Boxed In: The War Shock For D2C

• For D2C startups, the impact of ongoing geopolitical conflicts is no longer confined to global headlines. It is now hitting the most fundamental layers of business operations.

The ongoing geopolitical conflicts have pushed up crude oil prices and tightened global supply chains, triggering a ripple effect across petrochemicals, logistics, and manufacturing inputs.

This macro shock is now filtering into the consumer internet economy, particularly for D2C brands that rely heavily on packaging and global supply networks.

As oil-linked derivatives become more expensive and supply chains grow more unpredictable, startups across categories, from beauty and personal care to food and homeware, are beginning to feel the pressure on both costs and margins.

Cost volatility is now showing up in one of the most fundamental layers of their business: packaging.

From sachets and pouches to bottles and containers, packaging sits at the intersection of petrochemicals, logistics, and manufacturing. While packaging has traditionally been a relatively stable cost component, founders say that assumption is breaking down.

“Laminate (used for food and beverage packaging) prices have jumped from around ₹200-220 per kg to ₹270-290 per kg in just the last two weeks,” said Mansi Baranwal, founder of Troovy. That kind of sharp increase in such a short span is extremely difficult to plan around, she added.

Materials such as polyethylene and polypropylene, widely used across flexible and rigid packaging. are directly linked to crude oil prices. As global conflicts disrupt supply chains and push up energy costs, these materials are becoming significantly more expensive.

“In beauty and personal care, conditions are severely strained, we’re seeing 60-70% spikes in certain packaging components and 30-35% increases in raw material costs,” said Manish Chowdhary, the founder of WOW Skin Science.

This isn’t a gradual shift; it’s happening almost all at once.

The scale of increase is particularly striking because packaging has typically accounted for a relatively small portion of costs, around 5-10% of total COGS for most brands. However, in categories such as beauty and personal care, and packaged foods, where aesthetics and product integrity rely heavily on packaging, this share can climb significantly higher.

That makes these categories disproportionately exposed to sudden cost shocks. “For categories like sauces, where packaging can account for nearly 30-35% of the product cost, the increase in PET and PP bottle prices is having a disproportionately high impact on margins,” Baranwal explained.

Even seemingly minor inputs are seeing sharp increases. Packaging tapes have seen almost a 35% spike post the war, which is a sharp jump for something that’s usually a stable cost line, said the founder of a premium dinnerware D2C brand.

What makes the current situation particularly challenging is the speed of these increases. Unlike gradual inflationary trends, the recent spikes have compressed decision-making timelines for founders, leaving little room for strategic adjustments.

Margins Under Pressure

For D2C startups, many of which already operate on thin margins, the rise in packaging costs is not an isolated problem. It is compounding alongside increases in raw materials, logistics, and manufacturing.

The result is a growing squeeze on profitability. Across FMCG supply chains, input costs are already up 6-10%, according to Chowdhary, with further increases expected as supply disruptions intensify. For brands that typically operate at gross margins of 10-20%, even a 1-2% increase in overall costs can materially impact profitability.

And unlike other cost components, packaging is often harder to optimise quickly. “We’ve had to diversify our vendor base aggressively over the past few months,” said the dinnerware brand founder. “Even then, input costs are still up by around 7-8% unofficially, and pricing remains highly volatile depending on availability.”

This volatility is forcing brands to move away from predictable cost planning cycles. Instead, procurement teams are increasingly dealing with fluctuating quotes, shorter validity windows, and renegotiated supplier terms.

This creates a dual challenge: managing immediate cost pressures while maintaining long-term brand positioning, especially in categories where packaging plays a key role in customer perception.

Supply Chain Complexity Rises

Beyond pricing, the current environment is also reshaping how D2C brands manage their supply chains. The disruptions are not limited to cost increases, as they are also affecting availability and production capacity.

“In ceramics, where firing is entirely gas-dependent in India, nearly 50% of factories have shut down temporarily, which has directly cut supply by half,” said the dinnerware brand founder. “That kind of disruption is creating serious constraints across the supply chain.”

Such disruptions are forcing brands to rethink long-standing supply chain strategies. Instead of relying on a limited set of vendors, many are now actively diversifying their supplier base. At the same time, coordination between brands, contract manufacturers, and packaging vendors has become more frequent and complex.

The shift is subtle but significant: from leading an, efficiency-driven supply chains to more resilient, buffer-driven models.

“We’ve had to diversify our vendor base aggressively,” the founder added, highlighting how procurement itself is becoming a strategic function rather than a backend operation.

Logistics is adding another layer of complexity. With fuel prices fluctuating, shipping and freight costs are also rising, further contributing to overall cost pressures.

For many brands, this is leading to adjustments such as:

• Increasing safety stock levels
• Placing orders earlier to hedge against delay
• Accepting higher inventory holding costs to ensure continuity

Beyond Packaging: Category-Level Shocks

While packaging has emerged as the most visible pressure point, the impact of ongoing geopolitical disruptions extends far beyond it. In food and beverage categories, for instance, raw material availability is becoming a concern.

