Recently, it’s been impossible to walk down a city street, ride the subway or scroll through Instagram without coming across an ad for a popular new direct-to-consumer (D-to-C) brand. These industry disruptors are positioning themselves independently from the retail giants that once owned the space, and instead selling straight to the consumer. From toothbrushes and mattresses to suitcases and sofas, these high-quality, affordable products are shipped straight to consumers’ doors in a matter of days, changing the way people shop and giving them exactly what they want, convenience.
With the number of these challenger D-to-C brands on the rise and quickly gaining , everyone wants to know the “it factor” behind their success and not only what will continue to drive D-to-C forward, but what it means for traditional retailers as well.
The D-to-C Value Offering
With the burst in popularity of quick delivery services like Amazon Prime, the retail sector is experiencing heightened shopper expectations around convenience. For today’s consumers, convenience no longer means being able to pick something up at the store; it means not having to. At Diffusion, we took a look at consumers’ purchase intentions to determine just what it is they desire. This found that more than one in four Americans feel D-to-C retail offers greater convenience than going to a traditional store. Furthermore, one in six are drawn to these brands because of fast, free shipping. They desire interaction-less convenience, and it’s turned out to be one of the largest trends in the retail sector in the past decade. In fact, this year’s Black Friday sales saw .
As a result of the growth of D-to-C brands, many traditional retailers are stepping up to the plate with competitive shipping options — and they're still losing market share to D-to-C brands because of a perceived discrepancy in product quality. The traditional retail model offers a convenient variety of products all in one place, diffusing attention from individual brands and products. However, eye-catching ads and websites from disruptor companies highlight their specialization in one product category, which suggests a higher quality guarantee to consumers. Retailers looking to better compete with these competitive D-to-C brands need to focus on counter-marketing by emphasizing specialization and product quality to win over today’s consumers.
Where Disruptors Are Missing the Mark
Despite the impressive trend of success for recent D-to-C players, there are areas of the purchasing process that need improvement, and traditional retailers still have the leg up with consumers.
Diffusion’s Purchase Intent Index found that only 9 percent of Americans say the customer service from D-to-C brands is superior to that of traditional brands. However, this may not last long. We’re experiencing a movement in the D-to-C space towards the opening of or pop-up shops, aiming to offer customer service reminiscent of a traditional retailer without diverging from their core direct offering. For D-to-C to remain successful long term, we’ll expect to see brands find new ways to offer an exceptional and thorough customer experience without sacrificing the distinctive direct nature of the D-to-C model.
According to the report, consumers would also like to see a heightened level of personalization or assistance in the D-to-C buying process, as only 11 percent think it exceeds the level found with traditional brands. Going hand in hand with customer service, consumers expect to receive customized care while considering a purchase, requesting advice or information from an associate on a product at least. Due to the digitally native quality of most D-to-C brands, it’s harder to reinforce this aspect of care to each customer. For long-term D-to-C success, disruptor brands should strive to balance an identity as both the sellers and makers of their products.
D-to-C brands are successfully disrupting the retail space by capitalizing on the weaknesses of traditional retailers, namely by emphasizing amazing quality and convenience. Now as we see more and more disruptor brands catching on by offering physical storefronts to compensate for the characteristics of in-person shopping that can’t be emulated online, traditional retailers will continue to be challenged to improve by these industry innovators.
Ivan Ristic is the president of Diffusion PR, an independent PR agency for technology, travel and CPG brands.
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