#BizTrends2020: D2C’s Evolving Landscape
#BizTrends2020: D2C’s Evolving Landscape
By Mike Smollan Chief Growth & Innovation Officer, Smollan

As recently as last year, various boardrooms, airport lounges, in Strat sessions and at team builds ‘evolution and survival of the fittest’ were terms bandied around like a ding bat on time trials. And then, slam dunk – virus 1, global teams 0. Albeit, for a brief moment.

We could not have predicted the accelerated speed at which that statement would next level as we were forced to hastily adapt to new patterns in consumer behaviour, get our personal hygiene protocols ship-shape, bring our communities closer and work in a significantly more purpose-driven empathetic way. And then there comes a time where lessons learnt possess a greater familiarity and we find our groove and mindfully partner the noise of the virus, with the bigger picture as we chart a new course.

Factoring in forecasts, recently released by Edge by Ascential, the by and large foot-flat growth of ecommerce has seen sales fast-forward by more than two years on a massive scale in specifically Asia Pacific along with a slower start in Latin America, the Middle East and Africa regions. The report found that the ecommerce landscape is defined by a few scaled players driving growth, and a huge number of smaller sites seeking to find a differentiated space in some way.

D2C is taking root in the ecommerce spaces and despite sales volumes still being small, offers another layer of opportunity over the long term in the knowledge that it does not negate the relevance of other trade channels but instead allows for an omnichannel approach to deriving value at the end of the day. These platforms with manufacturer-to-consumer direct sales, allow for deeper brand relationships and a higher degree of data capture. As D2C falls into what is considered a niche retail model, typified by exclusivity and high-consideration categories, legacy brands such as Gillette, Nike and Old Spice are on track in terms of innovating in the D2C space.

Gillette Venus is an example of one of their brands that offers consumers an exclusive razor subscription service through its D2C site. On signing up, shoppers choose a tailored plan for delivery with optional add-ons such as shaving cream. While Unilever Pakistan launched Super Sauda that offers the full range of Unilever products, with the purpose being to ‘acquire first-party data for the global consumer goods business.’

Being a nimble, relevant, and a customer-centric business applying a D2C model selling products directly to the customer allows one to control almost every aspect of the journey. However it is important, as the Edge report points out that a brand must decide what the purpose of the platform is going to be, how it is going to be differentiated and what problem it is solving for consumers. The area of value is key with a D2C platform and the need to identify what that is. Take for example Amazon, selling x product with free one-day delivery versus another D2C platform with a rewards program but seven-day delivery which may not be a superior offering for consumers.

Social media channels are a super-efficient way to direct consumers to your platforms by finding the customer where they are. Instagram with its 1 billion plus monthly active users (TechCrunch 2018), prompted Old Spice to tap in using sponsored posts and Instagram shops that brings the shopper into the Old Spice D2C store with ‘ahoy matey’ conversations and incentivisation to identify themselves and ultimately shop. In so doing, building a direct brand-shopper relationship.

Research recently revealed, when reviewing a category spread of personal care, household care and confectionary and snack products that many manufacturers reserve D2C capabilities for their most well-known brands with exclusive, premium and luxury products more commonly offered, where a brand can provide a tailored online experience. Confectionery and snacks led the pack with the highest proportion of branded sites with D2C capabilities. PepsiCo launched two D2C website and as virus related panic buying caused a demand for essential products with high levels of out-of-stocks in-stores. M&Ms also launched a brand website allowing consumers to directly purchase, offering them the option to personalise, choose the colour and the packaging as well as add images or text to the treat.

As we move into a new year, retailers, brands, and manufacturers amidst an insecure economic outlook need to refine their values around ecommerce, sustainability, and localism as we become more accustomed to shoppers living in smaller footprints on an expansive, inter-connected level. Certainly, the D2C space will be no exception.