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The traditional retail landscape has changed for good. And even though we’re visiting non-essential retailers and hospitality establishments again, the last few months of lockdown regulations will have a lasting impact on consumer shopping behaviour.
Restrictions to shopping as we knew it – in bricks and mortar stores – during lockdown have allowed direct to consumer (D2C) brands to come into their own. This has been especially proven by the last two months having seen the same amount of transition to digital from offline as the last decade before. And it’s not just established D2C brands such as Gousto and Birchbox, disruptors and other brands who didn’t previously offer a D2C function have been jumping on the hype and pushing their strategies forward in response to the industry booming in order to help stay relevant.
During the pandemic we’ve seen Heinz beans being delivered straight to your door, M&S, Princes and Morrisons offering food boxes to key workers and the vulnerable, and Mindful Chef seeking £25m in funding. Recent reports have even revealed D2C retailers have experienced a sales growth of up to 30% following the COVID-19 crisis. There’s really no sign of the industry slowing down, as D2C has rapidly become a popular, responsive and low-cost option for manufacturers.
This story behind D2C
For brands, the current crisis has been a shock across most sectors. No high street and no non-essential stores up until recently, mean brands have been forced to adapt to survive. But it’s not all gloom and doom. We are already seeing the benefits of changed habits. Brands are recognising an opportunity to succeed, pushing themselves further out of their comfort zone. The current situation has encouraged brands to reconsider how to respond to the challenges we’re faced with and move forward in an alternative way.
But let’s go back in time for a moment. The D2C movement isn’t actually new at all, it’s already around a decade old. The Dollar Shave Club, acquired by Unilever in 2016, is a perfect example of a brand who recognised the opportunity of D2C in the early days. Offering grooming sets via a monthly subscription, it led the way for D2C brands, and we are now faced with more than 500 D2C start-ups existing across a multitude of sectors.
Legacy examples like The Dollar Shave Club have encouraged big retail brands, like Nike, Gap and Timberland to all assess how they can similarly tap into D2C themselves. It’s not just retailers either. Ford have built a D2C offering – Ford Direct – the safe and easy way to buy a nearly new Ford car, with a package of support that helps take the stress out of used car buying. Going beyond consumer goods, the financial sector and B2B companies are also engaging with the concept. P1 is a great example here, the company is working to automate and make the financial advice and investment industry paperless through significantly reducing cost and overheads via its investment platform – making it easier, cheaper and quicker to deliver financial advice and investment solutions to the end client.
But what do these brands all have in common, and why have they chosen to adopt a D2C strategy? In short: lockdown restrictions. It’s been a chance to develop a new type of connection with changing consumer lifestyles.
So, the question is, how can brands just staring on their journey actually be successful in implementing a D2C strategy?
Breaking the mould
In 2016, the subscription industry was worth $2.6billion, and coronavirus has just given the industry another boost.
Brands need to think about how they can adapt and progress their business model to accommodate changing consumer habits. It might be a scary thought (all change is daunting), but companies shouldn’t feel rooted in the traditional methods they’ve been using previously – there’s a subscription business out there for (almost) any product, so why shouldn’t your brand join them? Consider how it will suit your product, brand and consumer best, and then make the leap.
Building a D2C strategy is a chance to better understand your customer and their community by establishing a connection via their lifestyle choices and emotions. Consider what makes them tick and discover their values. For too long traditional retailers have been a barrier between the brand and its consumers. Glossier, is a great example of success. A brand that started from a blog (Into the Gloss), made the business decisions quickly become a D2C beauty brand and consequently billion-dollar phenomenon, highlighted the importance of finding your own brand niche.
Casper mattresses is another example. The brand focused on finding one single mattress that offered comfort for the biggest market possible, whilst minimising the lengthy process behind choosing a mattress. It made a promise which shaped the brand in its early days, and that was one of ‘simplicity’. Most importantly it turned simplicity into a niche luxury and proved that offering something simple as an antidote to a complex and sometimes overwhelming market is a way to come out top.
By truly specialising in your sector, you also win when it comes to search. Nowadays, more than ever, we are led by the consumer. So, you want to be top of the list when they type into that search bar. Beyond this, you must also take into consideration omnichannel, the customer will choose where they want to engage with the brand, so you have to deliver the brand promise wherever and whenever they choose to do this.
Other things you should consider when refining your strategy include:
- Being comfortable with data. Look at cost and ROI and understand the conversion rate.
- Offer true value. Don’t let people visit your site and then go to Amazon for the product.
- Have a marketplace strategy. These platforms are experts in driving sales, will continue to be so.
- Take the lead. Consider ways to manage and control the brand experience.
- Make it count. Have a presence, if you don’t, then you can’t have an impact.
- Get matchmaking. Employ the right internal skills and best-suited agencies.
- Have the right technology in place. Building the right tech stack for your D2C capability is key.
Follow these suggestions for your D2C strategy and you’ll be on track to adopting one fit for the future.