The direct-to-consumer (D2C) retail model is at an interesting crossroads. For companies that are both manufacturers and retailers, a D2C model benefits these brands by removing middlemen and third-party suppliers from the equation and selling products directly to consumers. The beauty of D2C is that there is a low barrier to entry with lower overhead costs that yield higher margins for retailers.
However, the D2C market recently hit a small bump, experiencing a drop in gross margins on average, by 19% in the past year. This decline is attributed to rising Facebook ad prices, issues with ad measurement and increased shipping costs. But not all is lost, and there are plenty of reasons to be optimistic about the potential of D2C as major brands continue to invest. In fact, in 2021, Nike planned to conduct 60% of their sales through D2C channels by 2025.
When facing supply chain issues coupled with rising shipping costs, D2C retailers can succeed by focusing on an exceptional customer journey. For retailers wanting to excel in D2C, measures must be taken to connect with customers by offering a complete personalized omnichannel e-commerce experience.
Why D2C Is Attractive to Consumers
In many ways, selling merchandise through a D2C retail model is not that different from selling via B2C and B2B models. Customers will always respond to an engaging and personalized customer journey from any retailer that can provide desired products efficiently.
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It’s also important to note that both millennials and Gen Z are inclined to support and buy directly from brands that they believe are making the world a better place. In fact, a Google study from 2021 found that nearly 60% of online consumers say they’ll go out of their way to purchase directly from a brand.
Build An Exceptional Customer Journey at Every Touchpoint
With customers eager to buy directly from brands, D2C retailers can reach these shoppers with an exceptional customer experience. From the moment a shopper hears about a brand to the moment they receive their order, every touchpoint along the way should be exceptional and connected.
Consistency is key when it comes to messaging and managing customer expectations around product inventory, shipping, and delivery. Even if there are external supply chain issues that impact inventory availability and shipping, providing an omnichannel experience that is connected and consistent can help retailers manage customer expectations.
Second, D2C retailers can employ several measures to cultivate customer loyalty. D2C retailers should consider offering special memberships or VIP perks to customers. In addition, selling products on a subscription basis, either through a scheduled replenishment of favorite products or by offering the chance to try curated items, are unique ways to delight customers with convenience and the ability to try new merchandise.
Customers love to feel like brands know and understand them, so leveraging personalization with targeted messaging and product recommendations can shore up customer delight and loyalty. Retailers have a treasure trove of data about each customer’s interests, so why not use it to deliver personalized messages and special offers that will delight shoppers?
Finally, leveraging a unified commerce platform is a great way for D2C retailers to meet customer needs. Not only can customers be reached across all channels, but delivering a personalized omnichannel e-commerce experience is easily achievable. With a unified system, all data about customers, inventory, orders, shipments, and more is available inside the same platform so retailers can execute from one portal of truth.
The Power of D2C
With a D2C model, retailers can take the entire customer experience into their own hands, ensuring that brand identity is authentic, consistent, and well-targeted to the right customers. In today’s modern yet complex retail landscape, D2C offers retailers a number of opportunities to succeed.
—Meyar Sheik, President and CCO, Kibo