Covid has significantly contributed to brands taking the D2C approach. Though the trend initially started back in 2016 during demonetization. Usually, around that time, D2C retail companies realized their potential to become a bigger brand was much higher if they created their very own online brand site rather than bagging sales from third-party sites.
The massive online sales across all the eCommerce segments skyrocketed when Covid struck. Companies profited on every sale they locked but paid the price for every sale they made through a third-party site. Paying commissions to the third-party site only added to the brand’s remorse. In addition, brands started realizing massive amounts of cheaper imitations of their products in the markets. They began being launched under the mask of big private names, which became an enormous competition for the brands.
It being another factor that made brands pivot from conventional eCommerce selling. And that the trend has exponentially increased in the brands. According to Statista, by the end of the financial year, the Indian D2C market is supposed to contribute USD 12 billion. By the end of the 2027 financial year is expected to touch USD 60 billion, and these statistics no doubt make the market look promising for D2C brands.
Why choose the D2C approach is much more than what you read now. Xpresslane has been in business with more than 150 D2C brands helping them to deliver the best checkout experience for their customers. Our close association with the D2C brands will help our readers to get a better insight into the D2C approach is beneficial for the brands. In summary, some of the vastly important reasons why brands take a direct D2C approach are explained in detail in the eight points below.
Table of Contents
Striking Reasons Why Brands Are Going D2C:
Maintain Customer Data
When brands sell their products through a third-party site, they have to rely on the third-party sites to study customer behaviour and data and conduct business analysis. It gets entirely reversed when the brands get to sell their products from their very own website. You might have had something else on your mind, but according to the research, this is the primary reason brands choose to switch to the D2C approach.
Some of the information that brands can directly collect are as follows:
-When did the customer buy the product?
-Name of the customer.
-The campaign channel that the customer followed to make a purchase.
-The device customer used while making the purchase. Is the customer a repeat or a new user?
Considering that data is the new gold, brands can do a lot of groundbreaking work like improving targeting, massaging, enhancing marketing strategy and many other things required for a successful business to get going.
Developing Relationships With Customers & Nurturing Them
Third-party sites will treat your customers differently than you desire to treat your customer. The chances of a third-party site putting extra effort into your customer are slim, guaranteeing that the average customer experience will be low. Eventually, it will diminish the chances of having a repeat customer for any brand on a third-party site.
Giving brands a D2C approach increases the chances of providing customers with a better experience. Thereby opening a space to build connections with the customers and nurture the relationships built with the customers.
Consider, for instance, whether the customer’s order is damaged or not delivered. The third party may need to put more effort into resolving the customer’s concerns. But, when addressed by the D2C brand, it will fix the same issue more efficiently and in much less time.
More Profitability
In the beginning, we mentioned that for every sale D2C makes on the third-party site, and they have to pay a commission. With money saved on commission, D2C brands can spend money on promotional activities for the brand. That will ensure the survival of the brand in the cutthroat market.
When the D2C brands start retaining their profit after cutting ties with third-party sites, they begin investing these funds into better customer experience and increasing their sales channel.
Lastly, when D2C brands sell their products from their platform, they can offer customers a better price range. That was only possible if there was an involvement of the middleman in the selling of their products.
Strategically Offer Deals & Discounts
The idea of brands being able to decide the deals, sales and discounts is another significant reason to switch to D2C. With better innovations, discounting features can increase the chances of conversions. For example, if you use Xpresslane’s checkout operating system, D2C brands can offer customers a dynamic incentivization part. Moreover, customers will be provided with a more personalized checkout process depending upon the campaign they choose to shop from the brands. Overall, the comprehensive checkout process will maximize the brands’ revenue and reduce their cash burn.
Invest In Product Development
Knowing the customer’s intent is the best way to grow the business. Data is Gold!! When retail brands mine the data to analyze trends, they can develop the best product.
