There are a lot of abbrevations in the world of commerce. B2B, (usiness to business), B2C (Business to consumer), S-Ecommerce (Social Commerce) and D2C (Direct to consumer), and af ew years ago the terms H2H (Human to human) & P2P (Person 2to person) were introduced to focus on the fact, that humans are of utmost importance. At the end of te day, humans are spending the money. But I have written about that already in another post.
Commerce, both on and offline, are undergoing a continuous transition nowadays. Something, I find very exciting 🙂
Today, I want to write a bit about D2C, because it’s popularity is increasing right now.
Now why did I embed this photo in a post about ecommerce? Because when I read about D2C, I had a picture in my mind of a traditional street market (thinking with pictures, as a comparison is great for me, to bring new subjects to the point, and to make them more tangible. Yes I know, I am an odd man now and then 🙂 )
Because D2C enables a direct connection to the customer without another chain link in betweeb. So to speak from one hand in the other. And today’s consomers like it a lot.
Why is it so topical right now?
With retail outlets closed for protracted periods because of the COVID-19 outbreak, consumer product companies have had to increasingly re-examine their online direct to consumer (D2C) strategies. Many have sustained or increased sales through such channels despite traditional routes to market failing. Some are exploring fresh opportunities to create stronger, more resilient online D2C business models that will sustain them during the oncoming economic downturn.
In fact, the current crisis has turned D2C routes to market from an opportunity to a necessity. Online sales have rocketed. The average online transaction value has risen 74% compared with a year ago, according to the electronic payments company ACI Worldwide.1 The crisis has accelerated the long running trend toward e-commerce, with 44% of consumers expecting to do more grocery shopping online and 39% expecting to do more durables shopping online over the next one to two years according to the EY Future Consumer Index.
Consumers are also turning to businesses, that can communicate a strong sense of social purpose on issues such as community, health and the environment as part of their overall value proposition. Online D2C provides businesses with an ideal platform for such messaging, as well as helping them demonstrate tangible reasons to purchase direct: offer differentiation, unique shopping experience and attractive pricing. In fact, while availability is most important for 59% of global consumers in the immediate wake of the pandemic, as the expected recession bites, such online channels may provide businesses with the right economic model to deliver better value to consumers at a perceived fair price.
Brand characteristics that influence consumer shopping behavior, 54% of global consumers feel authenticity and honesty is extremely important.
In recent years, a number of so-called direct-to-consumer start-ups have emerged that want to rethink and improve customer relationships. To do so, they are focusing on four milestones that are particularly relevant for smart consumers: Community, Trust, Experimentation and Independence. The latter refers to the courage to do without all kinds of intermediaries.
Moreover, such direct-to-consumer brands draw on the advantages of the digital market and its ongoing dynamics. Another brand that has joined this coveted group is the natural cosmetics brand LUSH from England.
But what is behind this renovated direct-to-consumer (D2C) approach and why is it trending?
Direct-to-consumer brands are trendy
The model is so exciting, because brands that rely on it can avoid the price mark-ups of middlemen and thus offer products cheaper than the competition without having to sacrifice quality. At the same time, they have full insight into their customers’ behaviour and brand perception at all times. Therefore, product development, delivery and customer relations can be completely rethought.
A good example of this is the luxury retailer Threads, which only sells its products via the messenger services WhatsApp and WeChat. Threads offers its customers a highly personalised and convenient shopping experience at all times, no matter where they live. The purchase is completed through mobile messenger platforms and delivered all over the world. So it’s more about the user experience and less about the channels.
Also, monetisation of these business models is a big issue. To achieve this, many direct-to-consumer brands often rely on subscriptions, such as the baby products start-up Lillydoo, which by the way has become a strong competitor for Pampers.
LUSH, however, is taking a more radical approach. To do so, the British brand is boldly closing the door on the almighty social media platforms in the UK and going back to more classic marketing channels. The brand recently announced that it is discontinuing its UK social media profiles despite enormous popularity and successful product promotion.
In fact, LUSH has already built a strong and engaged community. Followers range from 200,000 on Twitter and 400,000 on Facebook to 570,000 on Instagram. Even or especially because this is such a drastic and shocking decision, it is appreciated and praised by the community.
LUSH is sending a clear message with this action:
We are tired of fighting with algorithms, and we do not want to pay to appear in your newsfeed. So we’ve decided it’s time to bid farewell to some of our social channels and open up the conversation between you and us instead.
LUSH will promote its own channels as a result of the decision against social media marketing. UK customers will therefore be able to communicate with the brand via live chat, email or the online shop.
Despite this announcement, LUSH will not completely disappear from the social media universe. The strategic focus on people-to-people marketing rather than brand-to-people will be reflected in collaborations with selected influencers. LUSH also stated that both the posts and successful hashtags such as #lushcommunity will remain activated.
Digital Business is People Business
Companies like LUSH are striving to make digital customer relationships better and to connect more closely and personally with their customers – without dependencies, without middlemen. And this is a trend that is becoming more and more noticeable in general. Wholesalers, for example, also increasingly want to become retailers.
It is paradoxical and at the same time enormously valuable that in an increasingly digital world, people are constantly looking for the most human, direct and close contact. Because in the end, digital business is about people and not exclusively about entities and machines. We are returning to elementary (social) principles. The emergence of D2C and people-to-people approaches proves this.