A few years ago, the direct-to-consumer business was relatively straightforward. Brands sold products online directly to consumers — and that was the end of it. Now, however, after experiencing an accelerated resurgence of e-commerce during the pandemic, DTC has become a more complex business.
At the start of the global pandemic, many street stores were forced to close their doors and open online shops to continue driving sales. In the case of some brands, this transition was so successful it became permanent.
But as the pandemic receded, the e-commerce market shifted. Amid disrupted supply chains, rebalancing economies, and rising inflation, the world’s attempt to revert to pre-COVID standards took a toll on e-commerce’s sudden underperformance.
Additionally, increases in Facebook ad prices, skyrocketing shipping costs, declining ad measurement, and small consumer bases were giving DTC brands a run for their money.
So, surely this means DTC is dead … right? Well, not quite. Though DTC companies are facing various shifting business climates, there are still ways they can adapt to new tactics and tools and fine-tune their business without taking any major hits during this time of readjustment.
As we mentioned earlier, DTC refers to the process of selling packaged goods directly to a consumer through online stores. For a period, many DTC brands acquired customers solely through social media, namely Facebook, Instagram, and TikTok.
However, since those social media platforms no longer produce the same results in this post-pandemic period, DTC companies are now searching for newer, longer-lasting methods to retain customers.
As marketing experts are reporting a rise in the number of customers who wish to resume in-store shopping, DTC brands are changing their attitudes toward online merchandising and expanding into brick-and-mortar stores.
For those who are well-established in the DTC business, finding options that offer low expense increases are becoming a top priority, with many adding direct mail, connected TV, audio, Pinterest, and other channels that appeal to their target audiences to their arsenal.
However, some DTC businesses are looking to entirely different routes to increase volume, such as opening their own stores or, for newer start-ups, investing in distribution channels like Amazon or other wholesale stores. Nordstrom and Macy’s, for example, are offering platforms to sell DTC goods in their marketplaces, making them an ideal option for DTC brands who need a new outlet boost in traffic and sales.
Moving Beyond the Online Shopping Channel
While DTC started simply as a sales channel, many companies are seeing the value of using it to engage with consumers on other levels. For example, DTC strategies can help track the customer journey and offer a more definable view of customer acquisition, sales, and retention statistics. In doing so, this helps companies strengthen consumer relationships and expand brand identity while avoiding any conflicts with their retailers.
Similarly, companies are using DTC strategies to implement a more streamlined and controlled experience for consumers. When adopting a DTC strategy, your brand controls everything from ads to packaging to follow-up emails. With this control comes customization, which sets you apart from the competition.
By comparison, using wholesale removes this ability for personalization, and all of these factors are put in the hands of a third party. While this can be an easier, more convenient option for some, one wrong step can cause a whole host of problems for your customers, which reflects poorly on your brand.
Another useful aspect of DTC is that it gives companies complete and total access to their consumer data. With such a connection, companies can gather valuable insights on a much deeper level, while allowing them to re-market and personalize where needed.
For brands looking for more and even more advanced data collection, DTC can offer statistical information regarding customer demographics, behaviors, and preferences, enabling more precise decision-making.
Resetting Business Expectations
With this monumental shift in e-commerce, companies are looking more intensely at meeting their bottom lines. Since capital is harder to come by, brands are honing their focus on generating more profitable revenue streams — with omnichannel diversification being a key player.
A year ago, DTC brands may have been able to take the slow-and-steady approach to profitability by sticking with one category. But now, expectations are shifting, and DTC brands must adjust their goals, re-aim their targets, and seek new ways to acquire customers.
Even then, once a DTC brands find success with a certain marketing tactic, other competitors are sure to implement that same method into their own playbook. To ensure continuous growth, DTC brands can’t expect to stick to a single market or category, and instead, must test new marketing channels.
As mentioned earlier, some DTC companies are accomplishing this by venturing into podcasting, connected TV, and direct mail. Whatever options you choose, the key is to diversify.
Alone, these channels might be enough to keep your brand afloat, but it significantly limits your brand visibility and customer base. Combining these channels creates more moments for conversions and sales, thus allowing you to introduce new products and expand into new verticals.
Don’t Kill Off DTC Just Yet — It’s (Still) Taking Shape
Unfortunately, some have been too quick to judge the DTC space. While the business is experiencing some temporary pitfalls, DTC is far from being buried in the grave. Especially coming off the heels of the global pandemic, the world has been taught that nothing is permanent, the market is in constant motion, disruptions will occur, and no one truly knows the right next move.
Companies must take this time to notice the evolution taking place with DTC. Now, it takes more than simply selling products online directly to consumers. To move forward, businesses must acknowledge that the DTC landscape is in flux, and look to new or additional channels to optimize their business processes.
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