Why Should Retailers embrace Direct-to-Consumer Strategies?
There are many reasons to employ a direct-to-consumer strategy – here Nicky Tozer, NetSuite’s EMEA Vice President, offers her top tips for businesses
Shoppers have slowly started coming back to the high street in England as non-essential stores reopened their doors. But it’s clearly not going to be a quick return to business. Store closures have impacted retailers since the start of the pandemic, and changes to consumer expectations, purchasing patterns and priorities are speeding up a shift to online-first, direct-to-consumer (D2C) retail strategies.
There are still questions about whether “normal service” will ever be resumed. The latest figures from Springboard found footfall from the week commencing June 15 was down 54 per cent on the same week in 2019. Meanwhile, over 85,000 businesses launched online over the last four months as lockdown sparked one of the most significant evolutions the United Kingdom retail sector has ever seen. While e-commerce growth could stabilise as more brick-and-mortar stores reopen, the experience will undoubtedly have a lasting effect on consumer habits.
What connects many modern retail brands is their online-first strategies, and a commitment to delighting customers at every stage of their purchasing journey. Brands are waking up to the fact customers are open to something deeper, even when it comes to spending in less-discretionary categories, like groceries, everyday household goods and utilities. The prominence of e-commerce and social media means brands themselves are engaging directly with customers, without the need for a physical location.
This ability to now go direct to the consumer has changed how retailers operate. With the pandemic accelerating this D2C shift, the opportunity for retailers is clear. Here are three direct-to-consumer strategies for retailers to consider.
Learn From Each Transaction
E-commerce is the foundation of direct-to-consumer retail and, for most, the primary sales channel. The online experience needs to be faultless. Customers expect the website to be visually appealing and user-friendly, with seamless site navigation, a frictionless checkout experience, photo galleries and detailed product information for every item. Many customers also expect free shipping and returns, which increases conversion and encourages repeat purchases.
Brands that have a presence in physical stores need to tie together the online and offline experiences seamlessly. After losing access to stores, consumers who prefer the ability to try an item before committing to purchase, couldn’t do so. Retailers knew this, so introduced pickup and local delivery for online orders, and easy return processes if the item wasn’t right for them. Several consumers may have recently tried these online options for the first time, and brands should be speaking to consumers to see if this is a service they’d like to use again.
A robust direct-to-consumer strategy requires brands to learn from each consumer transaction. Having an online presence is no longer just about reaching as many customers as possible – it’s also about keeping up to date with their preferences and truly understanding what makes them tick. By observing their shopping habits and generating insights from customer data, retailers can adapt products and services accordingly for the future.
Establish Loyal Customers
One distinct advantage direct-to-consumer businesses have over traditional brands is their ability to cultivate a loyal customer base. Shoppers today are focused on finding brands with values that align with their own, and they then become engaged, loyal followers of that brand. This is the community that will support initiatives like new product releases or pop-up events, or advocate for brands on their behalf.
Loyal customers are also less likely to abandon the brand during challenging times. They will feel a stronger desire to support this brand because they have a personal relationship and are invested in the business’ success. Most retailers have changed their communication with customers during the last few months, but direct-to-consumer retailers have used this time to deepen their relationship with customers. They’ve shown empathy and concern for customers, while also being transparent about their own priorities.
Be Ready To React
Direct-to-consumer businesses often do more with less. These brands have a deep understanding of their typical customer profile, including their interests and values, and they know how to speak to them. That allows them to spend advertising budget wisely while leveraging free channels like social media to pull in prospective and existing customers.
Brands that sell directly to consumers are usually more flexible, too. They often have no stores, or only a handful of them, and a smaller workforce, so there are fewer fixed costs. That’s a key advantage as retail undergoes a sudden shift and faces a less certain future. Other brands must embrace this willingness to change gears quickly as consumer preferences and the overall market continues to fluctuate.
Success For 2020 And Beyond
Brands can still succeed in the evolving retail landscape by learning from their direct-to-consumer counterparts. They no longer need to rely solely on others to market and sell their products. Instead, they can look inward and focus on what they can control. Direct-to-consumer offers a tremendous opportunity for retailers that can both drive revenue in the near-term and become critical to their long-term success.
Right now, none of us quite knows how things will pan out over the rest of the year, and what the longer-term effects of the pandemic will be. But the way consumers interact with brands has likely changed for good, and retailers must pursue new ways to reach shoppers if they want to succeed.