“We’re also seeing cocoa supply getting impacted, which is directly affecting categories like cookies,” said Baranwal. “On top of that, manufacturing units dependent on LPG are facing cost pressures, so it’s a double hit on both raw materials and production.”

Energy costs, particularly for manufacturing processes reliant on gas, are creating ripple effects across industries. In categories like ceramics, the dependence on gas is so high that supply disruptions have led to production shutdowns, cutting output significantly and tightening supply.

These overlapping challenges, raw materials, energy, and packaging, are creating a multi-layered cost shock for D2C brands.

What makes this situation different from past disruptions is its breadth. Instead of affecting a single input or category, the current environment is impacting multiple layers of the value chain simultaneously.

And according to the founders we spoke to, the worst may still be ahead for consumers.

The Pricing Dilemma: Pass It On Or Absorb The Hit?

As cost pressures build, D2C brands are approaching a critical decision point: whether to pass on these increases to consumers or absorb them in their margins. So far, most have opted for caution.

“We’re already looking at a minimum 5% price hike, but most brands are still in wait-and-watch mode,” said Troovy’s Baranwal.

The hesitation is understandable. In a highly competitive ecommerce environment, even small price increases can impact conversion rates and customer retention. At the same time, absorbing sustained cost increases is not a viable long-term strategy.

“In the near term, we don’t see a way around passing on at least a 10-15% price increase,” said the dinnerware brand founder. “You can absorb some shocks, but not when multiple inputs — from packaging to production — are moving up together.”

However, implementing price hikes is not as straightforward as it sounds. Changing MRP isn’t a simple switch. Brands have to redesign packaging, update prints, inform vendors, and phase out existing inventory already in the market. It’s a time-consuming and costly process, which is why most brands delay price hikes even when costs are rising.

This operational complexity creates a lag between cost increases and pricing adjustments, further squeezing margins in the interim. For now, many brands are experimenting with incremental changes, small price hikes, bundled offerings, or subtle adjustments in pack sizes while closely monitoring consumer response.

Most brands haven’t taken price hikes yet, but they will have to start very soon. At these levels of cost inflation, absorbing it entirely just isn’t viable anymore, according to founders.

Spotlight: Secret Alchemist Bets On Fragrance Boom

Founded by Ankita Thadani and Akash Valia, Secret Alchemist is a D2C beauty and personal care startup that has carved a niche in India’s fast-growing fragrance segment with its focus on clean, ingredient-led perfumes rooted in aromatherapy traditions.

The brand operates as a digital-first fragrance label, selling through its own website as well as marketplaces and quick commerce platforms, while positioning itself at the intersection of wellness and premium personal care.

As it looks to scale its presence and deepen its product portfolio, investors are taking note. Secret Alchemist has raised $3 Mn (INR 27.1 Cr) in a seed funding round led by Hindustan Unilever’s venture arm, Unilever Ventures, with participation from DSG Consumer Partners to fuel expansion, R&D, and team building.

The Ecommerce Buzz

L’Oreal To Acquire Innovist 

Beauty and personal care startup Innovist is reportedly in discussions to divest a majority stake to global cosmetics major L’Oréal. As per reports, the global giant would pick up a controlling stake in Innovist at a potential valuation of $350 Mn to $450 Mn.

Assiduus Global Funding

Assiduus, which leverages technology to help brands launch, scale and grow across global ecommerce marketplaces, raised $25 Mn in its pre-Series B round led by Bajaj FinServ. The company will use the freshly raised capital to deepen its AI and data capabilities.

DailyObjects FY26 Revenue Forecast 

D2C design and lifestyle brand DailyObjects forecasts a 2X jump in its FY26 net revenue to around ₹230 Cr from ₹111 Cr reported in FY25, with EBITDA profitability also on the table. Meanwhile, the brand’s net loss widened by over 58%, rising to ₹16 Cr in FY25 from ₹10 Cr in FY24.

DrinkPrime Funding

Water purifier brand DrinkPrime raised ₹20 Cr in its extended Series A round at a valuation of ₹340 Cr, marking a 31% jump from its valuation of ₹260 Cr in the previous funding round. It has also raised an undisclosed amount of debt. 

The Deep Dive

The Operator Question

How do you decide when to hold more inventory versus run lean in a volatile demand environment? We reached out to Swagatika Das, the CEO & cofounder of Nat Habit.

According to Das, amid a volatile demand environment, inventory decisions have to balance cost, agility, and consumer experience. The focus has to be on maintaining an optimal inventory level that ensures continuity without locking in excessive cost. In categories like BPC, staying responsive is as important as staying stocked.

“On the raw materials side, the impact has been relatively contained for us as most of our ingredients are domestically sourced, though we have seen some inflation in imported inputs. The sharper pressure has come from packaging, where the costs have increased significantly.”

“Our approach has been to build calibrated safety stock, especially for critical materials, to hedge against price volatility and supply disruptions. At the same time, we are conscious of not over-indexing on inventory, given the implications on working capital and warehousing efficiency,” she said.

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