When does online hit a wall? D2C stakeholders decode the offline shift

For a digital-first brand, there is a point when the website starts feeling a little too small.

Not literally, of course! The website can still take orders from across the country, social media can keep bringing in new customers and performance marketing can keep pushing products into feeds. But once a brand has built meaningful scale, the question changes.

It is no longer simply about how cheaply it can acquire another customer online. It is about where the next layer of growth comes from.

That is increasingly taking brands to an old-fashioned answer: a store.

From mattress and fashion brands to gifting and shapewear, digital-heavy businesses are expanding into physical retail as they scale. The move is not necessarily a rejection of the D2C model that got them there. Instead, brands increasingly see stores as a way to solve problems that digital cannot completely address, from product experience and trust to premiumisation, discovery and incremental customer acquisition.

Underneat, for instance, is entering physical retail with its first store coming up in Gurugram’s Galleria, bringing a category where fit, compression and comfort are difficult to communicate entirely through a screen into a physical environment. The shift raises a bigger question: why does offline become strategically important once a digital-first brand reaches scale?

Factor 1: Digital doesn’t have the convincing power

Digital is exceptionally good at getting a consumer to discover a product. It can target her interests, retarget her after a visit and compress the distance between discovery and purchase to a few clicks. But that efficiency has its limits, particularly when the product needs to be experienced before the consumer is willing to spend more.

SleepyCat's Chief Operating Officer Kanishk Arya said the company's move into offline retail was partly driven by the nature of the mattress category. “Every category has its own channel dynamics, as brands mature, their channel mix starts to mirror the category sales mix. If you choose to not be present on a channel then you’re effectively unavailable to most of the customers buying from that channel. For high ticket touch n feel products, retail remains the majority channel; therefore, it was only a matter of time for us to enter the offline retail market.”

The store is not merely another place to complete the same transaction. It can change the economics of the transaction itself. For categories where touch, fit, quality or performance influence purchase decisions, physical retail can reduce the uncertainty that comes with buying from a screen.

For Underneat, that is particularly important. “The opportunity offline is to take that relationship one step further by allowing women to touch the product, understand compression and fit, compare silhouettes and discover what works for their individual bodies,” the company said.

The physical store, therefore, is less about competing with the speed of digital and more about answering the questions digital struggles to answer.

Factor 2: The next growth layer is harder to find online

For a young D2C brand, digital can be an extraordinarily efficient growth engine. A brand can identify an unmet need, build a community, test creative, target consumers and scale without first building a traditional distribution network.

But scale changes the problem.

Once a brand has already built awareness among digitally active consumers, incremental growth increasingly requires reaching people beyond the audiences it has efficiently acquired online.

That makes physical retail another route into the brand ecosystem. SNITCH CMO Chetan Siyal said the company's offline expansion is part of building an omnichannel business as it has scaled. The brand now has more than 130 stores. “Physical retail allows us to make the brand more accessible across markets while giving customers an opportunity to experience the products firsthand,” said Siyal.

In fashion, he added, the physical experience continues to matter. “Stores give us an opportunity to build a stronger physical brand presence and engage with customers beyond the digital transaction. Digital commerce has made product discovery and purchase extremely fast, but that does not eliminate the relevance of physical retail.”

For FNP, which has more than 350 stores, the equation is similarly less about replacing digital than extending the brand's reach. “We don't look at customers purely as online or offline customers - they move between channels depending on the occasion, urgency and convenience,” said Avi Kumar, Chief Marketing Officer, FNP.

That matters in a category like gifting, where the purchase occasion itself can determine how a customer shops. “With 350+ stores across India, retail is an important part of FNP’s omnichannel ecosystem and contributes a double-digit share of our overall revenue. Beyond revenue, we track store productivity and customer behaviour across channels, as customers increasingly move between online and offline depending on the occasion, convenience and need,” said Kumar.

The implication is that a store can expand the addressable customer base without asking a brand to abandon the digital acquisition engine that built it.

Factor 3: The store is becoming part of the digital funnel

The old D2C journey was straightforward: discover online, visit the website and buy. The emerging journey is messier, but potentially more valuable: discover online, visit a store, experience the product, buy offline and return online later.

Underneat sees exactly this interplay between the two channels. “A consumer may discover Underneat online, try the product offline and subsequently become a repeat digital customer. Equally, someone who has followed the brand online for months may finally convert after experiencing it physically.” 

That makes the store less of a standalone retail operation and more of another layer in the customer journey.

FNP similarly sees online and offline as “complementary parts of one ecosystem.”

“A customer may discover us online and purchase at a store, or discover us through a store and later transact digitally. Our focus is to make that movement between channels seamless and deliver a consistent FNP experience at every touchpoint,” said Kumar.

For SNITCH, the same logic applies. “We see online and offline as complementary rather than competing channels. Digital offers convenience, discovery and speed, while physical stores add product experience, accessibility and a tangible brand touchpoint,” said Siyal.

The store, then, is not necessarily where the customer journey begins or ends. Increasingly, it is one of the places where the digital relationship gets strengthened.

Factor 4: Offline can change the economics

This may be the most important reason for digital-first brands to enter retail.

Stores are expensive. Rent, staff, inventory and operations can quickly turn physical expansion into a costly exercise. So if brands are opening stores at scale, the business case has to go beyond simply saying that consumers like physical experiences.

SleepyCat's experience offers a glimpse of what that business case can look like. Arya said the company has been able to leverage existing digital demand to drive retail without having to build an equally heavy retail marketing engine. “We are able to capitalise the online brand pull better on retail without the need for heavy retail marketing so yes it leads to tremendous incremental revenue and better return on overall brand level marketing.”

“Stores helped increase both the basket size and repeats,” he added.

That changes the role of the store. If physical retail can help a brand sell a more premium product, increase basket size and generate repeat purchases, it can potentially improve the economics of the broader business rather than simply add another sales channel.

For a brand that has already crossed meaningful digital scale, that distinction matters.

The question is no longer whether it can sell online. Clearly, it can.

The harder question is whether the next phase of growth can come from doing more with the customers it already attracts, while reaching the ones it cannot efficiently reach through a screen. That is where offline starts to look less like a legacy distribution model and more like a strategic growth lever.

As Underneat puts it, “The strongest brands of the future will be channel-agnostic: discovered on Instagram, researched online, experienced in a store and purchased wherever it is most convenient.”

For D2C brands, ₹100 crore may be less a finish line than the point where the physical growth engine kicks in!