3 Reasons E-commerce Is Shifting Toward Direct-to-Consumer Brands (And Why You Should Care)
Direct-to-consumer brands are on the rise, and the e-commerce industry is learning how to cut out the middleman. This may be glaringly obvious for anyone in the industry. Still, it’s incredibly important to understand why this shift is happening, and how this shift is happening.
We are witnessing a new wave, and a new way, of doing business. Traditional business and marketing models don’t cut it anymore, because traditional avenues of marketing and business are becoming obsolete. And thus we’ve seen incredible direct-to-consumer brands like Dollar Shave Club, Hubble, and Glossier start to dominate their industries.
So what are these direct-to-consumer pioneers doing right? And why are direct-to-consumer brands so consuming? If you’re an entrepreneur, marketer, or even a large business, you need to know the main reasons e-commerce is seeing such a powerful shift toward direct-to-consumer brands.
1. Democratization of technology and production has enabled far more firms to enter the market.
The e-commerce market is becoming increasingly comprised of direct-to-consumer brands, and one of the main reasons is because of the access entrepreneurs and marketers have to technology and production.
Drop-shipping and increasingly sophisticated offshore production means that you no longer need to have domain expertise to start production. Widespread technology makes this much more accessible. It helps ensure that production costs are lower, and there is less risk when investing in your own production.
The game has changed; you no longer need technical sophistication to build and market an e-commerce business.
This technology also allows for low overhead costs. E-commerce platforms make it easy to provide a storefront and run a business without actually having to invest in physical space. As we’ve seen over time, social networks are a ready-made source of potential customers in one place that these brands can access directly.
2. Brands are able to focus on their consumers’ interest and build relationships with them simultaneously.
Consumer preferences are increasingly being focused on; good brands strive for personalization and aim to create a relationship with their customers. Social media represents an opportunity for direct-to-consumer brands to have regular, authentic interactions with consumers. It enables these brands to build meaningful relationships with their audience.
Direct-to-consumer brands have access to the massive amounts of data that their customers generate. Now, more than ever, they can use this data to deliver personalized experiences. Every touchpoint provides data, which savvy brands can use to provide more unique experiences to their customers. They pay attention to the metrics they can quantify with their emails, e-commerce, social media, etc., and use them to strengthen their presence as brand.
Notably, with all this data, successful direct-to-consumer brands still choose to value their relationships with their customers over their transactions. They are all about building a relationship with the consumer in the long term and learning how to deliver mutual value.
Successful brands understand that consumer opinions matter. More importantly, they’ve noticed that consumers are no longer willing to be passive recipients of advertisements––instead, they trust “objective” sources like reviews and referrals. Generating brand loyalty to build trust is crucial for successful marketing.
3. These brands are combining key values and features that ensure their success.
Yes, many of these direct-to-consumer brands have tech and social media platforms on their side. But how are they leveraging them to become top industry competitors in such a short time? They are doing a lot more than one specific thing.
A key component you see these brands implementing is their strong digital foundation. They are leveraging the data available to direct-to-consumer brands, and they do it for everything from advertising to pop-up stores to product prototyping.
Another huge items they brands pay attention to is personalization. They dedicate their work to their customers. This is seen from how they are delivering communication, sales, offers, and products that are all tailored to the individual consumer.
Successful direct-to-consumer brands always prioritize their authenticity. They communicate directly and forthrightly with consumers regardless of channel. A crucial ingredient to these brands’ secret sauce is their story. Good direct-to-consumer brands know that standing out in today’s crowded marketplace requires strong messaging and positioning that speaks to the target consumer.
This shift is happening so rapidly because consumers are increasingly choosing brands not only based on product quality, but based on what the brand represents and how they maintain their relationship. Larger companies may move toward smaller sub-brands that can build that kind of relationship that consumers expect. It is imperative that entrepreneurs, marketers, and large companies alike come to understand this landscape and it’s not-so-gradual progression.
Ro Bhatia is the chief marketing officer at LimeLight, a start-up that provides a single platform to manage online subscription businesses. He has held leadership roles at DexYP and HomeDepot prior and has also worked at Yahoo, eBay, VMware, Google in varying capacities.