There have been more dramatic changes in the retail industry this century than RuPaul’s costumes in an episode of Drag Race.
While not as fabulous as Ru’s wardrobe, some of these shifts have been significant enough to rock a lot of boats and upset a tonne of apple carts all at the same time; unnerving for many traditional retailers and catastrophic for some. Glossing over the birth of the internet, global pandemics and the like, one trend-making serious wave in recent times is direct-to-consumer (D2C) selling. How does it work exactly? What are the pros and cons? And could this style of retail be worked with rather than against, so all brands get a piece of the action?
Simplify for success
Direct-to-consumer retail became popular in the late 90s – but in the broadest sense of the word, as in retailers that sold directly to their customers online without the need to visit a physical store.
The idea then was Amazon-style warehouses where hundreds of thousands of products could be stored and dispatched – something a bricks-and-mortar store could never do – giving shoppers more choice than they could possibly handle.
Of course, Bezos’s Amazon continues to thrive in the world of e-commerce and, as of 2020, the company holds the highest global brand valuation.
The modern D2C brand is considerably more refined, well thought out and doing extremely well.
Gathering huge momentum in the past few years, countless entrepreneurs have been savvy enough to corner specific markets, often starting out small by focusing on just one product and using carefully considered strategies to reach, connect with and build their audiences.
Gymshark is the perfect example of such a brand taking the retail industry by storm.
Founded in 2012 by school friends Ben Francis and Lewis Morgan, who initially distributed bodybuilding supplements to their online customers, they soon turned to produce their own fitness wear range, all sewn on a machine in Ben’s parents’ garage and made to order. Today the company is valued at more than £1 billion.
Non-reliant on third-party retailers, wholesalers or any other middle person, D2C brands like Gymshark can focus on customer relationships and ensure their products specifically meet shoppers’ needs. Keeping product ranges more niche is a smart move as, not only is less choice often a good thing, but it also means customers will likely return again and again to a specialist brand if their experience has been a positive one. And despite their seemingly faceless approach, D2C retailers are becoming increasingly creative in finding ways to meet customers IRL (look that up if you are over 40) through engaging pop-ups and other live activations.
Weighing it up
The appeal of D2C retail is the complete control it gives a business of its entire process – from manufacturing to marketing and branding, sales to distribution and everything in between.
By taking care of every step yourself, there are fewer costs to cover or hurdles to overcome in terms of negotiating with wholesalers or buyers or wrangling with unreliable manufacturers; you set your own rules and timelines, which gives you the confidence to manage customers’ expectations without worrying someone in the supply chain will screw it all up for you.
Reduced costs also mean products can be priced competitively and shoppers can take advantage of making that saving when they select yours as their preferred brand.
Today’s D2C businesses rely heavily on social media platforms as an effective way to get their message out to potential audiences; making full use of every facet available, including live broadcasts and shop now features, for example, is a no-brainer. The more channels used to connect with your customers the better.
It pays to invest in fastidious data collection and analysis tools too, so as to target the right demographic and tweak content and service at speed, as necessary, which is something we at Stellar take care of on behalf of our clients to ensure they are always one step ahead.
On the flip side, being in total control of your entire supply chain is not a stress-free experience by any stretch of the imagination.
Before embarking on a direct selling journey there is much to consider, as taking on all of the things is a hugely practical, financial and logistical responsibility and something your brand needs to be able to sustain.
By eliminating all suppliers, third parties and go-betweens, you become accountable for every step of your customer’s journey and will feel the full force of their wrath should things go belly up – and that is not a good look on anyone’s timeline.
Are your processes secure? Can you keep up with demand? Does your business plan cover all eventualities?
With the right product, a solid infrastructure and a carefully constructed, comprehensive strategy in place, D2C retail can bring great reward.
Get your piece of the pie
There is no denying the recent surge of niche D2C brands has caused concern for many long-standing retailers.
Tiny businesses started in spare rooms, garden sheds and garages are growing at astonishing speed and becoming a genuine threat to some major brands – brands that must constantly evolve with a fast-changing industry.
Some are now delivering a hybrid model that incorporates a direct-to-consumer offering on certain products, giving customers the opportunity to view, experience and buy items straight from source, making their purchasing journey slick and convenient.
Our clients Samsung, Sage Appliances and Genesis motorcars have all adopted the D2C model for elements of their product ranges and the results prove it works.
Connecting directly with customers will always be a positive move and giving them the chance to experience new products in a fresh and innovative way, is both appealing and effective.
There are no longer hard and fast rules in the retail game as progress and technology (and a couple of other global, life-changing factors) have paved the way for new methodologies, alternative ways to reach customers and the opportunity to forge and build authentic relationships.
By embracing D2C and its many benefits, traditional brands can stay current, appeal to new audiences and enjoy a generous slice of modern retail success too.
