We've all been there - staring at price tags that make our eyes pop. But what if we told you these seemingly overpriced products are flying off the shelves? From lip balms to tea, D2C brands are rewriting the rules of pricing. How?

Let’s do some quick math.

A 10g lip balm from Himalaya Wellness costs you a chill Rs 38 on Blinkit. But a 2g stick from D2C brand Mamaearth is priced at a whopping Rs 276. It’s not just lip balms. FMCG behemoth Hindustan Unilever’s Lakmé mascara comes in at Rs 375 for 9ml, while D2C brand Plum Goodness’ 8ml version demands a cool Rs 600. Despite you screaming “price gouging”, these costlier brands are actually raking in the moolah. Mamaearth and Plum’s ‘expensive’ products are rather among the bestsellers.

Look beyond the beauty segment. Red Label tea costs Rs 250 for 500g. But D2C brand VAHDAM India’s Darjeeling Tea costs Rs 900 for just 100g, yet remains a bestseller for the brand.

To answer ‘how are D2C brands pulling this off?’, the industry responds in one word - premiumisation.

D2C founders tell exchange4media that with every passing year, the trend of premiumisation is on the rise, as a result of which they are noticing an increasing consumer interest in the brands’ premium product offerings. According to them, premiumisation is nothing but a marketing strategy that looks at enhancing the value perception of a brand, product or service. It is no longer just about brands hiking the retail price of a product.

Content and influencer marketing is how D2C brands are primarily driving this messaging of their premium offerings to consumers. For instance, the beauty segment has seen the rise of terms like niacinamide and hyaluronic acid in the past one year. Following the same, a vast range of beauty & personal care D2C brands have amped up their content marketing game to highlight the benefits, uses etc. of these ingredients that are a part of their products. It can be The Minimalist posting about ‘Can Niacinamide and Retinol be used together?’ or Plum putting up content saying ‘Let us understand how to use Niacinamide Serum’.

It is then taken ahead by contextual advertising.

For example, a digital marketing expert who handles D2C brands shared that when a user is reading a blog on benefits of niacinamide, the brand’s products with the same (generally priced a tad higher than other products) are shown to the user. The person added that on an average, these premium offerings see a higher click rate (approx 15-20%) when showcased alongside relevant content which highlights the value proposition of the product.

When we asked D2C founders about the reason why premiumisation is picking pace, they came with a similar response and noted that when consumers become aware of the value that they will derive from the said product regardless of higher prices, they are willing to pay. Shankar Prasad, CEO and Co-founder Plum Goodness, explains further that premium is no longer just about paying extra money. It in fact is about seeking better experiences and not hesitating to put down money for the same.

“And they're also willing to pay for the right value there, which is good news for brands like us, because we don't want to and we can't either compete at the mass end of the market,” he said.

Similarly, feminine hygiene brand Sirona has also seen an evident shift to premiumisation within its own portfolio of products. Founder Deep Bajaj shared an example of Pee Buddy and how earlier women used to look for a cleaner public washroom, versus now, they rather use a Pee Buddy product that costs Rs 15 per toilet seat cover. “Pee Buddy becomes a Rs 15 product, everytime you are peeing. But the cost of UTI is far more grave,” Bajaj explained, as he spoke about how if the value is justified, the price is no longer a big concern.

Another example is facial hair removal razors. Sirona tried exploring a lower pricing option for razors, which eventually led to the realisation that if a woman is looking for hair removal at home, she wants it to work like magic. In that scenario, a Rs 5, Rs 10 or Rs 20 difference doesn’t matter.

However, the value proposition of the product is not the only consideration consumers are doing. According to a First Insight report, 62% of Gen Z shoppers prefer to buy from sustainable brands, and a staggering 73% are willing to pay more for sustainable products. Bajaj shared how the vegan condom brand that Sirona acquired, called Bleu (again in the premium category), has also picked up amongst consumers who were earlier resorting to normal condoms.

Bharat Bhalla, Founder, Yu Foods, further pointed out that the Indian market is also going through a certain level of brand fatigue, consumers are seeking something different. “We can also see that, with migration towards quick commerce as a platform, people are willing to pay a certain amount of delivery fee for convenience. So, in essence, it is already a kind of sign towards premiumisation and moving to products that offer something which is different,” he added.

He also mentioned that the Indian consumer is wise enough today, and more conscious. “It can't be that you are just premiumizing a product purely on account of packaging or flavour and then say, there is a premiumization happening. I feel like the Indian consumer is wise enough to pay. At the end of the day, there has to be something differentiated that a brand or a product offering is giving to an end consumer. Whether it's 100% natural ingredients or it's something which is better for them,” Bhalla explained.

But why is this trend specific to just the D2C industry one might ask? The secret sauce, according to experts, lies in the D2C model itself. By cutting out the middleman, these brands have complete control over their image. They can craft a luxury narrative, use premium packaging, and focus on ingredients and experiences rather than just the product.

D2C brands are masters of their own destiny. With no middleman, they’ve crafted a world where every touchpoint screams their brand story. From the sleek packaging to the way they chat with customers, it’s all about creating a high-end vibe. They’re not just selling products; they’re selling a lifestyle. Words like ‘sustainable’, ‘handcrafted’, and ‘innovative’ become more than just buzzwords; they’re promises delivered straight to your doorstep.