Accelerating Your Brand’s Direct-to-Consumer Effort? Speed up Your Business Processes First
It’s definitely a big trend: Big brands are seeing big gains from the direct-to-consumer (DTC) share of their business. But how can organizations ensure they can maximize DTC and not fumble in the process? Read on.
It’s definitely a big trend: Big brands are seeing big gains from the direct-to-consumer (DTC) share of their business. And they want more:
- Adidas is aiming for about half of total net sales to come from DTC by 2025. That’s up from 40 percent in 2020.
- DTC was 40 percent of Nike’s total revenue in 2021, and the company now hopes to boost that to a 60% DTC share by 2025.
- Numerous other brands, including Under Armour, Dr. Martens, Decker’s, JCrew and PVH, are favoring a more DTC-heavy mix, bypassing distributors and third parties in favor of digital channels and their own brand-only physical stores.
The sudden, sweeping retail closures during the pandemic sent consumers online by the millions, spiking a boost in ecommerce overall and fueling a drive to DTC. But although DTC relies heavily on digital channels, it is about more than simply buying online. DTC is all about the brand.
Bonding with the brand
More than half (60%) of consumers now say they prefer buying directly from brands. Their reasons include personalization (the ability to design their very own experience), perceived price advantage, inside information, special offers and exclusive celebrity collaborations, discounted/free delivery options and most of all, the comfort of dealing with a business they trust.
If consumers see lots to love about dealing direct, brands see plenty of benefits too:
More profit. Without a retailer, wholesaler, platform or other middleman, brands can cut out costly intermediary expenses such as commissions and fees.
More control. The brand decides how and when to launch and promote its products, unrestricted by seasonal retail schedules and without competition for shelf space with thousands of other products.
Stronger customer connection. Dealing directly lets brands forge close, personal bonds through continuous communication, reinforcing their voice, values and personality—all integral parts of their brand identity. Strong connections are at the heart of customer loyalty.
Better customer experience. With direct access to granular customer data, brands can create unique, hyper-personalized customer experiences at every stage of the customer journey.
Brand expansion. Data and analytics can uncover expansion and extension possibilities of all kinds, from new product lines or extensions to new locations for brand-exclusive physical stores.
A few challenges, too
However, there is a flip side. Dealing with customers one-on-one can dramatically increase a brand’s operational complexity. Packing, tracking, freight, warehouse and inventory management, logistics, returns—every part of the supply chain becomes more complex, potentially more costly and more vulnerable to delays and mistakes.
Says Simon Evans, SVP Enterprise, Qualitest: “There is a huge difference between a brand shipping 1,000 items to Macy’s or some other retailer, which is relatively simple from a warehousing, picking and shipping perspective, and shipping to 1,000 customers who are just buying one or two items. The steps are the same, but those smaller quantities and where they’re getting shipped and how they’re getting there and what logistics partners a brand uses and how to pick small quantities–all those things change the business model.”
There are also new processes, such as address lookups and credit card verifications, which distributors formerly handled and are now the brand’s responsibility. There are heightened security concerns because of the enormous, constantly changing flow of sensitive customer data.
It’s all about speed
Brands that meet these challenges and realize the most DTC success start with a digital transformation, leveraging innovative technology to make their business processes smarter, more cost-effective, and faster. Much, much faster. “It’s all about speed,” says Simon Evans. “Systems have to be fast, and they have to be smart. Getting one shipment wrong with one retailer has an impact, but with DTC you have 1,000 individual customers impacted. Each has the potential to cause your brand tremendous reputational damage.”
Or abandon your brand forever. Research shows that 30% of consumers don’t return after one bad experience. After three bad experiences, that swells to 70%.
With stakes that high, it’s important that brands take the time to think through their technology strategy very carefully. Three must-have features are:
- Automation–for speeding up repeated functions, improving accuracy by eliminating human error, and controlling costs through greater efficiency and smarter workforce allocation.
- Artificial Intelligence (AI) and Machine Learning (ML)–for hyper-personalization, which goes deeper than traditional segmentation techniques to create the unique experience DTC customers expect at every touchpoint. These innovations also make processing the massive amounts of data involved lightning-fast.
- Scalability–in the form of flexible tech frameworks that enable brands to add new features, expand markets, and make changes of all kinds later without enormous cost increases.
Brand assurance: Delivering on a promise, every time
Optimizing DTC requires reimagining technology through a business lens and ensuring that it is firmly centered on improving every customer experience, building brand loyalty that can last a lifetime. “It’s not enough for the technology to meet its requirements,” says Simon Evans. “It can’t simply work. It has to work for customers. Quality is essential, but what we’re really talking about is brand assurance.”
How we can help
Are you ready to start a DTC initiative or expand your current DTC business? Qualitest partners with some of the biggest-name fashion, footwear and athletics brands in the world, including leaders in the DTC movement. Our solutions use AI, Machine Learning, automation and innovative testing techniques to help brands assure differentiated customer experiences without quality or cost compromise, every single time. Get in touch with one of our DTC experts now.