What is D2C and how might a brand benefit from it?
Commerce was heavily affected by national lockdowns and shutting businesses and services down due to COVID-19. As consumers were forced to stay at home, they turned their heads to eCommerce solutions like never before according to the McKinsey Digital report. The virus accelerated the change in consumer behavior. With more time spent online, searches for individual value fitting products and services grew. Meaningful content and serving a purpose grew more important. COVID-19 presented a dreadful threat but also an unique opportunity for brands building strong direct dialogue and connection with their customers.
Retailers did their very best of staying on the surface of consumers' minds. They had their own brand battle to defend, among other battles. When consumers searched for solutions of their needs, brands providing customers with the right, informative and purpose-driven content were winners. This spring awakened several manufacturing industry brands to ask themselves the question: Should we also be involved in selling to consumers?
This phenomenon is known to walk around as Direct to Consumer, DtC, D2C, Direct Brands or Digitally Native Vertical Brands. In any case we shall be discussing this phenomenon as D2C now.
Products are sold directly to the consumers, thus there are no intermediaries. The brand promise and the value proposition are delivered as originally intended by the brand to its customers. Customers can be reached to build loyalty and engagement with the brand. Direct access to communicate with customers gives you a feedback loop for developing new products and services via customer dialogue. Each customer action leaves a digital trail in your hands. The brand owner has direct control over the range of products and product bundles. There is the possibility to own a niché market in a chosen segment in a chosen market area. Not the least, direct sales also enable higher margins.
What does it take?
Leaning towards D2C proposes a great challenge for the board members. It is a change that needs strong management. There are current wholesaler and retailer agreements to respect. Simultaneously there is a great opportunity outside of them to pursue. An opportunity lies in experimenting combining products with new service models that wholesalers or retailers would not be able to offer.
Pursuing the opportunity can be done in Lean startup spirit. The low-risk trials are built on experiments. Experiments that offer proof of concept of real-life markets, actual business and sales. Experiments built in a way that they won’t interfere with existing business and processes. Building engagement directly with your brand also helps the wholesalers and retailers increase sales. Connecting loyalty programs to reach the whole value chain enables your access to more enriched data which eventually allows you to learn from your customers things beyond imagination. Previously cited McKinsey article explains how an European retail chain with around 1000 brick-and-mortar stores launched its e-commerce business just in 13 weeks – from scratch during COVID-19 shutdown.
When looking to explore deeper to identify your brand potential in D2C we advise you to look into partners experienced with commerce, tools, technologies, and processes for experimenting with your true D2C potential.
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MAREENA LÖFGRÉN, BRAND MANAGER, WOOLMAN OY