influencers spending deeper holes in D2C brand budgets.

“Customer acquisition costs are unsustainable unless there’s repeat buying. That’s why we’ve doubled down on CRM and retention strategies,” explains Harsh Somaiya, Co-Founder of The Bear House, a Bengaluru-based fashion brand.

Sharma of PinqPolka echoes this, saying: “Quick commerce is creating huge opportunities for growth, but it comes at a massive cost—commissions and marketing spends to reach a larger audience. This high CAC becomes a major barrier to going full scale.”

Siddharth Dungarwal, Founder of Bengaluru menswear brand Snitch, adds, “Ads alone don’t cut it anymore. You need creative storytelling, strong community engagement, and a solid loyalty funnel to make D2C work long-term.”

Marketplaces: Frenemy or fuel?

Despite concerns about price pressures and brand dilution, D2C players aren’t abandoning marketplaces just yet.

“Marketplaces are our top-of-funnel engine. Most customers find us on Amazon before coming to our website,” says Mittal.

“Marketplaces are a double-edged sword,” says Sharma. “Yes, it’s easy to get lost among lookalike products and brands with inferior quality, but these platforms are essential for discovery and reach. We treat marketplaces as a springboard for new customers, but our D2C channel is where the real PINQ story comes alive.”

Jain notes, “You need both. Marketplaces help with discovery and scale, while D2C builds deeper engagement and lifetime value.”

Dungarwal agrees, “It’s not about being anti-marketplace. It’s about using each platform for what it does best.”

The hybrid model is here to stay

India’s D2C ambition—owning the consumer, improving margins, and building brand equity—is still a work in progress. But until logistics, CAC, and trust barriers are resolved, marketplaces will remain vital.

“D2C channels offer better margins and let us own the customer relationship, but require higher upfront investment in marketing, tech and CAC. Marketplaces provide quick visibility but come at the cost of commissions and data loss,” Sharma summarises. “In the long run, building our platform gives us a stronger, more sustainable business and deeper customer loyalty.”

Or as Somaiya put it, “The brands that thrive will be those that play both games well—marketplace for discovery and D2C for loyalty.”

As the D2C ecosystem matures, the winning formula seems less about choosing between channels and more about mastering both.

The post The D2C Dilemma: Why homegrown brands still rely on marketplaces for scale appeared first on India Retailing.

from India Retailing https://ift.tt/dKZSzvY
via IFTTT