Direct-to-consumer (DTC) ecommerce is expected to record strong growth in 2021. So, is it time for your ecommerce brand to go direct?
In 2021, ecommerce is expected to make up 6.6% of all consumer-packaged-goods (CPG), with DTC movement to account for 40% of the sales growth in the sector. It is clear that many big brands such as Nike are pivoting to a DTC strategy.
Jean-Phillipe Nier, Head of Ecommerce UK&I at The Kraft Heinz Company, had this to say about DTC:
“In the future, this [direct-to-consumer] channel will be incredibly powerful to get closer to our consumers, get insight, and take learnings to the rest of our business.”
The movement to DTC is an emerging trend that we have identified will be important for merchants to act on this year. It is not only a potential avenue for revenue, but it is also a testing ground for companies looking to experiment with customer engagement.
With better customer engagement brands will be more likely to retain the customers that matter to them and build up customer loyalty.
In this article, we’ll explore what it means to go direct-to-consumer. We will also look at the reasons why DTC is looking charged for growth and what this can mean from a loyalty perspective.
What does direct-to-consumer mean?
DTC is about cutting out the middlemen and engaging directly with your customer. This means promoting and selling a product or service directly to the consumer.
“Mail-order catalogs, the first-ever of which was published in 15th century Venice, gave customers a first taste of the potential of D2C. Customers would receive a pamphlet of products (initially just books) they could purchase directly from a particular merchant for mail delivery. D2C marketing is essentially the new and improved mail-order catalog.”
So what does this mean in the modern age?
Largely as a result of the pandemic, online sales rose by 52.7% year-on-year in August 2020. In the age of online retail, DTC gives brands the power to take ownership over their brand, their data and how they communicate with customers. The better you can communicate with customers, the more likely they are to trust you and return to your brand.
Why is 2021 the year of direct-to-consumer ecommerce?
DTC is set to grow in 2021. The pandemic has meant brands have had to pivot. Legacy wholesalers and offline brick-and-mortar sellers have had to begin selling direct for the first time.
The nature of online retail means that it is quite simple to make this change. “Heinz, established in 1869, launched its first-ever DTC initiative in seven days. And Lindt, a Swiss chocolate company since 1845, launched in just five.”(Shopify)
The case for “selling direct” is substantial. You can cultivate better customer relationships and more dependable pricing. You can also have control over your brand-building.
Whether you are thinking about reach or brand or pricing, selling direct via digital avenues rather than traditional ones increases your potential to foster customer loyalty and boost your revenue.
More so than any other year, 2021 represents a point of opportunity for direct-to-consumer brands.
How can a direct-to-consumer model help your ecommerce brand?
There are three lessons you can learn when applying the DTC model to your ecommerce brand.
1. It gives you the opportunity to foster relationships with customers
66% of customers said they would be loyal to a brand if they could create ongoing relationships with the brands they like. Check out the Loyalty: Up close and personal report to discover other drivers of customer loyalty.
When you have control, you’re able to connect with customers in the ways you want. The conversation is productive and the customer is more likely to integrate you into their lives.
For example: Astrid and Miyu communicate with customers in ways that are human. They are focussed on building a community around their brand. The brand provides value to the customer, rather than just selling.
2. You are able to advance and hone the personalization of your brand
By fully owning your data, you have more touchpoints to tailor your content. You can serve customers with the right communication at the right time and hone your direct-to-consumer marketing.
Customers want more personalization. 65% of customers said they would be loyal to a brand if they got personalized offers; 61% said they would be loyal to a brand if they got personalized recommendations. See more stats like this.
For example, you can send different emails to at-risk and churned customers to encourage them to return and spend loyalty points at your store. Additionally, Boody includes the customer’s point balance in the email to remind them they have points in their account and to encourage them to return to the brand.
3. Finally, you can assert full control over your brand identity
You get to choose how your brand is put out in the world. You decide the message your company portrays so you can better connect with the right target market.
For example, Hobes used the loyalty page editor to make a clean page that integrates seamlessly with their site, their brand and their ideal customer. This helps to make your brand identity clear and makes it easy to connect with customers which in turn creates loyalty.
The takeaway from these three points is that you can have an improved relationship with the people you’re selling to.
Customers will be more loyal and return to your brand. You will be able to discern where your brand is successful and where it needs more work. As a result, you’ll experience greater demand and hopefully increase your bottom line.
Time for your ecommerce brand to go direct-to-consumer
DTC is an emerging trend in 2021. It’s important for brands to react to stay ahead of the game. While DTC has been around for a while it has become even more significant in the last 12 months.
A DTC model can help you foster relationships with customers, advance your personalization and ensure you have full control of your brand identity. During this difficult period for companies of all sizes, it is important to make every business decision count.
DTC approaches will work well for you now and in the future as long as you commit to a strategy that fosters loyalty and builds your brand.
Fast-track to your way to a year of breaking records. Check out our Accelerate campaign where we’re bringing you 12 ecommerce trends that you need to act on in the new year!