As major brands like Nike and L'Oréal shift significantly towards a direct-to-consumer (DTC) model and disruptors like Dollar Shave Club, Under Armour and Warby Parker explode into the market, they pose a dangerous new threat to retailers and established brands who are failing to grasp the need to be ‘fast & frictionless’.
Brands must now act fast to embrace the DTC opportunity and meet new shopper expectations, or risk being left behind by brands who are already owning the entire customer journey. This is the new reality for DTC brands.
In our latest report, co-written with Endless Gain, we shine a light on the shake-up being caused by the direct-to-consumer movement. As part of that research, we also asked three experts to offer their thoughts on the DTC trend.
Here’s what they had to say...
The Retail Expert
by Nicole Leinbach Reyhle, Founder of Retail Minded & Author of ‘Retail 101: The Guide to Managing & Marketing Your Retail Business’
Connecting with consumers has always been among the most important ways to capture and keep their attention – as well as dollars – but the challenges that face brands are nothing like those of the past. Nowadays, fast and frictionless expectations are demanded by customers and those that don’t deliver this fall behind.
Keeping this in mind, brands are now bypassing stores or competing with their retail partners through direct-to-consumer strategies – or DTC – in an effort to gain stronger profits and stronger customer relationships. The question remains, of course, is this the right strategy for brands to make?
Quite simply, I believe yes. But like most things in life, it won’t be easy.
While fast and frictionless remains an important component to DTC, these details are complex and can either make or break a brand’s efforts in reaching consumers directly. Factoring in brand reputation, marketing efforts, pre- and post-purchase experiences, customer loyalty strategies, delivery and return options, inventory management and of course – competition – and it’s clear to see that DTC is no easy switch for brands to turn on.
Is it impossible, though? No.
Is it worth trying for? Absolutely.
The reality is customer buying journeys have changed greatly since the introduction of ecommerce but more so, the introduction of digital marketing. Brands can connect with their customers and potential customers in more real-time scenarios thanks to social media and email marketing in particular. Due to this, customers are able to feel more connected and can better understand the brands they want to engage with and ultimately choose to purchase from.
These interactions should not be easily dismissed since customers are trusting these avenues as ways to connect with brands and thus, brands must incorporate these avenues to connect with customers. Gaining trust, building loyalty and creating engaging and entertaining experiences through these platforms are great strategies to help brands begin their DTC journeys – but it goes far beyond these details to ultimately make their DTC efforts a success.
Once brands have captivated customers enough to then capture their dollars, this is where the real “work” truly begins. With customers in charge of every step – or click – along their purchase journey, brands must recognize that at any moment, they risk losing consumer dollars.
This fear shouldn’t distract brands from wanting to incorporate DTC strategies but instead, help guide them to make the best decisions when planning these strategies. Among them include identifying the right technologies to seamlessly work together and deliver upon those fast and frictionless expectations demanded by customers, as well as recognize the buying experience has many touchpoints that need to be acknowledged.
Key factors to consider here include delivery options, return options and the variables that may distract customers to click away if they’re not getting what they want from these scenarios. The right technology, however, can allow for those investing in DTC to also benefit from solutions that help manage the ideal procedures to optimize deliveries and returns and process payments securely. As a result, customers will gain the confidence and appreciation in these brands and ultimately become more loyal to these companies, as well.
As someone who researches the business of retail regularly, I can confidently say that selling is not as much about the product being sold but rather the experience of the purchase journey. Brands have the opportunity to use this to their advantage as they roll out their unique DTC strategies, but what should not be overlooked are the not-so-unique expectations of today’s modern customers.
From brand reputation to promotional offerings to delivery options and more, customers want to feel aligned and connected to each touchpoint they have with a brand. Ease and convenience are understandably among the most important factors of customers today, but this is not limited to just their actual purchase experience. From the moment a buyer begins a purchase journey – whether intentional or not – this same customer is making countless choices that may or may not keep them on the path to ultimately purchase from you.
During the purchase itself, brands risk losing customers if payment options don’t cater to their preferences, if shipping choices aren’t what they want and if return scenarios don’t meet their expectations. Post-purchase experiences, as well, also influence a customer’s loyalty to your brand – and collectively each of these scenarios should be recognized as equally important. As your own brand may consider implementing a DTC strategy into your company, make sure you keep these factors in mind.
Finally, remember that as a consumer yourself, you have expectations that you want to be met. What are they? What are your distractions? And what makes you stay loyal to a brand or completely disappear as a customer?
Recognizing these realities can help you strengthen your DTC efforts, as well, but don’t lose sight of the importance of understanding all of your customers across the generations, also. Every detail matters when it comes to DTC and you can’t know enough about your existing and potential customers alike to help you truly strengthen your DTC success. Customers expect this from you and it’s your job to deliver upon their expectations.
The Technology Take
By Derek O’Carroll, CEO, Brightpearl
The DTC climate offers a massive market opportunity for brands, but it’s clear that there are many challenges to address, whether that’s from a user experience perspective, technology capabilities or the ability to offer fulfillment at the speed and convenience that shoppers want and expect.
