What is fueling the rise of DTC?

Over the last five years, consumer brands have been seeking to build direct and long-term relationship with end customers for several reasons:
 

• To generate consumers insights, boosting innovation and guiding customer trends
• To improve brand building and build communities leveraging social media.
• To differentiate products and experiences for a competitive advantage

Additionally, the COVID-19 pandemic accelerated profound business trends, including the massive consumer shift to digital channels. For instance, more than 50% of global consumers have used digital devices more frequently over the last year and are planning to continue to shop more online. As a result, many companies have been launching and enhancing their direct-to-consumer (DTC) offerings, indeed 99% of leaders from consumer goods companies are now investing in DTC sales.

DTC is fast becoming a major part of global ecommerce sales, amounting to $14.3 billion in 2019 (a.list) and is expected to reach $20 billion by the end of 2021.

A growing demand for DTC brands

A DTC ecommerce strategy gives a brand higher control over its marketing and sales efforts as well as the customer experience. DTC brands can use real-time customer data to create personalized content, products and experience while boosting customer satisfaction and retention.

Today, the global consumer is increasingly searching for value-driven brands which they can trust. DTC brands can help to establish a deep connection with consumers as they share a direct line of contact, enabling them to be more customer-centric and innovative than traditional retailers.

In fact, did you know that 88% of global consumers prefer to buy a product directly from a brand website?

Within a highly competitive and rapidly changing market, consumers expect brands to offer fast delivery, proactive customer service, personalized products, and value-driven messaging. Consumers also value experiences more than ever, with 43% happy to pay more for greater shopping experience and 63% willing to share data with the brand to enhance their experience.

A DTC ecommerce strategy gives brands the flexibility and agility to meet existing consumer’s needs and expectations and to quickly test and launch new products in the market. Consumers think that own-brands websites offer more comprehensive information and guidance around the products or service, and they have a wider range of products to choose from as well as better discounts.

The DTC approach enables brands to get to know their customers better using real-time data and to offer superior customer service through tailored product recommendations. Instead of broad marketing campaigns, the DTC model uses one-to-one, precision marketing capabilities and digital assets that meets customers’ needs and preferences which help to increase loyalty.
 

Use a DTC approach that pays off

Companies can use a DTC approach to forge deep customer relationships that improve their competitive advantage through:

• Brand authenticity. DTC brands can build a distinctive brand identity with authentic and consistent communication. This results in better customer connection and retention. Today purpose is very important to Gen Z and millennials who make purchasing decisions based on companies’ values.
• Data driven insights. DTC brands can collect consumer real-time data throughout the customer lifecycle and better understand consumers’ interests to improve targeting and develop closer relationships. Highly effective digital strategies based on data driven insights lead to higher retention and lower cost per customer acquisition.
• Better customer proposition. With more control over the customer journey, DTC brands can deliver best in class customer experience from website UX, product recommendations and personalized offers.
• Strong unit economics. The DTC model contains positive attributes like high average order values, strong gross margins and repeat rates via subscriptions models. This model is profitable and drives lifetime value through customer loyalty, leading to greater brand confidence towards new customer acquisition.

If you'd like to find out more about how DTC could enhance the growth of your business, contact us here.