Friday, September 30, 2022

Why Every Brand Should Go Direct-to-Consumer (DTC)

Direct-to-consumer (DTC) trend, also known as . also known as arbitrariness, essentially bypasses traditional middlemen in the supply chain – including retailers, wholesalers, distributors, and advertisers – to connect directly to the end consumer. With 81 percent of consumers in the US saying they plan to buy from the DTC brand by 2023, it is clear that DTC represents a significant business opportunity for organizations – and poses a very real threat to traditional intermediary businesses.

Why is this trend so strong, and why now?

In a word, online. If you think about it, DTC channels are nothing new. For years, farmers have partnered with supermarkets to sell their wares directly to customers at farmers’ markets. But as customers go online for everyday conversations and transactions (for everything from groceries to flights), it’s easier than ever to connect directly with them – and thus the middlemen – retail. Cut to vendors and other organizations that have traditionally facilitated the customer journey.

Now, we’re seeing a wave of new businesses that are eliminating the middlemen altogether, such as Dollar Shave Club, which provides shaving products directly to consumers on a monthly subscription model. But we’re also seeing established brands like Nike work hard to build direct relationships with consumers.

What are the advantages and disadvantages of going directly to the consumer?

There are many reasons to jump on board with the DTC trend, including:

No need to negotiate with powerful third-party middlemen such as chain supermarkets and department stores. For startups, trying to get a foot in the door with large retailers can be a significant barrier to entry.

You have complete control over your brand image and customer experience (unlike selling through retailers, where you may have little control over how your product is presented and sold).

Costs are reduced in some areas, potentially allowing you to price more aggressively.

You get more profit as there is no middleman doing the deduction.

And you build a better understanding of customers because when you sell directly, you can collect valuable customer data.

There are benefits for the customer as well. For example, they enjoy a more personal, meaningful relationship with the brands they love, while also bypassing the staggering array of choices offered by the big middleman retailers.

So far, so good. But exploring the DTC strategy presents some challenges for organizations:

This may add some business costs, such as marketing and distribution.

This requires a strong, authentic brand.

This requires a digital-first mindset and a strong online presence.

In addition, it sometimes runs the risk of severing long-standing relationships with intermediary channels.

All things considered, the right way forward for many organizations may be to strike a balance while keeping existing partnerships alive with intermediaries and investing in DTC routes.

New and old brands are going DTC

Let’s look at mattresses as an example. Buying a mattress involved going to a mattress store or home retailer like IKEA and trying several different mattresses. The kids will be desperately bored, while you and your partner will be struggling to remember which mattress was which. Was it the second one you liked best, or the 20th, After you finally decide, you find out it’s out of stock for the next eight weeks…

But soon, mattress stores may be handed the history books as new mattress brands are emerging (pardon the pun) that sell directly to consumers. In 2019, 45 percent of mattresses sold were purchased online, of which 12 percent came from DTC brands – and this will only increase. Eve Sleep is one such DTC mattress brand. Formed in 2015 with the goal of making mattress buying as easy as ordering a taxi, Eve Sleep delivers a number of different mattresses delivered to your door with a 100-night home trial. The company is doing so well; It has since branched out into selling a full range of sleep-related products, such as sheets, duvets, and bed frames.

Eve Sleep may be designed with DTC in mind, but what about the established brands that are traditionally sold through middlemen? Many of these brands are also turning to the DTC model. For example, Nike has grown its e-commerce game heavily, and in 2020, DTC sales accounted for 33 percent of revenue at Nike. This is compared to 13 percent a decade ago. In other words, DTC hasn’t been an overnight success at Nike, but a steady and relentless push—but one that’s clearly paying off. So if you only take one lesson from this article, it should be this: Start exploring the DTC strategy. just, Making those DTC connections can take time, even for big brands like Nike.

What if you are an intermediary business?

If I were a leader in an intermediary organization, such as a retailer or a bank, I would be paying a lot of attention to this trend. Such intermediaries – who have been quite powerful in the past – will increasingly be out of the equation. Therefore, intermediaries of all shapes and sizes should start asking themselves, “What value are we offering to customers? Is this enough for them to stick with us? Will customers leave us completely in the future? Will you?”

To learn more about this and other future trends, sign up for my newsletter and check out my new book, Business trends in practice: 25+ trends that are redefining organizations, Packed with real-world examples, it cuts through the hype to present the key trends that will shape the businesses of the future.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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