Analyzing trends helps website owners understand customer behavior and improve their product offerings. For example, research has shown that tedious checkout processes make customers drop out of the process. But, knowing that customers might drop out, website owners can now make their checkout fast and dynamic. Many D2C brands use Xpresslane’s checkout operating system to make the checkout procedure quicker and swift for their website. Using Xpresslane’s checkout operating system has improved the conversion rate for many D2C brands.
Besides optimizing the checkout process, analyzing the data can also help upsell journeys and increase the opportunities to improve the customer journey in other sectors.
Embrace Omnichannel Ecommerce
Omnichannel commerce is a procedure of using multiple channels to amplify the number of sales. Along with that also provides customers with a unified shopping experience no matter which channel the customer uses for shopping.
Around 73% of consumers use multiple channels to shop during their entire shopping journey, a study conducted by the Harvard Business School. Omnichannel will soon become a norm, and customers will have omnichannel expectations from their favorite brands. The D2C brands can only fulfil this kind of expectation. In all honesty, unified customer sales and potential sales for the customer.
Control Over Messaging, Branding, & Reputation
Control is another reason why brands are stepping into the D2C world.
Control over pricing, branding, messaging and everything else that helps them control the brand reputation. While gaining control over essential brand touchpoints, brands can offer a high-quality experience to the customers no matter which channel the customer uses to shop from the brand.
Having control helps brands provide a personal touch, as they can improve the messages they send to their customer, leveraging personalization. Adding more human feel to the process may compel the customers to take the desired actions. For example, many brands provide direct human contact for support 24X7 to solve their customer’s concerns. Or some brands use WhatsApp as a primary mode of communication to stay in touch with customers. They use it for informing customers of order details to the customers, upcoming sales, and new product launches; it also helps them recover abandoned carts, and lastly, they can send custom-made messages levelling up the touch of personalization.
Lastly, as mentioned earlier, their control over data allows the brands to build their brand image the way they desire. Brands can indulge in influencer marketing to build a reputation for the brand, whereas they can invest in Google ads to increase brand awareness.
Control Over Otherwise External Factors, Especially RTOs
Return to origin is one of the significant concerns of business owners. The return to origin phenomenon happens when the customer refuses the delivery at the doorstep. It generally occurs in the case of Cash on delivery offers. The company has to incur extra expenses like repackaging, reverse logistics, inventory blockage, etc.
Brands generally do not have control over the increasing RTOs when they sell through a third-party website. But, the escalating number of RTOs can be resolved if the brands plan to D2C.
For example, the Xpresslane checkout operating system can resolve most brands’ problems.
What does Xpresslane do?
-Xpresslane will categorize the high-risk and low-buying intent users and remove the COD facility for these customers.
-Also, high-risk and mid-risk customers will be provided incentives to make prepaid payments, reducing the chances of RTO.
-Xpresslane will also help brands charge more for COD orders to stop customers from impulse buying.
Conclusion:
There are multiple reasons for brands to go D2C, and one of the most crucial reasons behind it is that the present timeline has fewer barriers to entering the D2C market. Additionally, D2C can deliver higher margins with greater control over the exact domain, from product creation to sales and delivery. So any new emerging D2C brand driven by the motive to deliver personalized, relevant, nurturing experiences to fulfil the customers’ needs will be racing to the top and emerge as winners.
FAQs:
Why is D2C good?
D2C is good as it bypasses intermediaries like retailers and wholesalers, thus reducing unnecessary costs between the manufacturer and consumers.
What is a D2C business model?
D2C is short for direct-to-customer/consumer. In the D2C business model, they have their own production facilities and distribute them within their own channels after production. Here channels refer to e-commerce platforms, retail stores and social media.
Why do consumers prefer D2C?
A significant benefit of D2C brands is that they don’t have to share their consumer’s data with the retailers. They are making D2C brands utterly aware of the insights about the customer, like when the product was bought, who purchased it, and through which channel.
Why is D2C the future?
Most brands are engaging in D2C channels as there has been increasing attention towards the convenience and rise in online shopping. It helps brands to take care of the customer touchpoints, making them independent of the retailers, and this shift is evident in every industry sector, from FMCG to household goods.