Why D2C Brands Are the Future of Retail?
Last year was an explosive year for the retail industry in the UK, particularly eCommerce, which had the biggest festive season ever. In 2019 eCommerce sales grew 14.6 % compared to the previous year.
What do Glossier, HelloFresh meal kits, and Casper have in common? All three are direct-to consumer online retail brands that have achieved worldwide recognition and success.
What Does Direct-to-Consumer (D2C) Mean?
Direct-to-consumer (or D2C) is an emerging retail business model, where companies manufacture, market, and ship their products directly to buyers without relying on traditional stores or other middlemen.
This allows D2C companies to sell their products without sharing their margins with 3rd party companies and maintain end-to-end control over the making, marketing, and distribution of products.
Beyond a magnificent social media presence, D2C brands offer more convenience, typically via a subscription that ships orders directly to shopper’s home. It’s estimated that by 2021, roughly 93% of UK internet users are expected to do online shopping, which is the highest online shopping penetration rate in Europe.
Infographic courtesy to Coredna
Why Has the D2C Business Model Grown in the Last Few Years?
There are many reasons D2C brands have grown in popularity: more and more people buy goods online and entrepreneurs can open a business without a physical store.
As a result, business owners are remodelling supply chains and rethinking the customer experience.
Social media now allows companies to target their ideal customers cost-effectively while allowing them to have total control of marketing budgets.
It is estimated that there are more than 400 D2C brands on the market today, and according to a recent report by IRI, online sales will account for 10 percent of all CPG sales by 2022, which will be up by approximately 1.4 per cent from 2015.
So what exactly has led to the success of D2C brands in recent years?
Online shopping is convenient, quick (thanks to next day delivery), and cost-effective, as customers can compare prices quickly and easily across brands and retailers.
As Scott Ginsberg, the Head of Content at Metric Digital comments on bigcommerce.com:
“Brands don’t want to rely solely on the stores to put the products out in the right places for the right people, or for the local sales reps to be educated about it. The other upside is, brands who go direct to consumer take ownership over their most important assets: Their customers.”
The Advantages of Direct-To-Consumer Marketing
Direct-to-consumer marketing is undoubtedly on the rise.
Below, we’ve listed 4 benefits of the D2C model:
#1 Complete Control of Your Business
D2C brands have total control over product manufacturing, marketing, selling, and customer service.
#2 Easier to Build Amazing Customer Relationships
D2C brands can directly interact with consumers. You’ll be able to make any improvements based on customer feedback and address any issues without relationships being damaged by a third-party retailer.
#3 Bigger Revenue Growth
D2C brands increase their revenue by eliminating 3rd parties (supplier, manufacturer, wholesaler, and retailer) from their supply chain. This means that D2C brands don’t have to split their fees with any 3rd parties.
#4 Gain a Better Understanding of the Customer
D2C brands usually target their customers on social media, which allows to obtain in-depth data and understand customer preferences, lifestyles, demographics, etc.
Digital marketing allows to get a clearer picture of buyer behaviour and as such, increase conversions while delivering unique, personalised experiences.
How Do Direct-to-Consumer Brands Approach Marketing?
The explosion of direct-to-consumer companies provides an interesting opportunity for savvy marketers who are aware of the enormous potential for the industry.
A CommerceNext study revealed that 78% of D2C brands increased their 2019 marketing budget compared to 60% of traditional retailers, and D2C brands were spending a larger percentage of eCommerce revenue on marketing.
To stand out from the crowd, you need to make your mark when marketing online. We’ve made a list below on how you can get started:
Infographics and memes. Never underestimate the power of visual content.
Instagram ads. With over a billion users and more than 25 million business profiles, Instagram have launched a variety of paid advertising formats [we removed the link because it’s common knowledge, you want to keep your outbound links to other websites to a minimum] from “Shop Now” to “Swipe Up” to IGTV that directs consumers straight to the site.
Celebrities and micro-influencers. By working with influencers, your message can get in front of millions of people and increase your brand awareness and sales.
This year will bring continual change (and challenges) to traditional marketing strategies for retail and D2C brands. It’s all about taking full advantage of digital platforms and engaging with your audience.
NICOLA MONGON is the MD of Spotlight Recruitment, the leading marketing recruitment agency in the UK since 2008. Read our 5* Google reviews from candidates and clients to find our more. If you would like to discuss recruitment, you can reach Spotlight on 020 3008 4254 or firstname.lastname@example.org