The COVID-19 crisis brought monumental shifts to retail and placed the customer front and centre of the shopping experience. Retail relationships came under pressure, shopping habits across geographies and generations changed — and many brands were thrust into the world of direct-to-consumer (D2C) sales.
D2C was a space that was previously dominated by digital natives, but long-standing brands are increasingly taking the leap. Traditionally it has been popular within the fashion, consumer goods and housewares verticals, but D2C brands are popping up in a range of industries, from cars to fast-moving consumer goods and beyond.
Opportunities and Challenges
Brands who navigate the journey to D2C successfully have greater chances of gaining benefits through one of the strongest forces in e-commerce: buyer loyalty. If the shopping, buying and shipping experiences meet their expectations, establishing trust and cementing a positive impression of the brand’s image, the D2C transaction may encourage consumers to revisit the brand for additional needs and explore what else the brand has to offer.
Marketplaces, in particular, experienced rapid growth during 2020, as buyers and brands flocked to the platforms to connect during the closure of brick-and-mortar shops.
Now, consumers continue to seek their favourite brands on marketplaces, with millions of transactions occurring across Amazon, eBay, Zalando, La Redoute, Allegro and other channels each week. As shopping activity continues to evolve, online marketplaces are also becoming a first stop for many consumers searching for a particular product or brand. The information crucial to deciding to launch — or grow your existing presence — on marketplaces always comes back to the interests of your buyers.
Challenges appear when operational costs outweigh the benefits. And shipping costs, marketing, bringing traffic to your website — all cost more than ever before, according to Arlando Velho, strategic account director for brands, EMEA at ChannelAdvisor. Furthermore, keeping up with changing consumer expectations — all while maintaining inventory, launching new products and curating top-notch customer interactions at every juncture — presents its own level of vigilance and effort.
To successfully confront those obstacles, it’s critical to take control of the end-to-end transaction and the customer experience.
Velho suggests focusing on three core areas as you begin: marketing, selling and operations. While these systems are already critical components of your business, concentrating on seamless movement between them will play a significant role in the outcome of your D2C enterprise.
And, as with any multichannel strategy, the ability to react to market changes with speed and agility is key.
Velho offers five tips to boost a D2C model:
- Start the conversation internally and get buy-in from the top.
- Identify the consumer problem and pivot with purpose.
- Think differently, but don’t overthink it.
- The challenge is the unknown.
- Use the insights to amplify your marketing efforts.
Velho emphasises an innovative, broad approach to balancing retailer relationships and the pursuit of D2C. The most productive retail mix extends offerings to support both activities.
“Your retail partners haven’t suddenly become unimportant,” Velho said. “If you’re not thinking about how you can improve their business by doing your D2C, it’s only going to become competitive.”
The Horizon and Beyond
It’s likely that consumer habits that have changed significantly during the pandemic will remain in place for some time. In a survey ChannelAdvisor conducted with Dynata in June 2020, 56% of UK shoppers indicated that they research online more before shopping in-store than they did before lockdown (and for shoppers aged 18-26, the figure rises to 72%). Since the start of the first lockdown in the UK, 80% of consumers noted that they received a good online service from a brand or retailer and say they are more likely to shop with them in future, while 53% have discovered new brands or retailers and plan to shop more with them online.
E-commerce will continue to adapt to shopping trends, consumer expectations, market pressures and economic influences in the future. Brands and retailers need to take stock of their current offering and invest in their online marketing and selling capabilities to create an interconnected customer journey that is able to generate revenue, both with your retail partners and your overall business.
Want to learn more? ChannelAdvisor recently collaborated with The Drum to develop a report investigating the advantages, potential pitfalls and complex considerations for brands entering D2C. Download your copy today to obtain more in-depth analysis, case studies and interviews with several brand experts on this topic today.