Once reserved for challenger start-ups, direct-to-consumer (DTC) is now being wholly embraced by big and small brands alike. In fact, Nike project DTC – led by digital sales – aims to deliver 60% of its total revenue by 20251, meaning they’re slowly pulling out of brick-and-mortar retail channels to focus on online. But is this trend a fad, or a new way of doing business that is likely to stick around for years to come?
- Cost savings: Online operations can drastically cut overheads and make a real difference to a business’ bottom line. You can save on rental costs, alongside securing higher margins that are typically sacrificed to a third party.
- More control: A DTC brand has increased control over their customer relationships, because they are interacting with them directly, alongside their brand messaging – reducing the possibility of reputational risk if a third-party provides poor service.
- Customer communications: When it comes to service, a direct line of communication with buyers is key – meaning you can quickly resolve issues.
- More customer data: DTC brands have access to more (or at the very least, more timely) data about their customers – who is buying their products, what are they buying, and why – enabling them to make more informed decisions.
- Competitive advantage: Moving quickly and being among the first in your industry to be a DTC brand helps you to secure more customers.
- Selling socially: Many DTC brands now sell via social media, which offers access to a huge potential customer base and the ability to organically build ‘buzz’ around your products.
But it isn’t ‘goodbye’ to physical stores…
Conversely, some DTC brands are moving onto the high street and opening physical stores. Just as a constant deluge of emails in our inbox impacted the cut-through of email marketing, many brands find it hard to stand out in an online DTC world. A brick-and-mortar store gives brands greater presence and helps them get noticed, alongside helping them offer a more tangible customer experience. When surveyed, 44.4% of consumers said they prefer in-store shopping to online. But it’s experience that really sells: 27% of respondents who prefer shopping in-stores said they do so because “they enjoy the presence experience of shopping in a store and visiting a physical location”. Another 25% said they like to touch, feel and experience products without the limitations of an online-only shopping experience.3
However, this same survey found that 48% of respondents said they’ve stopped purchasing certain items in-store and now purchase them online. Meaning that perhaps a hybrid DTC approach of physical and online sales will help brands to reach – and keep – the most customers.
DTC looks set to keep on growing, particularly in a post-pandemic world where buying habits have been possibly forever altered. But bigger, more established brands are likely to embrace the hybrid model of physical and online retail to maximise their sales. Those that are the most customer-focused, delivering what they know their shoppers want, and who embrace selling via social media will thrive.
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