How Big Brands Can Leverage The Direct To Consumer Craze
Five years after Dollar Shave Club was founded, Unilever acquired the direct-to-consumer razor company for $1 billion. It was a move Gillette could have never seen coming.
Direct-to-consumer is turning startup eCommerce businesses, like Bonobos, Blue Apron, and BarkBox into massively successful companies, in just five years. What can direct-to-consumer strategies do for companies who have already hit the 10+ figure mark?
Questioning if direct-to-consumer was worth the investment used to make sense. Who knew how long consumers would be happy to buy products online, and if the fad for new products and DTC brands would cease. Traditional retail could have made a comeback (at least that's what Amazon seems to be betting on).
But, with the COVID-19 pandemic shifting even more consumers towards online marketplaces, and even more direct-to-consumer founders getting massive paydays, D2C companies are proving that they're not a fad.
Direct-to-consumer eCommerce sales were $111.5 billion in 2020—they reached $129 billion in 2021. These startup brands have found success and are now a solid competition for bigger, Fortune 500 commerce brands as more people get comfortable ordering mattresses online. CBInsights analyzed the DTC strategy to see how brands like Warby Parker and Casper were finding such massive success:
- They chose simplicity over dozens of products
- They used digital marketing to build massive, loyal audiences
- They focused on delivering a top-tier customer experience
- They knew their success came from their views
If this is the formula for creating a brand new company, what happens if an established B2C company were to use it?
Consumer Product Brands that Have Gone Direct-to-Consumer
Some B2C brands have already made the transition towards going D2C, alongside their in-person shopping experiences. This transition required digital marketing knowledge, a customer journey, and strategic content that turns customers into loyal fans of your brand online.
PepsiCo took their marketing efforts digital by launching their first online storefronts, PantryShop.com and Snacks.com in May of 2020. Head of e-commerce Gibu Thomas explained to Digital Media Solutions, “The quality, fidelity and speed at which we get consumer feedback is just changed by having this direct touchpoint with the consumer.”
Their initial D2C model were bundles of PepsiCo products and the company openly talked about testing new online offers in the future.
As Shopify points out, Nike is transparent about the improved profit margins of online sales over their contracts with wholesalers. Retail Dive quotes a Nike spokesperson, “We are doubling down on our approach with Nike Digital and our owned stores, as well as a smaller number of strategic partners who share our vision to create a consistent, connected, and modern shopping experience.”
CNBC reports that Nike is moving towards its goal of having online sales represent 50% of total revenue in the next few years, giving their brick and mortar stores only half of their remaining profit goals.
Nestlé is looking at search as “shelf space” with a new consumer model. Nestle's North America Executive VP and CMO Antonio Sciuto explained to Think Google, “We need to think about search with the same obsession that we think about our store shelving. It's exactly the same.” Their D2C strategy has shaped into turning customers into subscribers for their products like Nestea and San Pellegrino.
Big consumer brands can leverage the direct-to-consumer craze, using digital spaces to get more advertising space than they ever had before and creating touchpoints that lead to brand loyalty.
PepsiCo, Nike, and Nestlé aren't just trying out direct-to-consumer—they're building it into their business model and even aiming to bring in the same amount of revenue as in-person sales.
But what were the logistics of going D2C that helped them finally hit launch on their online store?
The Logistics of Going Direct-To-Consumer
Going direct-to-consumer is like any business strategy—it takes ideation, creation, execution, and most importantly, testing. Testing content, offers, products, and customer experience. With startup D2C brands setting the standard high, established commerce brands have to meet that consumer expectation and even rise above it.
How do you get customers to order online and offline?
Use Micro-Influencers in your Online and Offline Marketing
Micro-influencers have less than 100,000 followers on social media but a huge pull with their audience. They've garnered a loyal, niche following with a high engagement and conversion rate. These micro-influencers can work with your brand in campaigns that promote your products, offers, and online subscription service to their followers. Eighty percent of social media Livestream viewers say they're likely to buy a product as a result of the endorsement of their favorite influencers.
In comparison to mega-influencers (influencers with 1+ million followers), micro-influencers see 7x the amount of engagement.
You can use this highly engaging content in your advertising material, like Instagram content, after the campaign ends (make sure to write this into your contract). With digital signage, this content can go into your stores and displays. Nike uses digital signage to highlight influencer content and user-generated content.
Incentivize Your Customers to Make User-Generated Content
User-generated content (UGC) is a photo or video made by your fans, audience, or customers about your products. It can be made after they purchase your products in your retail store or as they unbox their new subscription box from your new online store. This UGC is great for engagement and to repurpose across your internet and offline channels.
A UGC-centered campaign from Burberry saw a 50% increase in eCommerce sales year-over-year!
Add Social Proof to Product Pages, Emails, and Ads
Seventy percent of consumers will consider UGC reviews or ratings before making a purchasing decision, and at least 41% of them will read four to seven UGC reviews to gain important insights on a product. Social proof can drastically improve conversion rates on your product pages, in your email campaigns, and in your paid ads.
It's the oil that's greased the engines of DTC companies that have made it big and shows established brands exactly how to see the same revenue.
Hatchet Goods adds user-generated content to automatically share influencer and customer-created content to their product pages. As AdWeek found, 93% of consumers find UGC helpful when making a purchasing decision, which makes this placement strategic for conversions of new offers and products from well-known brands.
It's Time to go Direct-To-Consumer
A few years ago, it was an option to take your established commerce brand online. Now, it's a requirement. As customers create highly engaging and converting content for your brand and products, a brand that isn't online (and turning that UGC into social proof in marketing materials) is missing the boat.
Getting loyal customers to sign on to your subscriptions takes marketing strategy and touchpoints today, but it might involve a lot more hoops in the future. Direct-to-consumer is low-hanging fruit for established brands, and the time to harvest it is now.
Here are 3 ways to get your D2C offers off the ground:
- Bring in micro-influencers to spread awareness
- Find and repurpose user-generated content online and offline
- Add product reviews and testimonials on your product pages
The startup D2C brands did the hard work of figuring out what works best in D2C, now established companies can use their proven strategies to bring their offline audience and customers to their online stores.
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