We live in a global world, where the modern customer is spoiled for choice by enterprises competing for his business. In this hypercompetitive market landscape, businesses must explore alternative avenues of reaching their customers while also creating seamless, omnichannel and personalized customer journeys. As a model that checks all these boxes, the Direct-to-Consumer or D2C channel has emerged as a favorite for brands over the recent years.
While D2C has been slowly gaining traction over the last few years, the onset of the COVID-19 pandemic, and the subsequent rise in online shopping has really accelerated its adoption by brands. According to estimates,in the United States alone, online shopping grew to $17.8B in 2020 and projections for 2021 show it on track for a y-o-y growth of 19%. Clearly, this marks a paradigm shift in customer behavior that is here to stay, brought on by government-imposed sanctions on retail stores to drive social distancing.
“88% consumers prefer to buy directly from brands online , and two-thirds of consumers expect shopping channels to communicate directly with brands .”
This shift has forced brands to either jump into the D2C waters with a prayer or accelerate ongoing initiatives. In either case, enterprises have 3-paths they can go down as they attempt to quickly mature their D2C presence.
Let’s take a quick look at each of these paths:
Building your own D2C strategy
As a brand that is already using other established channels, enabling D2C is a complicated process that goes well beyond the simple notion of quickly rolling out a flashy ecommerce site. This is not a problem that can be solved by throwing money at it but instead, requires deep vision and strategy to build omnichannel experiences that resonate with the customers across every touch point of their journey with the brand.
Here are a few recommendations that can help enterprises avoid pitfalls and build a better D2C presence from scratch:
- Instead of taking your entire inventory D2C at once, start with a few that promise the best ROI
- Be cognizant of conflicting sales channels, this would allow you to minimize sales cannibalization
- Make sure that your D2C platform offers the level of personalization customers have come to expect in their online interactions
- Draw upon other technologies such as conversational AI and digital agents to make the D2C experience richer for your customers while also opening avenues for increased revenue through crosssell and up-sell
D2C through acquisition
Acquisition has always been a quick and simple way to bring new technologies on-board, and it is just as effective with regards to D2C. Acquiring a niche brand with an established D2C presence also allows the larger player to quickly move into the market and bolster existing channels and customer base through resource investments instead of having to reinvent the wheel. For the smaller brand being acquired, the acquisition opens new geographies because of the scale-up capabilities of the established players./p>
Customers win as well, as the acquisition allows them access to a wider array of products, across pre-existing channels. Unilever and P&G are great example of businesses that broke into the D2C landscape through strategic acquisitions of niche companies like the Dollar Shave Club.
Partnering to accelerate the shift to D2C
D2C is a complicated endeavor because of the number of gears and cogs involved in making it work. Right from order brokering, merge and cross docking, generating available-to-promise delivery window to ensuring last-mile delivery, there are dozens of steps involved before the delivery professional rings our doorbell.
Dealing with all these complexities can force a brand into completely uncharted territories. This is exactly why many brands are choosing to partner with D2C experts to facilitate the logistics, allowing them to focus on what they know best: their product. There are multiple success stories, including fashion brand Shien which has taken multiple geographies by storm after partnering with Amazon to take care of last-mile delivery.
Regardless of the route a brand takes to channelize D2C, two things will remain constantly important for enhancing customer journeys: First, having a comprehensive customer experience strategy (CX) in place for seamless and elevated customer experience across channels and touch points. Second, having a unified view of customer with integrated data between eCommerce and customer engagement platforms to deliver personalized omnichannel experiences to customers. A CX strategy augmented by a unified view of customer will not only help the brand increase its sales & brand awareness, but also allow it to reduce churn and recognize and leverage new opportunities across the board.
With changing consumer preferences and a world where the average consumer has an entire spectrum of options available before every purchase, it is paramount for businesses to adapt to ever-changing business scenarios. Despite high entry barriers and increasing competition in the current D2C landscape, forward-looking companies will continue to invest in strengthening their D2C chops with an eye to the future.
If current trends are anything to go by, brands investing in D2C would be making the smart choice. According to studies, 52% of DTC brands have experienced demand surges in since the start of the pandemic compared with demand decline experience by 80% of traditional retailers . Clearly, customer behavior has undergone a permanent shift. What has not changed however, is the fact that regardless of vertical or geography, customer is still the king. Businesses what would survive and thrive in the new normal, would do well to recognize the new realities and move quickly to capitalize upon the opportunities offered by the D2C channel.
To learn more about how enterprises can make the shift to D2C and how data-driven customer experience is the key to unlocking D2C, download and read my whitepaper D2C: A Look at the Rapidly Growing Market Segment and Key Enablement strategies.