How India’s D2C Wave Is Creating New Investment Opportunities

A few years ago, Direct-to-Consumer (D2C) brands were seen as niche challengers to legacy incumbents. Today, they’re shaping how India shops, how brands are built—and increasingly, how portfolios can evolve.

At Windmill Capital, we see India’s D2C boom as more than a retail story. It reflects a broader economic shift, powered by digital rails, rising aspirations, and entrepreneurial innovation. Thematic investing offers a thoughtful way to participate in this evolution, with built-in diversification to navigate its uncertainties.

📊 The Numbers Tell a Bold Story

India’s D2C market is projected for significant growth, fueled by increasing digital penetration and evolving consumer behaviour. Segments like beauty, grocery, fashion, and electronics continue to lead this surge, backed by substantial funding activity and the emergence of D2C unicorns. AI adoption remains high among brands, and the explosive growth in Tier 2+ demand is a critical factor. Notably, online shoppers in these regions show a strong inclination towards categories like fashion and beauty, often seeking value and engaging with content in their local languages (RedSeer, March 2024).

In terms of market opportunity, the Indian D2C sector was valued at USD 16.9 billion in 2023 and is projected to scale up sharply to USD 87.5 billion by 2025, reaching an impressive USD 267.03 billion by 2030 (Mordor Intelligence, 2025).
This indicates a 15x+ expansion over the decade, making D2C one of the fastest-growing consumer segments globally.

This isn’t just a shopping shift—it’s a supply chain, tech, and behavioural transformation. But as this market matures, where should investors look? The answer lies not in picking individual winners, but in backing the rails they run on.

🧠 Why Thematic Investing Works So Well Here

Cross-Sector Impact: D2C’s influence spans logistics, fintech, AI, retail media, and consumer tech, offering thematic portfolios broad exposure across this dynamic value chain.
From Shelf Space to Smartphone Space: The playbook has indeed changed. D2C brands scale through digital channels, leveraging vernacular influencers and seamless checkout flows powered by UPI and ONDC. Thematic investing captures this fundamental shift in consumer engagement.
Consumer = Investor: Aligning personal values with investment strategies remains a powerful motivator, with themes like toxin-free products and sustainable practices gaining traction among investors who are also consumers. Notably, a significant portion of Indian consumers are willing to pay a premium for sustainable and ethically sourced goods (Deloitte India, Late 2024).

⚠️ Risks Are Real. That’s Why Thematic Exposure Helps

India’s D2C ecosystem, while promising, faces challenges. Rising customer acquisition costs (CAC) and fluctuating funding environments necessitate a cautious approach. Regulatory compliance, particularly with evolving e-commerce rules, also presents operational hurdles (Khaitan & Co., January 2025). Overcrowding in certain segments and the widening gap between CAC and LTV continue to be concerns for individual brands.

Customer Acquisition Cost (CAC) refers to the spend required to acquire a new customer, while Lifetime Value (LTV) estimates the total revenue a customer generates over their relationship with a brand. A healthy business model typically expects LTV to significantly exceed CAC; when this balance tilts unfavorably, long-term profitability comes under pressure.
Recent studies suggest that over 80% of India’s D2C brands remain unprofitable as of early 2025, largely due to rising CACs outpacing gains in LTV (1Lattice, 2025).

💡 This is where thematic exposure offers an edge: Investors can gain exposure to logistics, platforms, and infrastructure enablers—segments that benefit from D2C tailwinds while operating with potentially stronger fundamentals.

🏪 Offline is the New Online + Mergers & Acquisition Momentum

D2C brands are increasingly adopting omnichannel strategies—integrating online platforms, offline stores, and social media touchpoints to reach consumers more seamlessly. Omnichannel here refers to creating a unified customer experience across different platforms, meaning a shopper might browse a brand’s Instagram page, visit its website, and buy from a retail store—all while enjoying consistent service and branding.

For instance, boAt has expanded to 500+ offline retail points, and jewellery D2C brand GIVA now operates over 50 offline stores across India (Business Today, February 2025).

📈 What’s Investable Today?

While many D2C startups remain private, investors can still gain exposure to this growing sector through listed proxies and Windmill-powered thematic portfolios, which provide diversified access to key trends within the space.

Listed Proxies

These companies are aligned with the D2C-driven growth, either through their own digital-first strategies or by investing in/acquiring such brands.

