The transformative potential of Direct-to-Consumer retail strategies
How technology is giving merchants the tools to reshape and nurture customer relationships in D2C.
The transformative potential of Direct-to-Consumer retail strategies
How technology is giving merchants the tools to reshape and nurture customer relationships in D2C.
Optimizing an age-old concept
In recent years, a new range of businesses have decided to adopt, adapt, and modernize the notion of Direct-to-Customer (D2C or DTC). Simply put, D2C brands are those that design, manufacture, and sell goods directly to the consumer. Retailers like Warby Parker, Everlane, Bonobos, Dollar Shave Club, and Glossier have all found success using direct-to-customer strategies.
The trend towards D2C has attracted all types of retailers, with over three-quarters (78%) of enterprises claiming their organization is either actively implementing a formal D2C strategy or is in the planning phase.
of enterprise respondents said that in the last 12 months, a greater proportion of their sales revenue was generated via D2C channels
Direct consumer channels which grew fastest in terms of revenue
Branded mobile app
Mobile web browser
Web browser using a computer
Shoppable social media
Branded brick-and-motor store
Other physical presences e.g. pop-up stores, mobile store, etc.
Research shows a massive revenue opportunity
We commissioned 451 Research to examine the prevalence of direct-to-customer business models within digital commerce. Their survey of more than 200 enterprises and 3,000 consumers in North America revealed a nearly $165 billion revenue opportunity through the delivery of cross-channel buying options and personalized experience.
The main driver of this evolution is technology. Consumers now have the option of spreading payments for larger items and returning or exchanging items without shipping fees. Social media platforms provide a cost-effective alternative to expensive print, while payment platforms make it easier than ever for brands to set up their own online stores.
revenue opportunity with D2C strategies
“Our challenge [in 2020] was, ‘How do we bring that genuine and beautiful in-store experience to our digital channels?’ We’ve launched new customer service initiatives such as live chats and video consultations, curbside pick-up, and click-and-collect.”
Robbie Tutt ･ GM of Digital and Technology, Aesop
Bypassing new barriers created by COVID-19
With the shuttering of countless brick-and-mortar stores, an unprecedented number of consumers have switched to digital channels to shop and transact. Consumers are seeking safe and quick low- and no-touch purchase experiences. The D2C model gives brands an inroad to capitalize as businesses seek ways to adapt to pandemic-driven market shifts.
Direct-to-customer businesses remove steps in the shopper journey, allowing brands to own the relationship between their product and the consumer. This seemingly personal approach deepens customer relationships and builds both trust and loyalty, especially with the option of membership perks and a strong payments strategy.
Ensuring choice at checkout builds customer loyalty, but many D2C companies fall short
of customers will buy directly from brands they trust
of customers are less likely to shop a brand with limited payment options
of D2C businesses offer alternative payment methods
of D2C businesses offer loyalty payment methods
“The payment methods you offer means that we can give more freedom to customers to pay how they would like to pay.”
Mike West ･ Digital Director, LUSH
Technology bridges the gap
A payments platform that offers unified commerce makes it easy for brands to expand into all digital and in-person channels their customers frequent. Not only do effective D2C payment strategies provide consumers with choice at checkout, they also reduce incidents of fraud and create a seamless customer experience no matter where people shop.
The majority of enterprise respondents said that their D2C strategy allows for better customer engagement and loyalty (83%), greater control over the customer experience (89%), and greater agility and competitive standing (93%).
in potential sales lost due to friction at online checkout
Top 8 payments strategies to grow a D2C strategy
“Customer expectations are not simply that you’re able to sell across channels but also that the whole experience is intuitive and fluid.”
Dominique Essig・Chief Experience Officer - Bonobos
