In Part 1 and Part 2 of “The Return of Direct-to-Consumer” series I discussed WHAT direct-to-consumer looks like in 2021, how the definition and opportunities have evolved, and what brands are leading and lagging in the DTC world.
Part 3 of this series outlines the ‘Why’; the benefits to both the business and consumer when a brand goes DTC.
Why Consider Going Direct-to-Consumer?
Almost half of manufacturers said direct to consumer sales increased brand awareness and have boosted leads and sales for their channel partners.
27% said they can focus on items that yield the best profitability while letting the manufacturer fulfill orders for lower-volume inventory items.
14% said they see a benefit in letting the manufacturer test the success of new products before passing them along to retailers. *source
Apart from these compelling statistics there are other reasons a business should consider going direct-to-consumer right now ranging from access to elusive first-party consumer information to faster time-to-market.
Data & Insights – Enable and act on data-driven insights
Going direct-to-consumer makes available multiple layers of data you may not have access to as a traditional B2B or B2B2C organization. Access to this level of first party data provides potential capabilities for better mining, analysis and insights which should lead to better relationships with consumers as well as agility in addressing opportunities that arise based on data insights. For a business, going DTC means:
Owned consumer data
Deeper consumer insights
The potential to leverage existing distribution partnerships in new ways
The capability to experiment with new partners, channels, and product categories at a lower risk
Speed & Efficiency – Develop organizational agility
Building on the owned consumer data and data-driven insights capabilities, a DTC model can enable even greater organizational agility and speed-to-market from the basics of cutting out the middlemen to the opportunity to have even greater insight into supply chain challenges and opportunities. For a business, going DTC means:
Elimination of intermediary overhead
Efficiency gains across unified operational processes
Improved velocity & speed to market
Potentially greater control, visibility, and the ability to provide transparency into the supply chain
Brand & Consumer – Build stronger, lasting consumer relationships
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Having direct access to realtime consumer by selling directly to them allows brands to build 1:1 relationships by being in direct control of brand perception, conversation, and consumer experience. For a business, going DTC means:
Direct control over brand/brand perception
New market discovery and penetration
New consumer acquisition
New revenue streams
From a consumer’s perspective, buying directly from a brand is more desirable than going through intermediaries IF brands get the experience right. In a recent publication studying consumer attitudes towards direct-to-consumer brands there is direct correlation between a positive DTC consumer experience and their intent to repurchase.
“… quantitative analysis with 210 US DTC shoppers confirmed that co-creation, cost-effectiveness, website attractiveness, brand uniqueness, social media engagement, and innovativeness of DTC brands significantly influence consumers’ attitudes while cost-effectiveness (indirectly), brand uniqueness, social media engagement, and brand innovativeness affect consumers re-purchase intentions. The findings offer insights for aspiring entrepreneurs and incumbent retailers on strengthening their value propositions.”
However, if a brand doesn’t get their consumer experience right, consumers won’t return. When thinking about building a direct-to-consumer business, starting with a consumer-centric perspective is imperative. Inspired by the Elements of Value model from HBR and Maslow’s Hierarchy of Needs we’ve developed a simple consumer perception aspiration model a DTC brand can reference that suggests the attitudes a brand should hope to elicit from their consumers via a DTC model to nurture them from acquisition to advocacy.
Of course, deciding to go direct-to-consumer and understanding the business benefits is different from understanding how to shift an organization from department-focused to consumer-centric. In Part 4 of “The Return of Direct-to-Consumer” series we’ll look at HOW an organization can start developing a direct, consumer-centric business.