Overcoming D-to-C Obstacles for Success
Direct-to-consumer (D-to-C) strategies are very effective across different brands and companies. And yet, to find long-term success, these stakeholders must be aware of the many obstacles and how to overcome them.
What is D-to-C?
In this rapidly evolving market where e-commerce has significantly changed consumer buying habits, many have turned to D-to-C strategies. Instead of sending large numbers of products to third-party resellers, companies embracing the D-to-C model utilize internal channels and ship products right to the buyer, no matter the order sizes.
As McKinsey explains, D-to-C snowballed during the pandemic and hasn't ebbed as conditions on the ground have slowly and finally improved. For example, in 2020, e-commerce sales penetration in the United States more than doubled, increasing from 16 percent the year before to 35 percent. In addition, companies that have successfully transitioned to D-to-C saw e-commerce revenue increase almost 50 percent over the same period.
According to Statista, D-to-C e-commerce sales in the U.S. will hit nearly $175 billion by 2023, compared to the $129.31 billion generated in 2021. In the first year of the pandemic, 2020, that number stood at $115.5 billion.
Overcoming the Challenges
Not surprisingly, some obstacles must be avoided when selling D-to-C. Some of these are easier to overcome than others, as you'll read about below.
What Makes You Different?
Popular e-commerce strategies inevitably lead to more competition, which is both a challenge and an opportunity. On the one hand, increased competition makes it easier to determine which products sell and which ones do not. On the other hand, for a company to get its products recognized, it must find ways to differentiate its customer buying process compared to everyone else.
What can distinguish one company from another can take many forms. One of the reasons Amazon.com climbed to the top of the e-commerce mountain and remains there is the ease of use. Having a speedy website is also beneficial; no one wants to lose sales because web pages are too slow or the checkout process is too cumbersome.
A carefully crafted mix of website promotions can also help companies keep customers happy and coming back for more.
Some companies differentiate themselves by offering more and better shipping options. For this, many have turned to third-party delivery providers. Experts in their field, these organizations provide a mix of shipping services, including nationwide, same-day and scheduled delivery. In addition, some now offer white-glove service, reverse logistics, and item assembly for larger shipments.
Overall, it's essential to understand finding success with D-to-C is highly dependent on reaching out to millennials and the Generation Z crowd. These folks are digital natives and often prefer shopping online. They expect elevated customer and brand experiences that traditional retailers may not be able to provide.
Customers like having choices, whether buying furniture or clothing, exercise gear, or home furnishings. Because of this, D-to-C companies should make it possible for customers to customize and personalize items on the fly. Depending on the product, giving customers the ability to easily change colors, logos or backgrounds can go a long way toward growing brand loyalty and increasing sales.
The most successful D-to-C companies recognize the power of social media marketing. Success, however, isn't achieved just by promoting certain products on Instagram, Twitter or Facebook. It also means developing authentic relationships with a target audience and figuring out what makes them tick. This means tapping into their lifestyles and interests and taking these into account when creating online content such as blog posts, instructional videos and video snippets.
The rise of social media hasn't happened in a vacuum. Today, these same social media platforms are where many consumers are making most of their purchases. In other words, companies can't just rely on having a traditional online store anymore to generate sales. For D-to-C companies, this means maintaining the resources to embrace new channels as customer habits change. In 2022, leveraging technologies like augmented reality, virtual reality, and perhaps the biggest buzzword of the year, the metaverse, will be important.
For growing D-to-C brands, tapping into the latest technologies doesn't just mean having an online presence on TikTok or being able to ship products in 24 hours or less. It also means having the technical infrastructure to meet ever-changing customer demands. Sometimes this is only possible long term by partnering with organizations that are already leaders in specialized technical fields, such as analytics and logistics. Unfortunately, these parts of a business are often tough to manage well.
Some partners not only assist companies in getting products from one point to another, they also incorporate software platforms that allow companies to oversee those deliveries and tap into customer reviews and other metrics.
The pandemic helped jump-start D-to-C e-commerce sales and marketing. Even in "normal" times, D-to-C is expected to grow in the coming years. But whether an organization finds success in D-to-C depends on conquering the many obstacles.
Jay Sackos is the vice president of Dolly, a leading on-demand delivery service trusted by retailers like Lowe's, Costco, Crate and Barrel, Big Lots!, and many more.
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Jay Sackos is the Vice President of Dolly, a leading, on-demand delivery service trusted by retailers like Lowe's, Costco, Crate & Barrel, Big Lots!, and many more.