Direct online sales has shifted the way brands interact with their customers. By cutting out the middleman, establishing online relationships with customers directly, and guaranteeing pleasurable buying experiences, D2C brands are shaping a new retail experience.
Setting the SceneOver the past 100 years, the retail and consumer brand landscape has been dominated by giants who’ve leveraged massive scale, powerful distribution networks, and tight control over limited advertising mediums to choke competition and own market share. These factors served as barriers to entry for smaller brands who could not compete with the resources that the likes of Procter & Gamble or LVMH wielded at their disposal. In the last 15 years, the rise of internet connectivity, social media, and technology has all but eroded these barriers, which has given rise to a new set of challenger brands. It’s no secret that technology is fuelling a new age in retail. As mobile apps, artificial intelligence, and augmented reality become common features in the e-commerce experience the number of retailers adopting new technologies is rising and competition is getting fiercer.
Disrupting the Status Quo
- Digital-First Brand Platform Rather than a product a consumer might first encounter in a physical retail store, D2C companies start building their brands as digital experiences. That means the cost of market entry is much lower as there’s not an immediate need to have inventory or a retail distribution system in place.
- One to One Experience Customers tend to read reviews first. Those Amazon comments inform the customer’s decision on whether or not to buy a product, making the one to one relationship in the full buying process one of the building blocks of the D2C brand.
“66% of new product searches begin on Amazon today vs 20% on search engines, and 4% on a brand website. Amazon has replaced Google when it comes to finding products. Even when a shopper plans to buy an item from a physical retail store, they often read the product’s reviews on Amazon before purchasing the product at a brick and mortar store.”Source: Feedvisor
- Vertical Integration D2C businesses design and work directly with the producers of their products. This is where we can see the practical application of a customer’s specific needs and preferences.
AdvantagesWith the endless availability of around-the-clock purchasing and global marketplaces selling personalized goods, standing out is even more important. By utilizing a digital-first brand platform, one to one brand customer relationship, and vertical integration, D2Cs are involved throughout the customer journey. They are able to gather the necessary data for optimizing marketing strategies, user experience, payment processes, and in turn improving the overall customer experience. This rich source of data enables these brands to better target and better serve their online customer base. It doesn’t stop there; not only can retailers use ticketing to help manage live customer engagement, but the information learnt from the interaction can be used to improve the experience further and tweak the way the retailer actually works! The data acquired also need not be solely transactional in nature: NPS, special event attendance, organic traffic, and customer reviews all give insight into the emotional response elicited by a brand and its products and services. These sentiments are extremely important, the company can then develop with the customer and expand its reach.
The Long Lasting ImpactConsumers are leading the changes to products and services. At its most basic, this new way of building a business ensures that the brand and the individual target customer develop together in a way that is mutually beneficial to both the business and the consumer. Promoting reciprocation in a deep, loyal, and committed relationship. This progress is unprecedented. The notion that a single data point can interact with a brand and that the company as a whole can then, and will, optimize for that individual is a wonderful step forward in retail’s evolution and consumer quality of life.
“The e-commerce platform, which supplies businesses with means to sell products online, recorded almost $3 billion of global sales over the Black Friday to Cyber Monday shopping period last November, a 61% increase from the year prior. This is an example of how direct-to-consumer is no longer a fad.”(2020) CNBC – Direct-to-consumer ‘is no longer a fad,’ Shopify COO says after strong Q4 earnings report