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Top Trends Direct-to-Consumer (DTC) Brands Should Know

Aaron

The digital economy has significantly affected the way today’s consumers interact with retailers. As e-commerce has become popularized, customer expectations have risen, increasing the need for digital transformation. With today’s seamless omnichannel experiences and increased one-to-one customer interactions, brands have had to overhaul traditional retail systems.

 

Accompanying this shift has been the rise of the direct-to-consumer (DTC) model. This business model has allowed increased control over business processes with more opportunity to build a cohesive brand narrative and increased usage of data.

 

With this transition, new retail and business trends have emerged. This is particularly true since the COVID-19 outbreak. In order for DTC companies to surface as front-runners in the e-commerce market, it is worth taking note of and acting upon these trends.

 

Investing in data

As technology continues to expand, more brands are leveraging data in order to drive connection and personalization. In fact, according to Forbes, 85% of companies with an enterprise-wide analytics strategy in place are seeing revenue growth greater than 7%.

 

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DTC brands have an advantage within this sector, as full control of their value-chain allows them to collect data at many points throughout the consumption journey. There has been plenty of evidence that shows that investing in data analytics helps DTC brands learn about consumers and streamline the shopping experience.

 

The importance of experience

As consumers continue to transition towards e-commerce shopping, seamless shopping experiences are becoming more and more important. On top of convenience, customers are increasingly caring about other aspects such as connection with the brand and purchasing journey narrative. Additionally, when purchasing in person, customers look towards immersive shopping experiences.

 

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In fact, according to a recent Salesforce report, 62% of consumers surveyed claim to share bad experiences with others, while 72% of consumers say they share good experiences with others. Additionally, 67% say that they would pay more for a good experience. By recognizing the importance of experience and investing in development, DTC companies can attract new customers and possibly increase margins.

 

Popular DTC brand Pura Vida Bracelets has explored these efforts, developing its own retail experience called “Sip + Shop”. Partnering with Kombucha brewery June Shine, they hosted a Happy Hour with live music and mural painting, offering a discount for those who purchased from Pura Vida. Likewise, other DTC brands can create similar social shopping experiences in both digital and physical forms.

 

Value-based shopping

Today’s consumers are more socially conscious than ever, with many wanting to know more about what the companies they support are doing for the environment. Additionally, consumers are becoming increasingly conscious about the political and social values of the brands they support. In fact, according to a recent RetailMeNot survey, two-thirds of consumers surveyed believe that more brands should take a public stand on important social values.

 

 

Customers are also demanding to know more about a product’s entire lifecycle, including the ethics of sourcing and treatment of workers. Many customers are even willing to pay a premium for products that are considered socially compliant with sustainability practices. According to a Deloitte survey, the majority of customers across a range of age groups are willing to pay between 1%-20% more for certified socially compliant products. Gen Z and Millennials lead this trend, with 75% or more of each group willing to pay extra. With these groups having recently entered or entered the workforce over the next few decades, DTC brands should look to invest in sustainability and publicize their values.

 

Transformation of traditional physical retail

Physical retail is also undergoing a major shift. Traditionally, consumers visit stores and pick the items they want off the crowded shelves, try clothes on, purchase, and leave. Now, however, the in-store experience is becoming increasingly digitized. Digital transformation is absolutely important. In fact, according to Harvard Business Review, 73% of customers are omnichannel consumers who switch from channel to channel when shopping. This isn’t just limited to shopping apps or virtual coupons. Most of these customers also use in-store digital tools such as price checkers, interactive catalogs, tablets, and more.  More customers have also turned to the BOPIS model, an acronym for “Buy Online and Pick-Up in Store”. In an NRF survey, almost 70% of customers claimed that BOPIS improved their shopping experience.

 

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Sustainable clothing brand Reformation has invested in using a “Bricks and Clicks” model. Reformation stores have clothing pieces displayed on the shelves, but customers do not just pick them up to try them on. Instead, the store’s walls are lined with multiple large touch screens displaying the in-store offerings. Customers can scroll through all the clothes and choose which pieces they want to try on. Shoppers then receive a text when their fitting room is ready, where they can play their own music, adjust the lighting settings, and digitally swap out sizes or pieces. Ultimately, shoppers are given a cohesive, omnichannel shopping experience.

 

Expanding product range

Today’s DTC brands often started as single-product businesses. Employing digital tools, these companies built themselves from the ground up with ambitions to emerge as challengers within established markets. DTC brands have utilized their digital presence to create lasting connections with consumers. By expanding their product range and emerging in adjacent industries, DTC brands may be able to build upon their existing customer loyalty and generate more sales, ultimately increasing customer lifetime value.

 

Well-known mattress brand Casper has done this, pivoting from focusing on solely mattresses to focusing on sleep products. They have now added nightlights, pillows, and dog beds to their portfolio. With their cult following, Casper recognized the ability to build upon the trust and loyalty established with existing customers, ultimately hoping to emerge as a leading sleep product company.

 

Diversifying marketing channels

Traditionally, DTC brands have utilized social media marketing, hoping to create a strong brand identity and make data-driven decisions. Many have formed strategic partnerships with influencers or celebrities and expanded their brand networks by encouraging loyal customers to become brand advocates. However, there is a strong case for DTC brands to explore other marketing channels – ones that allow brands to tell a story.

 

Image via Apple

 

Today, connected TV (CTV) presents a great marketing opportunity for DTC brands. These powerful digital TVs allow customers to access content on the web, past the channels offered by traditional cable providers. In fact, according to a study done by Telaria and Hulu, DTC shoppers spend 70% more of their time using CTV than they do on social media apps and additionally find CTV ads two times as relevant as linear TV ads. Of the respondents, 82% stated that they would pursue action after viewing an ad from a DTC brand while streaming content. Evidently, DTC shoppers may be more engaged in viewing CTV ads, making this form of advertising an important investment for DTC companies.

 

Predictive models for direct-to-consumer

To help shorten the lead time for the sales cycle, Chain of Demand has made their predictive models available for small and medium-sized businesses to improve inventory management through smarter AI-driven demand forecasting. 

 

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