The evolution of Direct to Consumer eCommerce Model
By Gautam Malkarnekar | July 08, 2020
1. BRAND (DIRECT TO CONSUMER) ECOMMERCE: JOURNEY OVER THE YEARS
With the advent of Marketplace eCommerce in India around 2008-2009 and it’s rapid success, for several years, brands did not feel the need for Brand (D2C – direct to consumer) eCommerce. By 2010-2015, the brands felt the need to have their own Brand (D2C) eCommerce presence to have a direct connection with their loyal consumers. In the last 5 years (2015-2020) brands faced other challenges on the Marketplaces such as:
- Increased discounting
- lower margins
- Increased ad spends
- Lack of customer loyalty
- No track of customer behavior and data
- Launching their own private label products
Today, as the consumer appetite for eCommerce is growing with deep internet and mobile penetration, Brand (D2C) eCommerce is now vital for a brand to sustain itself in the near term as well as long term, offering a credible and complementary revenue channel to Marketplace eCommerce. Furthermore, the recent COVID-19 lockdown scenario highlighted the need for a reliable and established Brand (D2C) eCommerce from small to large brands.
But has the Brand (D2C) eCommerce support system kept up the pace?2. BRAND (D2C) ECOMMERCE: SUPPORT ECOSYSTEM
The rise in Marketplace eCommerce saw a rise in key partners in the support system such as shipping, warehousing solutions, and payment gateways. Today, Brand eCommerce has a new set of requirements that are only partially fulfilled with the available D-I-Y tech platforms and adhoc agency support for Digital Marketing. There is no partner who offers a comprehensive solution that looks at the underlying tech, digital marketing campaigns, and revenue holistically. The graph below shows how the various solutions are perceived by the brand in terms of their value.
- Basic eCommerce Tech: Hosting + Payment Gateway/Logistic Integration + Basic Security
- Advanced eCommerce Tech: Basic + Advanced Security + Compliance & Certification + Auto Scaling + Advanced eCommerce Features and Functionality + Customized UI/UX
- Digital Marketing: Ad Campaigns (SEM), eMail/SMS, SEO
- Performance Marketing: Digital Marketing + GMV based Revenue Share Model
- Advanced Analytics: Dashboards across multiple data sources + Alerts + Intelligent Digital Marketing campaign Management
- Conversion Ratio Improvement: AI-Enabled User Personalization, Product Recommendations
- Intelligent Recommendations – AI-Enabled Recommendations across Platform performance, Digital Marketing Campaign, improvements to directly impact GMV growth.
- There is a strong need to understand the entire value chain for Brand eCommerce. Knowing how the different parts of the puzzle are affected by your actions, is the key to driving consistent growth.
- As a brand, if you have selected a partner/agency based on their expertise in one area, it is important to ensure that they collaborate with other service providers to get a 360° view and deliver comprehensive value.
- There are very few pure-play Brand eCommerce partners/service providers who offer the entire bouquet of services required to successfully establish and grow revenues for Brand eCommerce.