With rapid changes in consumer behaviour, brands are jumping on the D2C eCommerce bandwagon with a never-before sense of urgency. Before embarking on this journey, brands should answer some critical questions and determine their strategy, before investing in tech. "If you build it, he will come" is as much a fallacy for brands as is for startups.
The role of D2C Channel for your brand
There are many reasons for brands to invest in their D2C eCommerce channel. Not all apply equally for every brand. Before venturing into establishing a D2C Channel, brands should clearly identify the specific objectives they would like to accomplish.
Product Packaging & Delivery Experience
The D2C channel requires brands to operate differently with respect to packaging and deliveries.
For sales through retail & distributor networks, products have been traditionally transported in larger quantities (through own/leased commercial trucks) and in bulk packaging (typically boxes, cartons etc.) to distributors and retailers. The D2C eCommerce channel handling of consumers orders in smaller quantities (typically a few retail packs, of multiple different products).
For many brands, this may require significant effort in reworking retail packaging. The packaging has to be robust enough for shipment through courier services like FedEx, DHL and through local, last-mile delivery services. Some brands look at this as an opportunity to bring out a D2C centric packaging that can be a real unboxing experience for the consumer.
Brands also need to realise that the delivery experience given to the end consumer on their D2C channel also contributes significantly to the brand experience. This is quite unlike the traditional bulk transportation for distributor and retailer orders. A D2C juice brand includes a handwritten note by its founder with every delivery specifically addressing each customer by their name.
To stay ahead of competitors, brands need to think beyond omnichannel packaging when incorporating a D2C strategy.
Customer Lifetime Value
For a profitable D2C business, the Customer Lifetime Value (CLV) should be at least a few multiples (2 to 5 times) of the Customer Acquisition Cost (CAC). For some brands, the CLV is the value of a single purchase (e.g. a sofa) For some others, the CLV is the value of repeated purchases of multiple different products (e.g. cosmetics, health foods etc.).
The CAC in D2C eCommerce is typically higher compared to retail channels. Brands need to figure out the right strategies to achieve significant CLV; prior to scaling up D2C marketing.
Investing in the consumer journey, from product discovery to unboxing, is key to retaining consumers and building up CLV. The brand website (and apps) play a very important role in building a strong, direct consumer relationship.
Not surprisingly, brands that create wow experiences on their D2C eCommerce website on product experience pages, on reorders and have a simple checkout process have significantly high consumer retention. Keeping Product FAQs & usage tips up-to-date and including lots of valuable content (just like we do here in this article) are simple but effective ways of keeping your consumers engaged on your website and apps.
Investing in Technology for D2C eCommerce
In today's world of DIY SaaS-driven eCommerce (there are platforms that claim to be hosting more than a million merchants), major brands need to ensure that the eCommerce platform they roll out reflects their brand equity.
The key is to determine the specific objectives that they would like to accomplish through their D2C Channel and identify the right technology that can help achieve them.