Our ‘Fast and Frictionless’ report has delivered numerous insights, and while it’s impossible here to delve into every area, there are a number of aspects that jump out to me.
There’s now a clear need for DTC business models to be more customer-centric. That’s the only way you can succeed in this new reality. In order to do that, you must have a full picture of your customer, ideally through data-driven insights. Operating ‘blind’ in the DTC space is only going to get you eaten for breakfast by more capable competitors, such as Gymshark, Dollar Shave Club, Casper and others who are now dominating DTC by way of owning the entire customer journey.
The good news is that fast and frictionless is obtainable if you fix the nuts and bolts of your business. Speed and convenience now define an optimal DTC shopping experience for the majority of buyers, with efficiency and accuracy at the very core, and these are the areas that can and should be developed.
For example, delivery was identified in our research paper as being one of the major areas of friction for consumers. For brands to offer a level of service that meets the requirements of today’s shopper, they have to have the right systems in place, such as technology that allows them to automate workflows like order management, inventory, fulfillment and purchase ordering. Ultimately, automation of workflows can provide brands with the confidence and ability to execute on next day delivery.
The other area where things are going wrong is returns. In an ecommerce business, excellent returns management is essential to ensuring a frictionless experience at every level of the buying journey.
Getting this right can provide a new competitive advantage, while failure can and likely will lead to dissatisfied customers who won’t shop with you again - and as we now know, brand loyalty in the DTC arena is extremely fragile.
For optimal returns, brands must consider systems that ensure the correct items are received back into inventory and placed back into the correct location within the warehouse. Businesses need a framework in place that allows returns to be processed quickly, accurately and easily, allowing brands to get products back into rotation sooner.
The DTC opportunity is available for those that embrace and support fast and frictionless experiences for their customers, through investment in all ends of the buying journey - from outstanding user experiences and same-next day delivery options, to real-time shipping and customer-focused returns models.
By making the buying journey as smooth as possible, you can eliminate pain points for your customers - and doing so will set you apart from everyone else. Then, not only will you avoid being eaten, but your DTC brand will be the one setting the breakfast table.
The Optimization Specialists
by Neil McKay, CEO, Endless Gain
As our research reveals, the number of brands selling directly to consumers is set to explode over the next year, with even mega brands like Nike and L'Oréal investing heavily in their DTC models.
This is happening because buying behaviors are changing. Our findings show that more than 80% of shoppers have bought directly from a brand’s website in the last year and more than half prefer to shop this way.
So, it’s understandable why so many brands are racing to develop DTC channels; the opportunity to own the entire customer experience is extremely enticing. However, our research shows more can be done to support the fast and frictionless ecommerce experiences that customers expect.
Consumers are now looking for much better website experiences, and with 39% of shoppers having experienced problems buying goods from brands online in the last 12 months, it’s fair to say there’s a great deal of room for improvement.
As our findings suggest, shoppers are much more likely to buy from a brand if the website helps them to find what they want quickly and easily, provides clear information on shipping and returns, as well as convenience when it comes to delivery.
Shoppers do not want to have to register to make a purchase and they demand flexible delivery and payment options - if that isn’t available it creates barriers to conversion and significant negative emotional responses that can drive away potential customers. By focusing on the areas that are so important to shoppers, brands can go a long way to improving their customers’ online experience; which, customers say, they are willing to pay between 4-6% more for.
Enhancing the buying journey is vital because a customer’s experience is their perception of how a brand is treating them. Their perception is made up of their emotions and behavior that build memories and feelings that can either win sales and loyalty for a brand or lose sales and loyalty.
It’s all about the customer’s experience and sadly for some brands, the experience they give their customers is sub-optimal. When things go amiss at any stage of the buying journey the consequences can be costly - particularly in an environment where shoppers are much less loyal and are likely to abandon you after one poor experience, as our study has revealed.
To truly succeed in the DTC environment means taking ownership of the entire end-to-end journey, from discovery to delivery, and making it as fast and frictionless as possible. One way to do that is to embrace biometrics.
Biometric research is the study of biological signals and it’s helping brands to understand how their websites are making their customers feel on an emotional level. The importance of this cannot be underestimated as every single decision we take is driven either by an emotion or instinct. Our emotions are at the root of our decisions. Only recently, through advancement in science and modern technology, has it been possible to see what emotions brand websites bring out in their customers.
Combining biometrics with other research data will paint an extremely accurate picture of why their websites are not performing at the level they could or should. With this new found information, they can optimize their customers’ experience by removing friction points, knowing exactly what to improve, and can be confident in the knowledge that these areas are the ones that are influencing their customers’ buying decisions.
By doing this, brands are taking another step towards fast and frictionless and are gaining a distinct advantage over their competitors. They understand, and they are ensuring, that their customers’ experience is at the heart of their business growth.
These viewpoints can also be found within our research report: 'Fast & Frictionless: The New Reality for DTC Brands'.
Download the report now and learn why so many brands who sell directly to consumers are failing to offer the fast and frictionless end-to-end buying experiences their customers demand.
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