The Direct to Consumer (D2C) business model is rapidly becoming the new way of doing business in the commerce world. Brands are shown to reap huge benefits for taking the leap towards selling directly to their customers online. As more brands are jumping on board, the ones considering are wondering; “how do I start a D2C business?” Setting up a D2C store is fairly easy and simple when you have amazing platforms like Shopify and a variety of tools to help you to do so. The tough part is the saturated market.
Getting customers to a new online store and getting them engaged enough to become loyal to your brand is a completely different ball game. So how do you stand out from the overcrowded market in this day and age? It’s time to set up your own D2C store and start learning fast!
How do you build a strategy for a D2C business model?
To optimise the growth of your new online D2C business, you need to build a strategy. A strategy is about creating a guideline of principles that give you a clear direction of where you should be going and why. Your job is to understand what your customers want and find a way to deliver it to them in the best way. Without a clever strategy and unique concept, you are just another online store selling catalogue products. So what is the benefit from buying directly from you rather than a retailer of your brand?
Thinking about a concept that works for your brand and your specific industry is the first key step to building a successful D2C business. You have to make some big decisions. Do you want to sell your existing products or do you want to develop a completely new line of products exclusive to your online store?
A good place to start is to choose a range of products you know do well, and look for a whole new market area you have not sold to before. This is the part where you can get creative and figure out what type of value you can offer customers with your products. Brands from all different industries are becoming incredibly innovative with their D2C business strategies and you can too!
Choose a strategy aligned with consumer expectations
Consumer behaviours have changed where price is no longer the only selling point. Consumers increasingly care more about the values of the brand, the service they are receiving, continuity, the quality of the products as well as the ease of the shopping experience. There are a variety of ways a brand can leverage this in their webstore, but let's take a look at a few examples.
Examples of D2C business models and concepts:
1. Customisation
You might have seen some brands have quizzes on their website that allow customers to find the perfect product for their desires and needs. They might also allow the customer to customise and personalise products in their online shop and are seeing huge success through this strategy. As an example, Fazer, the international food experience company decided to digitise a chocolate personalisation experience, where customers are able to design custom confectionary wrappers and send them to chosen recipients. A perfect gift idea for someone on a special day. The great news? 1 in 5 consumers are willing to spend 20% more on personalised products and 46% of them are willing to wait longer to receive their customisable order, as noted in the Deloitte consumer review. This is a win-win for the merchant and customer!
2. Subscription & bundled products
The subscription eCommerce market has blown up with retailers generating up to billions in sales through this strategy. Making purchasing convenient for customers by making it a subscription service is a great way to increase customer lifetime value. Orkla Care, a leading supplier of branded consumer goods in the Baltic and Nordic regions, built a D2C business model that focuses on customer value by answering the needs of the consumer. They decided to sell specialised cleaning products for people with sensitive skin and have all the necessities as bundled services to be bought together. This provided a solution for their customers and created an effective business model. Having bundled products is actually a service that helps the customer find the right products that are useful with the other products they are buying. You might have seen a lot of online stores have the “people usually buy these together” - recommendations when you are completing purchases. This is a perfect example of how bundling products can increase your sales and provide a great customer experience.
3. Customer loyalty program
Loyalty programs are a powerful way to encourage customer loyalty towards your brand. Consumers have been shown to favour brands with loyalty programs and to spend more when they receive rewards. There is a lot of talk about customer acquisition but not enough about customer retention, even though acquiring new customers is harder than keeping the ones you already have. For that reason, having a strategy and concept in place that serves your existing customers is very beneficial for your business. Useful apps for merchants such as Yotpo allows customers to familiarize themselves with the products better, add reviews and see what other customers' are saying about the products. This gives the customer more confidence to buy and also reduces the rate of returns, as customers have more detailed information of what they are purchasing. This is what ethical fashion brand Kaiko has done to bring transparency in their company and ease the customer experience. The strategy has helped them not only drive growth but also keep developing their products based on customer feedback.
Is D2C the future for my business?
You still might be weighing the pro’s and cons of the D2C business model and wondering whether any of these strategies could work for you. The few examples provided are just the tip of the iceberg, the possibilities are endless. Now it is time to roll up your sleeves and dig deep in what is relevant to your business, your industry and what works best for your brand. D2C can be a wonderful opportunity for you to widen your horizons, increase sales, and be able to find customers anywhere in the world. You need to be prepared to have the resources and to be innovative in the ever-changing consumer industry. Having an open mind during this process and being brave enough to make bold decisions and learn from your mistakes is the key to success, just like anything in life. So, are you ready for the challenge?
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