Retail has undergone a significant transformation with businesses putting customers at the epicenter of the shopping experience. For a long time, businesses in this space relied on the winning formula of speed, convenience, relevancy, and product availability. However, to keep up with the rapid pace of change over the last year, companies that relied on traditional sales channels had to deal with a host of new challenges and restricted opportunities, pushing many of them towards direct-to-consumer eCommerce.
What exactly is Direct-to-consumer eCommerce?
DTC, or direct-to-consumer, is an eCommerce approach where you eliminate the need for any intermediaries to sell your products. You can offer your products and services directly to the customers through digital mediums like eCommerce stores or social media channels. With no middleman in the selling process, you gain total control over the product’s manufacturing, marketing, and distribution.
The rise and rise of DTC eCommerce
Direct-to-consumer eCommerce is on a strong path to exponential growth and retail evolution. These stats highlight its monumental rise and a promising future for retail:
- In 2019, 2 out of every 5 Americans made bought directly from the brand or manufacturer, circumventing retailers like Amazon and Walmart.
- DTC online sales accumulated to $17.75 billion in 2020, recording a growth of more than 24% over the previous year. The number is expected to reach $21.25 billion by 2021, which is more than threefold growth in just four years.
- DTC brands account for nearly one-fifth of all purchases made by US consumers.
- The number of DTC eCommerce customers is expected to hit an all-time high of 103 million by 2022.
Two sectors that have undergone a seismic shift in the overall retail strategy are CPG and Fashion & Apparel. In particular, by 2021, CPG is expected to constitute 6.6% of all eCommerce sales with the DTC movement contributing to a 40% sales growth in the sector. Big-box retailers are investing heavily in DTC: Target paid $80 million for a share in mattress retailer Casper, while Walmart acquired eCommerce-led apparel company Bonobos for $310 million. Even Unilever entered the DTC market by purchasing hugely successful brands like Dollar Shave Club for $1 billion.
The fashion & apparel industry is also adopting the DTC model in a big way. Giants like Levi’s, Nike, and Adidas are making significant investments in revamping their online stores, introducing new products regularly, and offering more customized products to their customers.
Why sell directly to consumers?
Selling directly to consumers is a win-win strategy for both the brand as well as consumers. For the brand, it brings opportunities to form a stronger bond with the customers to foster loyalty. On the other hand, consumers can benefit from an authentic brand experience as well as tailored offers.
Let’s look at some additional benefits of direct-to-consumer eCommerce that make it the essential retail strategy of today:
Improved customer loyalty
DTC eCommerce unlocks more opportunities to connect directly with the consumer. With full control over every aspect of its product and service portfolio, a brand can offer personalized offers and even create its unique loyalty & rewards program to foster better customer loyalty.
Data-driven personalization
With a direct connection with the consumer, you can have high-quality consumer data at your disposal. This data can enable you to provide better services by tailoring their experience. Behavioral data can help in better segmentation of customers so that you can engage them with unique content, personalized offers, discounts, and more.
Increased profitability
When you’re eliminating the middlemen, you’re slashing the cost of additional product markups paid to them and improving your profit margins. Bypassing your traditional retail distribution partners can save you around 10-15% from the wholesalers and 15-40% from retailers.
3 strategies to win at DTC eCommerce
Align people and processes
DTC is an altogether different approach to retail as it doesn’t involve any intermediaries. This means that you’ll have to make fundamental changes to your existing processes and ensure that your people are trained and onboard to adapt to this new way of doing business. For instance, you’ll have to train your teams to directly address your customers’ concerns as you don’t have the retailers to do it. The right tools combined with a proper plan can help you successfully make this shift.
Unify data under one platform
Data is pivotal to a great customer experience. How you use it can dictate the quality of the overall experience. The customer’s interaction with your brand at each touchpoint generates data. With all this data unified under a single platform, you can streamline operations as well as gain valuable customer and segment insights to create personalized experiences. A CRM platform can help enhance your customer engagements consolidating all the data in one place to help you create consistently seamless customer experiences across all touchpoints.
Go omnichannel
White direct-to-consumer selling can increase revenues, its actual strength is in unearthing valuable insights that can help brands to thrive across all channels, partnerships, and customer touchpoints. This is particularly important given the fact that no two customers shop alike. Choose the channels that your consumers prefer and focus on delivering an omnichannel experience to them. Technology can help you integrate all these channels and leverage automated tools to engage with your customers through tailored SMS, emails, push notifications, retargeting ads, and so on. As now you’re directly reaching out to your customers, make it as convenient for them as possible.
How can Visionet help?
Direct-to-consumer eCommerce is where retail is headed – especially if the ongoing turbulence continues to disrupt supply chain networks. While the Amazons of today will continue to dominate traditional retail for the foreseeable future, opportunities are wide open for brands to build impactful direct-to-consumer presences. And the right technology partner can take you there quickly and seamlessly.
We at Visionet can help your brand adopt a rapid yet cutting-edge DTC eCommerce presence through Catapult – our tailored, multi-tier, and multi-phase digital commerce implementation methodology. By combining our decades of digital commerce implementation experience with our proprietary accelerators and connectors, Catapult brings your vision of seamless cross-channel buying experiences to life. Get in touch with our experts to see how our award-winning solution can give your retail business an unparalleled edge.