How Established Brands Can Reap the Rewards of Direct-to-Consumer eCommerce
There’s no question that eCommerce is opening up a literal world of opportunities for consumer brands.
A recent report from eMarketer says that eCommerce accounted for more than 10 percent of all retail sales around the globe in 2017. Expect that number to keep rising. As Gideon Spanier at Raconteur points out, direct-to-consumer (DTC) brands are “dominating” in retail precisely because they are building relationships with consumers.
The response from established brands has been less than lightning quick. Why? Because their core businesses rely on them building relationships with retailers, not consumers directly. Shifting to DTC would require many of these brands to redirect their most fundamental strategies.
In the meantime, natively direct brands — which create, market, sell and ship products to customers themselves, without intermediaries — are thriving because they were born with a customer-experience mindset. They intuitively understand the power of focusing on customer experience and engagement.
Let’s explore what traditional brands can learn from the customer-experience mindset that digitally native brands are born with — and how embracing their tactics can lead to success.
Where the Disconnect Lies for Legacy Brands
Traditional brands are still built for worlds in which sales and marketing live in different, physical places. Electronics brands, for example, would promote their products in TV ads and on highway billboards, but then needed to motivate consumers to go to their local Best Buy, or perhaps to a small, independent shop, to actually buy the product.
That model worked for decades. As shopping moved online, however, it became clear that sales and marketing could share a common space, where they work in lockstep to create a seamless shopping experience.
Many legacy brands, however, imagine DTC as simply another sales channel. These brands could reach more customers by understanding that this is fundamental shift in the sales-marketing relationship.
Brands that miss this get stuck in an old paradigm of product-focused marketing rather than customer-focused marketing.
Let’s return once more to our hypothetical electronics brand. In the traditional world of highway billboards and retail checkouts, it made sense to roll out and promote new features and new models. That’s how you stayed top-of-mind with consumers.
But when you build your own eCommerce platform and your own digital customer journey, you can speak to consumers on a much more impactful level. You can learn specific details of each individual buyer, and through that intel you can craft a message that speaks to the customer’s own needs and desires.
What Digitally Native Brands Are Getting Right
Brands that were born online are reaching consumers far more effectively than traditional brands born in a pre-internet era.
Juliet Carnoy reports at HuffPost that eCommerce companies are more efficient and have a better profit margin than their brick-and-mortar counterparts. This isn’t because these brands are “better” at marketing. It’s because they understand digital customers.
For one, these brands are winning because they create product experiences. Think about what YouTube videos do well: makeup tutorials, product unboxing. Digitally native vertical brands understand this and speak to their customer’s experience.
Shawn Gold, corporate marketing officer for TechStyle Fashion Group, breaks the success down into four specifics: a “maniacal focus on customer experience, a mastery of digital communication, personalization and controlled distribution.”
The bottom line is digitally native brands find customers where they are at online, and they connect with them. By investing in creating great digital user experiences, these brands are:
- Engaging consumers directly, thoughtfully and with relevance
- Contextualizing the product experience in a way that resonates with consumers
- Creating better brand experiences through direct engagement (especially on social media)
- Building brands that speak to what today’s consumers value
- Using customer data to optimize every aspect of the business
The result is a successful cycle of engaging marketing, qualified sales, satisfied customers and sales-worthy reviews that can create an ongoing, lasting relationship with consumers.
4 Things Legacy Brands Can Do to Embrace DTC eCommerce
By understanding what exactly digitally native brands are getting right, executives at traditional brands can begin to implement their own DTC strategies. Each brand’s audience will have its specific needs and interests, but there are a few tips that will apply in any vertical.
1. Engage With Consumers On Their Own Terms
Consider DTC shoe brand Allbirds, which entered the footwear market in early 2016 with a pair of wool sneakers. Granted, the brand launched with some amazing press: TIME covered the brand’s launch with the headline “The World’s Most Comfortable Shoes Are Made of Super-Soft Wool.”
But Allbirds didn’t rest on one big media win. The company capitalized on that attention by devoting significant marketing energy to Instagram, where it currently reaches 176,000 followers. And while there are millions of brands that broadcast on Instagram, few brands spend as much time and energy actually listening to their Instagram followers.
