The 4 pillars of a great direct-to-consumer strategy
Direct-to-consumer is the new retail disruption.
In our age of extreme immediacy in which every imaginable product is available with the click of a button, it’s no surprise that direct-to-consumer brands are skyrocketing in popularity. Nowadays, along with low-price consumer packaged goods (CPG), you can order entire coordinated outfits from Frank and Oak, meals in a box from Goodfood and personalized hair dying kits from L’Oréal’s Colour & Co. The examples of brands disrupting the market in this way are everywhere and those taking the plunge are not looking back. Point in case, according to IAB, Nike projects that their direct-to-consumer sales will have grown by almost 2.5 times between fiscal 2015 and 2020, going from $6.6 billion to $16 billion. As for the food market, meal kit services are taking off: with sales expected to grow tenfold by 2022, the to-your-door delivery formula is reminiscent of the days of the milkman.
So, as Mitch Joel would say, why is “direct the new disruption”? These direct-to-consumer brands are inherently consumer-centric, as the entire shopping experience becomes built around their specific needs and wants. Forget about the masses, in this model, things get personal. To achieve this level of tailoring, you can’t go about it haphazardly, there needs to be one-on-one engagement with each person. Here are the four pillars that uphold the direct-to-consumer strategy:
Though we might think people are always attracted to the shiniest new thing, they actually enjoy predictability because it allows them to feel like they’re in control. Recurring sales are set by users and happen on their terms, whether it’s a weekly box from their favourite meal kit, their monthly delivery of socks or the yearly arrival of their new glasses. Tailoring these shopping experiences according to customer needs allows them to decide where they interact with your brand and when they receive your products, which creates a repeatable service and builds long-term, sustainable relationships. According to J.D. Power, with approximately ⅔ of all consumers in the United States expecting direct connectivity with the companies from which they get their goods and services, it’s safe to say that this isn’t your grandma’s market anymore.
As direct-to-consumer business models also set the scene for a more direct line of communication with customers, it becomes all about developing a highly curated and personal long-term relationship. Messaging apps and chatbots are becoming go-to channels for direct-to-consumer brands to make those sought-after connections. For example, two of our top Shopify clients (Polysleep and Fody Foods) are pioneering direct-to-consumer business models, in the online mattress and fodmap snacks industries respectively, by leveraging Heyday chatbots to engage customers on a personal level and facilitate the buying and shipping experience. By interacting directly with clients, you’re creating a valuable relationship that fuels itself with declared data. A chatbot implemented at the forefront of your online presence can ask the right questions at the right time in order to gather a person’s specific wants, needs and interests, which is crucial when looking to personalize your offering to them down the road. The information that chatbots glean during first interactions could be useful months later when your brand releases a new version of a pair shoes in a fresh new shade of orange. You’ll know exactly who loved and loathed those kicks, so you can focus on who to spread the word to.
Maybe above all else, consumers are looking for the smoothest shopping experience possible. It’s a busy world out there, time is a precious resource and brands who know how to conveniently save people time and effort are coming out on top. According to Forbes, research found that, after people bought an Echo smart speaker, their Amazon purchases increased by 29%, especially in the CPG category. Within the new voice-activated purchase ecosystem, Amazon has understood and leveraged that people love to just dictate the items they need to a speaker and have those things show up swiftly at their door, with no fuss and no store. In this all-connected, mobile-first world, the middleman is getting cut out in favour of a return to older tactics that focus on direct service, a model in which pre-selected items show up at their door.
With all this innovation in e-commerce flying around and consumers quickly adopting new purchase modes, it’s the perfect time for brands and customers alike to try something new. In online shopping, there’s an interesting balance between predictability and novelty: users enjoy the reliability of getting a monthly subscription and being in the driver’s seat for the shopping interaction, but they also love the novelty it allows for. This combo makes direct-to-consumer brands the perfect channel for experimenting with new products by testing them on a loyal fanbase that has willingly signed up for the challenge, before releasing them to the masses. Oreo’s partnership with Amazon for the Oreo Cookie Club Subscription Box, in which they send surprise cookie flavours to enthusiastic subscribers, is the perfect example of this kind of leveraging. In creating the club, the company managed to both delight their biggest fans, while getting priceless feedback about their new flavourful directions and also generating a sense of exclusivity.
AI-powered tech is making traditional service new again
In this ever-growing AI-augmented world, chatbots and virtual assistants help steer shoppers towards purchases that cut out the middleman and land directly on their doorstep – part of the sales dynamic coming full circle. Like when the milkman used to deliver fresh dairy straight to your home, companies are going back to highly personalized and direct relationships with customers thanks to chatbot support. User experience is at the very top of the marketing food chain, and companies are figuring out that sometimes things really were better back in the day, with a bit of help from AI, of course. The future of retail is a lot like its past: it’s mainly about creating meaningful and personalized shopping experiences, though now they can all happen online. In the end, maybe the current consumer climate has more to do with grandma’s era than we thought.
If you’re looking to create a direct-to-consumer channel and collect highly valuable data, contact us for a free consultation session.
Share this article
Sign up to FutureReady
Get your executive briefing on the future of customer experience in an AI-driven world.
Meet your new customer experience champion
Enter a new era of customer experience management, powered by AI.