Getting things direct is almost always an advantage: direct flights, a direct phone line, or a direct conversation all mean saving time and hassle. The world of retail is no exception. That’s why direct relationships between manufacturers and consumers are becoming increasingly common and increasingly profitable – in part thanks to the possibilities of that relationship existing in a ‘digital’ space.
Research suggests that nearly 90% of consumers would buy direct from a brand if they could. From major brands like Nike to small companies just starting out, companies are selling direct to reduce costs, improve customer experiences, and regain autonomy over their brand. So, in the spirit of directness, let’s jump straight in to exploring how direct to consumer retail can benefit your business (after getting some definitions out of the way first).
What is direct to consumer retail?
Direct to consumer retail, also known as DTC (or D2C, if you’re trying particularly hard to sound trendy), is pretty much exactly what it says on the tin: brands promoting and selling their products directly to consumers. There’s a growing number of businesses that operate entirely through DTC retail; for others, it’s a starting platform from which to grow. For yet others, DTC is a new way to interact with their customers and drive revenue alongside their more established sales channels.
How does direct to consumer retail benefit businesses?
The alternative to DTC – and the norm for many years now – is the traditional process of selling products via distributors, through individual stores, before the product finally lands in the hands of customers. It’s a tried and tested method that works well for many businesses, but selling direct to consumers is becoming increasingly popular – particularly when mobile apps and other emerging channels make it simple to communicate with customers even when there isn’t a store in sight.
Whilst DTC does have its own challenges, the potential financial benefits are certainly appealing. By cutting out the middlemen businesses can also cut out the related costs. In addition, DTC also brings new opportunities for creating personalized experiences and even personalized products.
Opening a line of communication directly between business and buyer also allows the organization to gain control (or regain control) of customer data and use that data to optimize and improve user experience at every stage in the process. What that also means is that selling direct helps to take command of the customer-business relationship – and right there is the fundamental reason why this business model is becoming so popular.
We all know that relationships are important. There are dozens of quotes and statistics and studies on the difference that positive customer relationships can make, but in the interests of directness, we’ll just stick to this quote borrowed from Alex Becker, VP of branded manufacturers with Digital River:
“If a consumer chooses your product over a competitor’s on a retailer’s website, you might have won a sale—but you’ve lost the opportunity to build a relationship.”
By interacting with consumers on your own platform, that opportunity is not lost. Customer relationships are one of the most effective marketing assets – a great relationship can mean more engagement and more brand loyalty, which in turns means more revenue as people want to return to the brand again and again.
How do I make direct to consumer marketing work for my business?
So, we’ve seen why speaking directly to your customers can be effective – now let’s turn to the all important ‘how’, looking at a few lessons we can learn from some of the most effective DTC companies. The screenshot examples below are taken from the apps of two established and successful businesses that have DTC selling as their foundation: ethical consumer goods seller The Honest Company, and clothing company Bonobos.
1. Invest in the app
There is one platform that you really can’t do without for direct to consumer retail: the mobile app. The majority of the major success stories for DTC – Dollar Shave Club, Harry’s, Warby Parker – center on having a great app that acts as a platform for marketing and selling their own products, whilst keeping it quick and easy for users.
For products that users won’t stumble across in a major supermarket or a high street store window, staying at the top of consumers’ minds might involve a little more creativity. The surest way to make that happen is to get on (and stay on) the smartphone screens. Your future customers are already looking at their mobile devices dozens of times each day, so it’s only logical that the number one platform for engaging with them, and for staying top of mind, is going to be mobile.
Consumers are far more likely to connect with a marketing or service message that appears on their own phone screen, and has a button linking them to related content, than a generic ad plastered up on a billboard. In fact, they may well not even see the billboard at all – since they’ll probably be looking down at their screens… To put it simply: if you’re looking to engage users in your products, a great app is key. Make sure yours is optimized to encourage regular use, seamlessly handle transactions, and continue the conversation afterwards. Here’s how:
2. Capitalize on convenience
One reason to buy directly is the simplicity of getting products direct from the source. Dollar Shave Club, for example, has built its business model around convenience. Knowing that razors will be a frequently repeated purchase, the company attracts customers by automating the whole process with a subscription service, and so saves people the effort of making regular visits to drugstores.
Once you have consumers using your app, you have an automatic advantage when it comes to retention. But to make the most of that, you need to work hard to make sure the app supports the customer every step of the way. Keeping things as simple as possible is vital to this – because making the buying process feel like more hassle than heading out to the shops is a sure fire way to lose your users.
As you can see from the screenshot below, the Honest Company also app taps into our desire for convenience, particularly when it comes to bulky, mundane goods like toiletries and cleaning products. The user interface is clear and uncluttered, you can browse without having to sign up, and it even highlights how the ‘bundling’ feature can save users money and time by stocking up with several products in one go.
3. Deliver great, personal experiences
If your business is operating within an industry where competitors are offering similar products at similar prices, you need to establish a reason why consumers should choose to buy from your brand in particular, especially when you’re asking them to come straight to you. One way this can be achieved is by producing ultra-personal experiences that build both your brand image and a pattern of repeated use.
Let’s go back to that quote from Alex Becker for a second – selling direct to consumers is an opportunity to make relationships. Selling through your own app means that you can collect data on your users, and use it to provide them with a personalized experience. Behavioural and demographic data enables you to build one-to-one relationships with customers, improving conversion rates as you can highlight products you know will interest them, and reducing churn rates as you know not to bother them with the products that won’t.
For example, as well as being a digital clothing store, the Bonobos app uses location data, user behavior and previous purchases to offer a virtual personal stylist, recommending a full outfit to wear each day based on climate, personal style and selected level of formality. This builds a connection between the user and the brand, entices users to look at the app every day, and suggests how new purchases can be styled, encouraging engagement, purchases and loyalty.
Selling direct to consumers allows you to explore new methods of interaction, creating experiences that are specific to your brand and so positioning your products in a way that will appeal to your target market. The possibilities for immersive brand experiences created using apps is endless – mini games, social sharing tools, messaging functions and camera or map capabilities, just to name a few. Emerging technologies like AR, VR and AI can be used to link digital to physical experiences – the Warby Parker app’s ability to recommend glasses for you using face mapping technology is a great example.
Direct to consumer retail might not suit every type of product or every demographic of customer, but for more and more businesses it’s offering a way to bypass some of the areas of friction in traditional retail models, at the same time as building closer relationships with consumers. It is a great example of the potential that customer data – used wisely – can deliver.