Updated: Jan 11
The lifestyles of people transformed in the year gone by. One big thing that also changed is the way they buy the things they need and want. Everything was merely a click away and delivered at the doorstep, putting a phenomenon called D2C (direct to consumer), aka DTC aka direct selling, right in the centre. In May 2020 alone, online spending across the world hit $82.5 billion, a staggering growth of 77% year-on-year. People found what they needed online, and got it delivered where they are. No middlemen, no marketplaces, no third-party.
So what is direct selling?
By definition, D2C is the easy process of delivering consumer product brands directly to them. It kicked off with consumer retail like fashion and homeware, and is now spreading into more big-ticket items like electronic gadgets and white goods.
Digging deeper into D2C or direct to consumer sales, the process rolls quite easily. If you are a vegan food brand, you create a product at your facility. When a customer orders for soy milk through your own D2C eCommerce store (built using an end-to-end eCommerce platform like Shoptimize) or your digital marketing efforts - you can have it delivered to them directly.
DTC is ideal for existing brands that are eager to grow their online presence, allowing them to use features like dynamic messaging, retargeting and other digital personalization techniques. What’s more, in a year where many new businesses started and others pivoted, the direct to consumer business model also offers an easy entry into a market. Little wonder that according to a recent report called Decade of D2C – Disrupting the next decade of shopping by Avendus, direct to consumer brands could be looking at a $100 Bn opportunity in India by 2025.
What makes direct to consumer brands a promising success story?
With D2C, you can manage the end-to-end customer experience chain and leverage generated data to create unique, efficient, and highest return experiences for them. Let’s see this with 4Ps.
More profit –No intermediaries means that brands cut distribution costs and maximize profit margins, building their line-up the way they like it. Imagine delivering your soy milk to your customer at his home in the way you would do it best. No inefficiencies that you cannot control.
More personalization -From websites to personalised messages or product delivery, with every direct touchpoint, brands have an opportunity to build emotional and value-added reasons to buy. So you can offer your regular customer a week of free smoothies in different flavours.
More precision –With access to all data in real-time, you can identify patterns, trends, needs, and user preferences. This means you also have the freedom to use this data in various ways by segmenting your users to precision. Additionally, you don’t have to stick to one sales platform. You can see where customers are shopping from the most, and build a precise omnichannel strategy to reach them. Go ahead and offer discounts on soy banana smoothie on your website, if you know that one customer segment loves a highly nutritious drink before hitting the gym.
More possibilities –D2C means the universe of digital-first marketing is unlocked for retail brands. You can regulate all your branding and conversion efforts under one funnel and finally close the circle of communication easily.
Such is the growing success of D2C that according to the Direct-to-Consumer Purchase Intent Index, more than 80% of end consumers are expected to make at least one purchase through a D2C brand within the next few years.
To kick off, what does 2021 entail for direct to consumer brands?
Trend watch #1 More sophisticated digital interactions
Direct to consumer brands will embrace richer digital experiences, both to create a more wholesome product as well as to deliver it. With the increasing use of Artificial Intelligence, these experiences can be tailored to match the interests of individual buyers and be delivered to them, when, where and how they want – something customers have long been demanding - inspiring greater customer loyalty.
Trend watch #2 Absolutely personalized experiences
Whether a customer receives an email in the Inbox, sees a digital ad, or talks to a chatbot, such experiences will become intensely relevant and tailored. Thus in a make-up brand, a buyer can match products not only to their skin tone, but also to their lifestyle and reason to buy – a nude brown lipstick at work and a hot pink shade for letting her hair down after work.
Trend watch #3 Data in the right hands
To state that quintillions of customer data is being generated as we speak is to state the obvious. But what was not as obvious so far, was the management of customer data. With this data being moved into the cloud, IT will only collate data, and marketing and business teams of D2C brands will take over the ownership of the data, and be able to put it to better use.
Trend watch #4 More D2C channels in the fray
As direct to consumer brands will increase focus on customer experience and product diversification, it will become crucial for them to choose how much to sell via D2C channels as compared to marketplaces. They will also need to figure the product mix and social media marketing stories with greater depth.
Trend watch #5 Direct to consumer brands built on stories
Whether on apps or websites, the “stories” feature will become strategically important for buyers to feel closer to the brand. Business owners will need to describe more than just product information – they will need to share their inspiration and business values. For instance, if a jewellery business owner shares that she started making contemporary silver jewellery to revive her grandmother’s timeless collection, it helps the buyer to make a compelling connection.
These trends augur sunny days for direct to consumer brands. But aligning with this trend will need to be studied, yet swift measures.
Here’s a deep-dive at what consumer brands can do to brace for the rise of D2C:
The D2C roadmap for 2021
D2C success will rely on several factors running cohesively towards one goal.
One of the most important factors will be to maintain a sense of relevance for consumers – coming as close as possible to existing and prospective customers. This will need to reflect in customer experience interactions on the brand’s website as well as in digital advertising.
With relevant insight mining generating a single view of the customer, direct to consumer brands will need to personalize the shopping experience for their customers. A trekking gear brand, for example, can use the buyer’s previous shopping (such as a warm and light jacket), search, and browsing history (maybe trekking shoes) to tailor the way the buyer navigates through their website. This could be as simple as prompting the buyer to log into their account so that the order history, payment, and shipping details are collated. Or in a personalized product experience, the trekking shoes can be offered as personalized – maybe soles with a stronger grip, or maybe doodles.
This naturally dovetails to the fact that these initiatives will no longer be taken in siloes. Instead, these omnichannel interactions will feel seamless to the consumer and they will demand unique experiences on each. By DNA, direct to consumer brands are digital natives, with social media and e-commerce an innate part of the brand’s construct. They will need to continually use technology to differentiate themselves in the digital shopping world.
Empowered consumers are fast taking control of their data, and choosing to decide how they want brands to engage with them. The brand that manages to grab and retain customer attention will sail through.
This will also bring the brand’s own websites in the spotlight, servicing unique and personalized content to loyal (and demanding) customers through personalized messaging through banners and offers. Digital tools at the disposal of brands will continue to proliferate: SEO, PPC, social networks as social selling channels, retargeting and more.
This could change how businesses and supply chains work. D2C strategies will also spark off new revenue streams through subscriptions, new product launches and customised tactics that lead to more user loyalty than ever.
According to a study by Invespcro, 78% of D2C brands have increased their marketing budget compared to only 60% of traditional retailers. Keeping up this upward trend means that D2C brands will need to come from a real place. Born from a mission-driven intent, the emphasis cannot just be on high-quality products, but on stories. Direct to consumer brands will truly come alive because of their unique personalities, powerful stories and enduring narratives.