The COVID-19 pandemic has changed countless aspects of daily life, including how we buy, sell, and work. In the ongoing transformation, Direct-to-Consumer (D2C) is emerging as a popular e-commerce strategy, allowing businesses to sell to end-consumers without a third party facilitator. For companies that now have to operate completely online due to lockdown measures and concerns around in-person transactions, D2C is a welcome solution.
In fact, predictions state that D2C sales will account for $17.75 billion of total e-commerce sales in 2020 - up 24.3% from the previous year. What's more, D2C can be applied across a variety of industries and offers a host of benefits to both consumers and companies. From improved customer experience, customization, and communication, to greater control, in-depth understanding of users through data gathering, and higher margins, here's why D2C is set to be a core part of the remote revolution:
Businesses that were once reliant on on-site locations have had to rethink how they distribute goods as brick-and-mortar stores close in the pandemic. As many as 25,000 shops in the U.S. are expected to shut this year, and many are opting to digitize processes to adapt to the new conditions.
Naturally, manufacturers want to streamline their sales and make savvy decisions that enable their business to survive in the long-term. With D2C, companies don't need to go through inefficient wholesale or resale processes. They remove the middleman and combine custom software, selected tools, and partnerships all in one place for an enhanced overview of business performance.
Likewise, businesses get complete ownership of marketing, deciding how they want to portray goods and services, and having greater flexibility to change branding. As a result, companies can tailor their brand and customer experience according to user research and engagement - which ultimately leads to stronger customer loyalty.
D2C also empowers businesses to leverage their building power and reach with channels that are closest to customers. For example, feedback can be collected via integrated chatbots, surveys, and interactive content. And, because D2C is an all-in-one solution, companies can collect website metrics like user clicks, product views, conversion rates, and more, which provides valuable insights about audiences and their behaviors.
At its core, D2C ties together product strategy, sales channels, customer handling, marketing, and tech support, and offers a unified platform for businesses to conduct daily tasks. By serving as a bridge between offline and online processes, D2C can reach people who previously weren't familiar with e-commerce but want to shop with companies they know and trust. At the same time, D2C opens doors to new markets and user segments by giving companies significantly more online visibility.
Cloud technology could be the backbone of the D2C revolution, as it powers many of the capabilities that D2C offers.
For instance, businesses can make a proof of concept with cloud technology and bring it to market in a shorter time frame and with minimal costs. There is therefore greater agility to test new products and begin selling faster, rather than waiting for stakeholders to approve and deploy goods. Likewise, manufacturers can develop a specific product and brand strategy, test it within a tight demographic and gather feedback to iterate quicker. These small increments ultimately have a substantial impact on business goals.
The cloud also serves as a place to host different systems such as design-powered, stellar frontend, frictionless payment, customer engagement, behavioural analytics, and fulfilment. Cloud technologies are essential for smooth backend processes, including order and inventory management, as well as accessing ETL and data warehouse analytics. Plus, data can be piped in from other tools and platforms, which simplifies spinning-up an initial version of a D2C business. In turn, companies can spend more time analyzing data and identifying important trends and less time managing data pipelines.
The majority of manufacturers and traditional retailers start their D2C strategy on a small budget, which is no problem as models can work with low-capacity machines and a simple set-up. Companies can then choose to scale-up as the business grows, being able to respond to changes in the market by adding new systems to their cloud environment(s).
Cloud technology supports omnichannel delivery too, so companies can configure their online store via a headless commerce platform, enabling them to stand out from competitors with a high-quality customer frontend and distinct brand.
Considering that 40% of consumers are anticipated to buy from D2C brands within the next five years, there is a clear need for businesses to learn about, and embrace, the strategy. Fortunately, there are already brands like Dollar Shave Club, Gillette, Nike, Bang & Olufsen, Herschel that are successfully D2C and are paving the way for others to follow suit.
While D2C was once seen as an 'alternative' business structure, it's fast becoming a necessity to pivot in the COVID-19 crisis and tap into an increasingly online-only consumer base. And along the way, companies get the additional benefits of higher revenues, customer insights, and better conversion rates.
Win, win.