“That’s one of the aspects of our social strategy that we’re really proud of,” Allbirds VP of Marketing Julie Channing told Digiday in 2017. “We listen to what consumers like and regularly receive pieces of feedback that we can use to make sure we are holding true to our standard of making better shoes, and that’s really about making continuous improvements.”
The brand equity Allbirds is building on Instagram is especially valuable because audiences on that platform skew younger. Research from Omnicore finds that 59 percent of internet users between 18 and 29 years old are Instagram users. One age demographic up, the 30-to-49-year-old group, that usage rate falls to 33 percent.
This puts Allbirds — and any brand engaging followers on Instagram — in a position to build long-term relationships with consumers. The 20 year old commenting on an Allbirds post about how her insoles are slipping may very well remain a loyal customer at 30 years old if she feels the company is listening to her feedback.Brands like Nike, Dirty Lemon and Bandai Namco are prioritizing DTC. Download this free guide to learn about the opportunities, challenges & success stories.
2. Speak to the Sophistication of Digital Consumers
One of the most important paradigm shifts for brands in the 21st Century has been an understanding of digital customer journeys. At a given moment, a consumer could be following 100 brands on Instagram, considering purchases from two or three of those brands, and trying to ignore irrelevant PPC ads or promoted posts from dozens of other brands.
This has made for very sophisticated consumers, who have access to considerably more information about companies and brands than in generations past. Brands must work hard to earn their loyalty.
In a nice piece of analysis, research firm Radicle applies that mindset to the personal fragrances market, where retail margins are traditionally high (Radicle puts the number at around 40 percent) and product information tends to be opaque. Brands that engage consumers could find success in this space, they argue, if those brands can balance a few elements.
First, there’s ingredient transparency: Digital consumers will appreciate knowing what, exactly, is in their bottle of perfume. Second, a high-end fragrance brand that can cut out retailers’ high margins, and pass those savings on, can meet consumers with a strong value proposition.
Radicle points to digitally native brands Warby Parker and Casper as companies that have excelled in other markets with similar pricing strategies: “Fragrances, like eyeglasses and mattresses, do not offer obvious justification for the pricing differences between various brands. Why is one fragrance $50 and another $400?”
Technology has changed consumer expectations. Brands that can speak to those expectations directly position themselves for DTC success.
3. Use Consumer Data to Personalize the Experience
Good conversationalists are good listeners, and brands cannot engage with consumers authentically without first understanding those consumers. That’s where data collection comes in.
The digital channels you use to reach consumers are rich with information. At a glance, you can learn who people are, where they live, what other brands they like. All of the information you collect informs what you say to your audience. The deeper your insights, the more relevant your message.
In a piece for Retail TouchPoints in July, Scalefast co-founder and CMO Olivier Schott noted how personalization has been a key part of Glossier’s success. The beauty products brand collects user data to make the checkout process smoother and solicits feedback to inform its own product design process.
“Brands must go above and beyond to create a truly one-to-one relationship with their customers,” he wrote. “Personalizing the customer experience isn’t just about showing people products you think they’d like, it’s about tailoring the entire experience to their needs from start to finish.”
4. Your Brand Has a Strong Voice — Use It
If your company has spent decades honing and refining its brand, then it brings a competitive advantage to the DTC space. Don’t neglect that strong brand voice as you begin to engage consumers directly.
Rather, lean on all that accumulated equity so your brand can speak to consumers in a way that is authentic, that builds rapport. “The push of traditional marketing and advertising strategies threatens to alienate instead of endear,” says Alexis Vera, executive creative director at IDL Worldwide.
“Brands that win in this new dynamic are becoming more intimate and transparent, finding ways to invite consumers to participate in organic ways that build emotional connections, cultivate community and, ultimately, win loyalty.”
That’s not a fundamental shift from building strong relationships with distributors and retailers. The audience changes, but the intent doesn’t. Ultimately, established brands got to where they are by building communities and earning loyalties. Exploring DTC is simply a way to keep that momentum going.