D2C ad spends fall 120-180 bps as returns rise 55%: Report

LS Digital has released an e-commerce report titled 'The Great Indian Commerce Shift', based on an analysis of more than 1.5 million orders across over 30 enterprise brands during the festive period from July to December 2025.

The report points to changes in online shopping behaviour, suggesting a shift away from traditional linear purchase journeys. It describes what it terms ‘Bipolar Buying,’ where consumers split purchases between quick commerce platforms for immediate needs and online marketplaces for planned purchases. According to the report, buying decisions are increasingly influenced by urgency, context and speed.

The study noted changes in performance metrics during the 2025 festive season. Marketplace conversion rates increased from 4.4% to 6.1%. At the same time, D2C brands reduced advertising spends by nearly 120-180 basis points while recording a 55% improvement in return on ad spend. The report said this reflected a move away from volume-led growth toward efficiency-driven performance.

Quick commerce platforms recorded higher conversion rates for lower-priced products. For items priced under Rs 500, quick commerce delivered conversion rates three to five times higher than traditional marketplaces, the report said. Marketplaces continued to play a role in higher-value categories where longer consideration and trust remain important.

The report also found that advertising cost trends varied by category. Personal Care and Home & Décor recorded cost-per-click inflation of 77% and 71%, respectively, while Innerwear and Household Supplies saw cost-per-click declines of 33% and 46%. Tier II and Tier III markets accounted for 65% of festive season orders.

On fulfilment, the report said 51% of festive orders were delivered through stores, surpassing centralised warehouses for the first time. It added that delivery timelines exceeding three days led to a 140% increase in return-to-origin rates, particularly for cash-on-delivery orders in non-metro areas.

Commenting on the findings, Rupak Ved, Group CBO and CEO - Media, LS Digital, said, “The 2025 festive season made one thing clear: growth is no longer a function of scale alone. The linear funnel is dead, and Shoppers have split into two distinct economies. In 2026, efficiency will not come from bidding smarter but will come from allocating budgets correctly across the funnel and building intent before the conversion window opens. Brands that align with 'Platform Personality will see exponential efficiency gains, while those chasing volume will struggle against the inflation wall.”

E-commerce performance in 2026 will be shaped by how brands respond to real-time demand, manage acquisition costs and improve delivery speed across platforms and markets.