Nykaa – Transitioning from a D2C model to a marketplace, capturing the evolving e-commerce dynamics.
Tata Consumer, Marico, HUL – Actively building or acquiring digital-first brands to capitalise on changing consumer behaviour.
Delhivery, Shopify, Info Edge – Key enablers of platforms and logistics that support the D2C ecosystem.

Windmill Capital-Powered Thematic Portfolios

Windmill’s thematic portfolios provide exposure to key drivers within the D2C sector, targeting long-term growth trends.

Digital Inclusion – Exposure to companies enabling a platform-first, SaaS-driven ecosystem.
Brand Value – Focus on companies building trusted, consumer-centric brands with long-term value.
The Great Indian Middle Class – Targets companies benefitting from aspirational consumption trends.

Note: These examples are intended to highlight sectors that benefit from D2C trends, not as stock recommendations. Investors should carefully consider their own risk tolerance and investment goals.

🔮 What We’re Watching: The Next Evolution of D2C in India

The D2C landscape in India isn’t just expanding—it’s evolving at multiple levels. Here are the key shifts reshaping its future:

AI-driven personalisation is becoming a baseline expectation, as brands use smarter targeting to drive higher conversion at lower acquisition costs (Pragma.ai, 2025).
Retail media monetisation is gaining momentum, with brands competing for premium digital shelf space to boost visibility and sales (Pragma.ai, 2025).
Dark stores and quick commerce are redefining fulfilment, enabling faster deliveries even in Tier 2 and 3 cities (Tech Publications, 2025).
Language-first influencer strategies are critical, as regional language engagement drives disproportionate trust and conversion (Bain & Company, 2025).
ONDC is democratising online commerce, giving smaller brands direct access to broader consumer bases without heavy platform fees (Government Announcements, 2024–2025).
Local language AI assistants are emerging as key enablers for personalised customer support, especially outside metros (Tech Publications, 2025).
Hyperlocal delivery optimisation is improving logistics efficiency for remote and non-urban markets (Tech Publications, 2025).
WhatsApp commerce is no longer an experiment—it’s becoming a primary sales channel, especially for discovery and direct sales in non-metros (Pragma.ai, 2025).
Declining dependence on Cash-on-Delivery (COD), driven by UPI adoption and consumer trust, is improving working capital cycles for D2C brands (Bain & Company, 2025).
Return-to-Origin (RTO) risk remains a top concern, prompting brands to adopt AI-based fraud detection and better address validation techniques (Pragma.ai, 2025).
Hyper-value commerce is surging, with consumers in Tier 2/3 cities increasingly seeking value-driven, affordable product assortments (Bain & Company, 2025).

Together, these shifts mark a new chapter: India’s D2C sector is no longer a challenger—it’s becoming the blueprint for mobile-first, trust-driven, decentralised commerce globally.

📌 In One Line

D2C is where India’s digital infrastructure, consumer aspiration, and startup innovation converge—and thematic investing is how we help investors ride that wave, with both focus and diversification.

🎱 Final Word

At Windmill Capital, we focus on long-term shifts—those that shape markets, not just moments. India’s D2C story isn’t a retail fad—it’s a structural transformation. One that reshapes how we consume, how businesses grow, and how portfolios can adapt. Thematic investing provides a clear, diversified lens to participate in this change, early, thoughtfully, and with conviction.

Explore our portfolios capturing this shift

📚 Sources

Mordor Intelligence – India D2C Market Forecast (Pre-2024 Data)
1Lattice – The Coming of Age of D2C (Pre-2024 Data)
Tracxn via Business Standard – India D2C Funding Trends (Pre-2024 Data)
Ashish Jain (LinkedIn) – D2C Unit Economics Commentary (Pre-2024 Data)
YourStory – Challenges in Indian D2C (Pre-2024 Data)
Sanchari Sen, Medium – Why India’s D2C Boom Is Fizzling Out (Pre-2024 Data)
RedSeer Strategy Consultants Report (March 2024)
Deloitte India Report on Conscious Consumerism (Late 2024)
Business Today Article on Omnichannel D2C (February 2025)
Khaitan & Co Legal Update on E-commerce Regulations (January 2025)
Avendus Capital Report on Consumer Tech M&A (March 2025)
Various Business News Outlets (2024–2025) on Government Initiatives and ONDC
Tech-Focused Publications (Inc42, YourStory) (Late 2024/Early 2025) on Emerging Technologies
Pragma.ai Blog – The D2C E-Commerce Shift 2024–2025
Bain & Company – How India Shops Online 2025

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