Everyone has found themselves racing into the grocery store for the one item they forgot— a bag of chips, a carton of milk. But, in today’s online ecosystem, incorporating D2C solutions is the next step for CPG brands as they acclimate to a constantly-evolving ecommerce ecosystem. For brands, adding D2C capabilities within their site also gives them access to valuable first-party data, which they can use to improve their marketing campaigns. So, how can CPG brands forge ahead in the competitive market and successfully incorporate D2C tactics into their strategies?
The Rise of DTC, For CPG
Traditional CPG strategies that relied on partnerships and in-store shopping were no match for the COVID-19 pandemic, and consumers quickly altered their shopping behaviors to adapt to this new reality. In fact, utilizing DTC strategies comes with a number of benefits for CPG brands as well— allowing them to cut out middlemen, compete with intrepid startups and build deeper relationships with their consumers.
In 2022 alone, 64% of consumers worldwide purchased directly from brands. Even in the wake of the pandemic, there has been a general downward trend in consumers shopping in-store, and incorporating DTC tactics can help these businesses make up for their losses. Perhaps the most valuable benefit of these direct tactics is that they can give companies access to first-party data, allowing them to flesh out their internal database and learn more about their most important target audiences.
Both traditional and emergent brands are implementing DTC strategies, to great success. For example, Dollar Shave Club began a DTC revolution in the shaving industry, with their customizable supplies subscription box, leading major players like Gillette to follow suit. And Pepsi.co launched two DTC offerings in 2020— Pantryshop.com and Snacks.com, to allow consumers to directly purchase their favorite brands like Lays and Pepsi directly from the comfort of their own home.
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Running the Risks
With no signs of a slowdown in the popularity of DTC offerings, brands looking to incorporate this strategy need to carefully consider their businesses’ capability to run a full-scale operation. In addition, as they build out their databases with first-party data, it will be important to strategize on how they will grow consumer acquisitions.
Of course, beginning your DTC operation will be more complicated than securing a website domain and listing your products. You’ll need to ensure that you have sufficient funding and planning to handle the shipping, tracking, payment processing, returns and support options (such as automated communications through your site). Naturally, delivering to individuals will require more precision than delivering palettes of product to brick-and-mortar stores, nationwide. With mega-corporations like Amazon able to ship certain essentials in under a day, consumer expectations can be high. Products need to be shipped in an accurate, trackable and timely fashion. Consumers also tend to expect sustainability efforts to be made, particularly with regards to packaging.
As with any new venture, implementing a DTC offering may also present challenges with customer acquisition, even for established brands. While the first-party data you collect can offer unique insights into your consumer base, proper digital marketing efforts are essential to sharing your offering widely, even to an existing consumer base. The best way to do this is through building trust in your platform. Be timely to respond to customer reviews, and make sure to have a consistent social media presence, for your relationship-building.
Most importantly, you need to ensure the functionality of your website, and any affiliate links that may lead to it. This can either be done by building an in-house solution, or utilizing an external e-commerce platform, like Shopify. Whichever solution you choose, you’ll want to ensure that it has an easy-to-use interface, and consistent operations. An in-house solution may require a larger digital team to maintain the site— a single social media manager won’t cut it.
Crafting Your Insights
With many of the benefits of DTC platforms tied to the data they can collect for your brand, it is vital to ensure that you have a data platform capable of compiling your findings and drawing actionable insights. To ensure that you are able to make the most of the data you collect, consider which teams are the most high-touch with your internal data already. Sitting down with these groups and determining the most important capabilities necessary can help as you look to narrow down your options.
By taking the time to build an easy-to-use website, increase consumer trust, and communicate consistently with your desired audience, your brand can begin the process of building a lasting DTC offering. As your base grows, so too will your analytical insights, giving you a direct window into consumers’ wants and needs and allowing your business the opportunity to meet and exceed those expectations, into the future.
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