The Shift to Direct-to-Consumer Accelerates in ‘21
The eCommerce industry has changed the way that we all shop, moving away from brick-and-mortar setups and providing greater access to all types of products. However, in recent years, Direct-to-Consumer (DTC) ) retail has exploded. And for good reason. If you’re still using a middleman operation to buy and sell your products, consider making the switch to DTC and improve customer loyalty, increase returns on ad spend, and bring in more sales.
What is Direct-to-Consumer (DTC) eCommerce?
Essentially, the DTC business model allows companies to sell directly to their consumers. This means that your brand is in control of creating, marketing, and shipping products. Although this may sound like a lot of extra work, the benefits often outweigh the additional responsibilities.
DTC companies are responsible for getting products to customers, but they also have more flexibility as there are opportunities to collaborate with in-personal retailers and host pop-ups.
Why Switch to DTC?
DTC is More Profitable
One of the biggest reasons that retailers decide to sell directly to consumers is because of the earning potential. Companies no longer need to dish out fees to third-party marketplaces in order to fulfill their orders, which means they’re taking in more money per sale. Data shows that high-income earners tend to prefer buying directly as well. Attracting a consumer base with more disposable income increases the chance that these shoppers will spend more money with your company.
Avoid Going Out of Stock
When you’re in control of all aspects of your business, you can set more realistic expectations for your customers. Working with third-party manufacturers and wholesalers means that sometimes you may have a large number of orders for a specific product only to find out that the third-party vendor is out of stock. This delays your product shipment and can create friction with your customer. Even if the delay isn’t directly your fault, the customer may see it this way, preventing them from returning to your eCommerce store. When operating as a DTC business, you may run out of stock from time to time, but you’ll be able to alert shoppers to items that are low in stock or preemptively notify them of potential delays.
Gives Brands Greater Control Over UX
When you control all aspects of your company, you can provide a better overall experience for your consumers from the way your website works to the quality of customer service. You are also able to collect and utilize first-party consumer data to make shopping more personalized, something most consumers have come to expect and prefer. This means offering personalized recommendations and offers based on behavior and buying history. Using this first-party data is becoming increasingly more important as Apple and Google begin to limit the ability to track consumers in order to protect their data.
Working directly with consumers also tends to increase brand loyalty as you’re able to create a better experience and provide top-notch service. Building customer loyalty is more cost-effective in the long run than continually attracting new customers, so it is a vital goal for eCommerce businesses.
DTC Shops Less Affected by the Pandemic
The pandemic had a devastating effect on many traditional businesses, but direct-to-consumer eCommerce companies actually grew over the last year. This trend makes sense as high-income earners tend to buy DTC more often, and this demographic was largely unaffected economically by the pandemic. Fear of going into public places and restrictions on businesses being open during the pandemic were two other factors that lead to an overall increase in eCommerce sales which some predict will continue.
How to Run a Successful DTC Business
Build Search Engine Visibility
Using search engine optimization to grow your online visibility is key to running a successful eCommerce business. Using these strategies will help your business to appear higher on the search engine optimization page (SERP) and allow more consumers to discover your products.
Take Advantage of Social Media
The most successful DTC brands use a combination of SEO tactics and social media strategies to increase awareness and build customer loyalty. Creating a strong brand presence on Instagram can help you turn your followers into micro-influencers, a type of marketing that is extremely successful. According to the Digital Marketing Institute, 49% of buyers rely on recommendations from social media influencers. If you’re going to run a DTC business, you should also take advantage of highly targeted Facebook ads. When you have greater control over your business with the DTC model, you have the opportunity to target your audience more specifically and increase your chance of converting a consumer into a customer.
Offer a Range of Products
If your products are too niche, you are limiting your SEO potential. With any type of eCommerce business, you want to make sure that people can find your company, and SEO marketing is one of the best ways to do that. With a wider range of SKUs, you have more options for targeted keywords, which means more opportunities for consumers to discover your brand.
The eCommerce industry is constantly changing the state of retail, and DTC is one of the latest changes that companies are latching on to. The benefits of selling directly to customers are clearly evident in that you have greater control of your business, allowing you to build stronger relationships with customers and provide them with a higher level of service.