The old century indirect brand economy is slowly disappearing as consumers demand more transparent and comfortable shopping experience. IAB study revealed that for the past few years, disruption has been a constant in the media landscape. Yet, patterns are emerging that give clarity to the path forward for the digital media and advertising industry.
That said, in the consumer economy, changing from indirect to direct experience is what businesses today should do. Why? A simple reason is that direct marketing is digitally savvy that it could increase consumer experience. Fueled by data, it will be the growth engine of the new economy.
What is Direct to Consumer?
Direct to Consumer (D2C) business, also known as direct marketing, is where a business sells directly to customers as opposed to having goods sold via a retailer or wholesaler. In other words, the goods are directly marketed to consumers without the involvement of third-party retailers and other types of middlemen.
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This new strategy is more popular among manufacturers as it gives more control and a higher profit margin. How? According to a survey by Econsultancy, direct marketing does not involve promoting a product or service with traditional advertising like television commercials or radio ads. Typically, advertising will strictly focus online from social media posts, blog posts, etc, ensuring its effectiveness for small and medium brands that do not have the greatest brand recognition yet.
Not merely about advertising online, however, D2C business also has several traditional methods such as door-to-door solicitation, face-to-face marketing, telephoning, and direct physical mails. However, these types of advertising are becoming more obsolete forms of D2C strategy.
The economy during D2C business
According to IAB, direct to consumer companies keep emerging and is now revolutionising evident in GDP with a constant increment from 2.1 percent in 2008 to 6.0 percent in 2016. Due to the increasing needs for direct marketing, big brands are slowly nibbled to death. More than 100 bed-in-a-box companies like Casper, Leesa, and Purple doubled U.S. market share between 2016-2018, to about 10 percent, as traditional brand Tempur Sealy saw sales decline 4.6 percent in the first half of 2018. Additionally, one-third of consumers plan to do at least 40 percent of their shopping from D2C companies in the next five years.
Building D2C business
If you are thinking about building a direct-to-consumer business, concentrating on one category with a fine-tuned proportion is probably best. The aim of this business is to control your direct-to-consumer relationship, co-creating products through conversation with the consumer, as well as to maintain end-to-end control over the product life cycle. Andy Dunn, the founder at Bonobos, advised the following tips when starting your D2C brand.
- The business is about interaction to consumers, thus, make it primary. Always maintain good interaction, transaction, and story-telling to consumers via your web and/or social media.
- Understand Digitally Native, Vertically Integrated Brand (DNVBs). The short summary of this is to go straight to the consumer and focus on eCommerce.
- The DNVB requires the commercialisation of an e-commerce channel, but that channel is an enablement layer – it is NOT the core asset.
- It is not e-commerce, it is vertical commerce, meaning business niche focus on serving a specific audience and their set of needs.
- The digitally-native vertical brand is maniacally focused on customer experience.
- Deeper data on the consumer drives enable the DNVB to stay closer to the customer than its brick and mortar driven peers, and the ownership of the brand end-to-end fuels more affinity for a vertical commerce brand than even the best e-commerce experiences.
- While born digitally, remember that DNVB need not end up digital-only.
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