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02/19/2021

4 Considerations For Traditional CG Brands Entering DTC

Things are being stirred up in the world of retail, with direct-to-consumer (DTC) companies challenging traditional consumer brands. These new breeds of DTC businesses are operating with business models that are both flexible and consumer-centric. 

One of the most widely cited DTC success story, Dollar Shave Club, impacted its segment with a subscription-based model and inexpensive but effective viral marketing ads, making it an attractive deal for Unilever. Bonobos, meanwhile, has garnered brand loyalty through its excellent customer service and support.

A major hunk of DTC revenue is spent on marketing (24%), which is much higher than the average of 9%. They are taking over social media with an army of followers and influencers, and are experimenting with a range of promotional activities such as pop-ups, targeted ads, and e-commerce to help them gain exposure and lower operational costs.    

However, there is still a way for established consumer brands to claw their way back into the fold — by rolling out their own DTC solution. Here are a few key considerations for CGs thinking of taking the plunge. 

1. Improve Speed to Market

DTC companies stand apart for their ability to launch products more quickly than their traditional counterparts. This is where tech suites come in. These platforms are equipped with machine learning and predictive analysis capable of capturing customer feedback in real time and provide actionable solutions for consumer brands.

They are even capable of testing out products digitally before the design and product development processes are involved, which aids the sales team in gauging the demand for future products.

2. Prioritize Digital Channels

An e-commerce platform is of course mandatory. Shopify or Squarespace can be a low-cost starting point and first party-data collection can begin. Slowly over time, the entire customer experience can be enriched in order to create happy shoppers.

Digital channels are the best place for companies to reach their target audience and build direct relationships with them. Social media channels including Facebook, Twitter and Instagram are where around 60% of online purchases happen, according to Catalyst and ClickZ. The firms also states the importance of search engines, as 57% of consumers discover new products on them. 

3. Enrich Customer Experience with Tech Support

For companies today, omnichannel presence is of utmost importance, especially digital ones. Digital touchpoints and transactional behavioral data can help develop an intense personalization strategy at scale. A consumer data platform is also required to collect, collate and analyze customer data from various sources such as social media and ad campaigns.

Understanding unique responses of customers also plays a role in enriching the customer experience. Take a look at Bonobos, a company that focuses on approval ratings by bulking up their customer support. They provide their customers with ultra-responsive support “ninjas” to handle customer queries and feedback.

This not only helped increase direct traffic, reaching up to 53.5%, but also approval ratings among customers, because no one sells your stuff better than your own happy customers through word of mouth.

4. Find the Right Logistics Partner(s)

Shipping and delivery of products is a critical point in the journey of an eager customer and for businesses too. It is also an area where API can be integrated to reduce errors due to human fallibility. A reliable logistics partner’s (Fedex, DoorDash) APIs need to be integrated for building complete reliability on the delivery front. A reliable partner would allow companies to accurately calculate shipping costs, provide choice of speed of delivery, ensure safety in delivery and enhance customer experience.

Amazon also has a vital role to play as 68% of online shoppers use Amazon to research, compare and buy products, as cited by Catalyst and ClickZ.  For now, there is no way around Amazon while implementing a DTC growth strategy.

Time for a Direct Approach

It is time for consumer brands to get back in the driver’s seat. With the DTC approach, companies can now push out third parties and reach out directly to consumers to market themselves, build a stronger connect, and become self-reliant.

Ajith Nayar is VP of marketing at Algonomy.

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