Given how ubiquitous Amazon has become in online shopping, it’s pretty refreshing to see a brand pop up that is not affiliated with the mega marketplace. Or any other marketplace or retail middleman. Direct-to-consumer brands (D2C) were made experience strong growthespecially at a time of extraordinary challenges in retail. The path of successful digital disruptors can provide a roadmap for older brands looking to improve their ecommerce game.
In the US, D2C e-commerce sales are expected to grow 128 percent from $ 76.6 billion in 2019 to $ 175 billion by 2023. according to eMarketer. In the same period, sales of digitally native D2C e-commerce are expected to increase by 131 percent from 19.3 billion US dollars to 44.7 billion US dollars.
According to Initials, a London-based marketing and advertising company, D2C 19 percent growth in 2021 alone. It also cites studies that say 55 percent of shoppers would prefer to shop from brands direct, while 40 percent say they will buy from a D2C brand in the next five years.
âAlthough the direct model has gained prominence in all sectors, studies suggest that it still plenty of room for growth“, Says Annie Little, Senior Strategist, of Initials in a paper titled” The Rise of D2C: What the Modern Shopper Really Wants “. âFrom our own research, we found that 82 percent of consumers currently have between zero and four D2C relationships. This result shows that the market is still in its infancy. There is now a tremendous opportunity for legacy brands to break the status quo with a D2C offering that meets the expectations, values ââand desired experiences of modern consumers. “
The COVID-19 pandemic continues to transform consumer shopping habits, making this an opportune time for brands to add or improve their D2C channel. Note that 52 percent of consumers are now searching for clothing ideas online more than before the pandemic, according to Cotton Incorporated’s Coronavirus Response Consumer Survey (Wave 7, Aug. 6, 2021). Consumers had plenty of time during the pandemic, and most (66 percent) said they learned a lot about buying clothes online.
Before the outbreak of COVID, research by the Coronavirus Response Survey (wave 7) shows that 46 percent of shoppers bought all of their clothing from a physical store, while 25 percent bought mostly from a physical store with some items purchased online. Another 14 percent bought half of their clothes in-store and half online, 10 percent bought mostly online, and 4 percent bought all of their clothing through online sites.
But in the future, when the pandemic is indeed over, according to the Coronavirus Response Survey (Wave 7), only 26 percent of consumers expect to buy all of their clothing in one physical store. Rather, the largest segment (29 percent) assumes that they mainly buy a few items online in brick-and-mortar stores, and 24 percent expect to buy half online and half in-store.
The reality is that, according to the Coronavirus Response Survey (Wave 7), almost three quarters of shoppers (70 percent) say they got used to shopping for clothes online during the pandemic.
From the consumer’s point of view, D2C shopping makes sense right now. Direct brand offer Convenience, ease of use, control over purchases, and the ability to customize, says Little. Old brands need to build on these values ââand prove why they’re relevant, rather than just launch a D2C channel.
For brands themselves, D2C represents fewer barriers to entry, higher margins and more control over their branding, marketing and sales strategy, says Little.
But whether they know it or like it, D2Cs compete with the standards set by Amazon, said Jeremy Goldman of eMarketer, senior analyst at Insider Intelligence, during the “Think like a D2C disruptorâ-Webinar. When consumers are reluctant to shop with a D2C, they consider delivery times or costs (36 percent) and the inability to try / see products in real life (34 percent). Add to this the inconvenience of returning products (21 percent) and concerns about data security (19 percent).
âOver time, the Amazons have the world Changed exactly what the average customer expects“Said Goldmann. “These are the things that D2Cs have to work on if they want to keep gaining market share.”
Branding discipline and focusing on a specific niche will help direct brands hold their own against larger companies with more resources, Goldman said. Brand discipline means narrowing down the choice and simplifying decisions, which ultimately improves and enriches the customer experience. Data and testing, he says, is at the heart of a good customer experience, so these brands invest in that data and let it guide them.
Data collection is more difficult Now that Apple and Google have limited the ability to track users. But that’s what most users want: 76 percent of consumers say they don’t like it when companies track them online, according to the 2020 Cotton Incorporated Lifestyle monitorâ¢ survey. At the same time, 70 percent say they want brands and retailers to give them recommendations based on past purchase history, and 66 percent want clothing brands and retailers to know more about what they like and how they shop.
However, gathering customer information wherever they can is crucial as it helps brands maintain relationships with their customers. Goldman says D2C brands Appreciate customer loyalty more than acquisitionbecause â60 percent of a typical D2C brand’s sales come from customers who have previously bought from it. Recurring revenue models include memberships, subscription boxes – for both recurring purchases (convenience) and discovery. Brands also need to diversify their advertising. Digital is saturated, Goldman says, so brands are starting to shift their ad spend to TV, direct mail, and experience marketing that engages directly with the consumer.
ChannelAdvisor’s vice president of digital marketing strategy, Link Walls, also attended the Think Like a D2C Disruptor webinar and said brands are getting smarter use purchasable media and provide customers with a faster way to buy, be it through ads on Facebook, Instagram, or elsewhere.
Little says that D2C “stay picky and hard foughtâFrom brands that keep playing their part in consumer life.
âThe brands that can create relevant, personalized and connected experiences that meet the wants and needs of a new generation of buyers,â says Little, âwill be the real winners in the D2C room. “