The rise of D2C: what the modern shopper really wants

The Drum 19 Feb 2021 04:00
By Annie Little-19 February 2021 16:00pm

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The rise of D2C: what the modern shopper really wants

In the past few years, a new generation of disruptive startups has emerged, and they are forcing traditional brands to re-think how they build, market, and sell products.

These direct-to-consumer (D2C) players utilize an innovative marketing strategy that enables them to enter the market directly, without relying on middlemen or third-party suppliers. This eliminates the barrier between producer and consumer, giving these businesses greater control over their brand, reputation, marketing and sales tactics.

Fuelling these shifts lies a change in shopper behavior and psychology. New research shows that 55% of consumers prefer to buy from brands directly, while a further 40% of shoppers say they will purchase from a D2C brand in the next five years.

For legacy brands, there is now a massive opportunity to disrupt the status quo with a D2C offering that delivers on the expectations, values and desired experiences of modern consumers.

Let’s uncover why.

Knock-on effects from the Covid-19 pandemic have accelerated the shift towards digital platforms. This offers shoppers an easier and more convenient customer experience. But this transition is nothing new; in fact, D2C players have been capitalising on this new set of experiences for years.

According to our research, values such as ‘convenience’ and ‘ease of use’ top the list of D2C benefits, with a resounding 94% of shoppers choosing at least one of these as their reason for shopping with D2C brands.

At Initials, we use a simple equation that cements the value of a direct proposition: convenience + customization = D2C conversion.

Clinique’s Karen Ehrlich, agreed with this: “It’s about having a one-to-one dialogue between the brand and consumer. This means D2C brands can be in full control over the range of brand experiences they offer. By tailoring communications to the consumer, D2C brands can ensure content is always relevant and personalised, which leads to a better customer experience.”

A link between purchasing intent and category

Direct brands have used advanced customer data metrics to personalize the entire brand experience, allowing for marketing campaigns that drive at the heart of the individual’s wants and needs. This set of tech solutions has optimized the relationship with the customer through automation of processes and sufficient scalability in volume and sales channels.

Beauty, for example, is one of the leading D2C categories, with brands such as Glossier and Harry’s setting the standard for customer-first strategies that are centered around convenience and customization. Unlike traditional competitors, these new players have experimented with distribution models and designed a customer experience that delivers on the values shoppers care about.

While some categories may have had a head start in adopting and applying the D2C model, we’re now seeing this become accepted more used by brands across a number of different sectors.

Some categories are now in the early stages of acquiring an engaged and loyal customer base. Alcohol, for example, is beginning to infiltrate the space, with D2C sales increasing by a marked 27% during the pandemic.

Brewgooder’s James Hughes commented on the adoption of the D2C model: “We’re now at a point where everyone feels they can do D2C. The companies that really do it best are the ones that utilize all the strengths of their brand. Our aim is to interlink all of our services, so we can unlock the potential of the online consumer journey and transition effortlessly from online to offline.”

This is where legacy brands have ample room to leverage the strengths of their existing customer base and consumer journey. By providing a D2C offering that is part of a larger, connected experience, legacy brands can make their market positioning more relevant and deliver products and services in ways that resonate with today’s shoppers.

As we analyze the D2C space, it’s clear that direct brands have succeeded by delivering on the values that matter most to a new generation of shoppers. This, in combination with a more structured and in-depth data set, has enabled a much more personalized brand experience.

Since more than 50% of shoppers have less than two D2C relationships, there is still plenty of room for brands to enter the space. This is especially true for heritage brands that may have a more traditional product offering.

While the number of current D2C relationships may be fairly low, brands should expect that increased competition in the space will make this a key battleground for customer acquisition in years to come.

In fact, the defining criteria for success in this space may well be determined by the product serving a behavioral need. For example, Gousto has solved a coordination issue that consumers didn’t even know they had. By providing people with a menu of items, rather than having to shop for a long list of ingredients before cooking, Gousto has saved people time, money, and mental space.

The brands that can build relevant, personalised, and connected experiences that meet the wants and needs of a new generation of shoppers will be the true winners of the D2C space.

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Karen EhrlichClinique
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