Brands that have a well-established presence among their customers can benefit significantly by opting for the D2C route of marketing. In the US alone, D2C sales are expected to reach $175 billion by 2023. Even new and emerging brands find tremendous merit in D2C marketing as they wish to gain better control over their brand, eliminate the intermediary and acquire complete ownership of the customer’s journey. Technology has helped build a strong foundation for D2C brands to promote business growth:
– Emergence of easy SaaS-based website development platforms like Shopify, Magento, etc. have made it easy for merchandisers to open their own stores.
– Quick preintegration with marketplaces have made it easy to expand the network and reach.
– Smooth integration of SaaS-based, cloud-hosted Tech solutions help analyze demand and inventory levels.
Benefits of D2C
- D2C enables brands to gain complete ownership of the value chain as well as the customer experience. They can create on-brand experiences throughout the customer journey and build rapport without having to rely on intermediaries.
- In a business world dominated by data, D2C gives brands a unique opportunity to capture comprehensive information about their target customer groups, thus enabling them to craft the right products, services, and communications.
- Logistically, D2C makes a lot more sense as brands can directly reach out to their customers if they have a healthy online presence. It may even result in lower costs and better margins for the brands.
- D2C is in line with the emerging trend of omnichannel commerce which allows customers to interact with the brands through multiple touch-points. Intermediary platforms like Amazon can hardly be expected to provide omnichannel services for each individual brand.
Challenges in going D2C and how technology is helping brands solve them
While D2C enables brands to retain and consolidate their identity and reach out to their customers directly, it also comes with its fair share of challenges.
One such challenge is the direct confrontation with retailers who invariably have well-established marketing and communication channels. Brands pitting themselves against these intermediaries could get bogged down, as they will have to invest heavily in the marketing efforts that would otherwise have been borne by the intermediary.
But many of the challenges that D2C brings forth can be tackled with the help of technology-driven solutions.
- Maximizing the reach: Exposing 100% inventory and maximizing reach through a brand’s own website and multiple marketplaces through a single tech platform.
- Real-time inventory-order sync: To ensure 100% of orders are captured and there are no cancellations due to overbooking.
- Cloud warehousing: Possibility to outsource warehousing, without CapEx, to Industry experts and 3PL providers. This allows brands to build a strong warehousing network to capture customers at every point of sales.
- Efficient and error-free fulfillment: Efficient warehousing is ensured with the use of technology and automation. Automation of processes helps minimize human decision-making errors and delays in order fulfillment. Digitization of inventory ensures 100% traceability and prevents wastage or loss of products in the warehouse.
- Simple UX/UI and easy accessibility: Ready dashboards to view brand, SKU & style performance at individual stakeholder levels from warehousing manager to Brand CEO.
- Reports of actionable insights: Easy to generate reports for analysis. Understanding channel performance and brand performance so that quick revisions can be done.
- Returns management: Easy returns analysis to capture the actual pain points and address them to minimize future returns. Rapid recommence to ensure maximum sales.
The emergence of D2C aggregators (Thrasio-style business model) in pushing the growth of D2C brands
A new trend on the D2C horizon is the emergence of Thrasio-style D2C aggregators that acquire new promising brands and help them expand. These brands often lack the support and technical know-how which is provided by the acquiring company. The companies also offer a common base of infrastructure that helps them support multiple brands. Besides, smaller brands also get ready access to technology upgrades which is essential to survive in the highly competitive marketplace of today.
Companies like Perch, Moonshot, GlobalBees, Mensa Brands, G.O.A.T Brand Labs, etc. are following the footsteps of Thrasio to power the growth of D2C brands. Thrasio-style aggregators identify brands that are doing well on marketplaces and acquire them to provide expertise in marketing, brand development, and supply chain management, thus pushing for exponential growth. Having a coherent customer base, quality niche products, and a Thrasio-style backer now seems to be the perfect recipe for creating a successful D2C brand.
D2C is one of the fastest emerging trends on the e-commerce horizon. All that brands need is the ability to scale faster with the help of best-in-class technology as well as some Thrasio-style financial backing. While the challenges are many, D2C as a trend is coping well to create a level playing field for smaller and newer brands.
30 June, 2022