Direct to Consumer (D2C)- New perspective for medium-sized companies

Direct-to-consumer, or D2C for short, is no longer a hype, but a proven, sustainable sales channel. More and more companies are deciding to tackle this. Here is also the statement from Adidas boss Kasper Rorsted: “By 2025 we will be a D2C-driven company with online as the most important store.” In this article we show the core of the “Membership as a catalyst for the D2C shift” strategy. On the one hand, brand stories are shared via the “Adidas Confirmed” app and, on the other hand, very limited items, e.g. Yeezy shoes, are drawn for sale through promotions (drops). The apps are not necessarily data-efficient and require a lot of profile information and consent. But users are willing to share this information.

Loyalty Programs for D2C success

With loyalty programs like Swarovski, customer loyalty is sustainably strengthened. By reaching higher club levels, you enjoy, among other things, the opportunity to buy exclusive items that are only available to the club. Brand strength is not necessarily necessary at the beginning. This is shown by the example of the startup “Dollar Shave Club”. It becomes clear that interesting business models, such as subscription models, are crucial to success. Other consumer goods manufacturers recognize this potential and are following suit. Further examples would be Beiersdorf, Henkel or L’Oréal as the following article shows.

What a medium-sized company should take away from the top brands

A simple D2C channel like an online shop can now be set up quickly and inexpensively. However, the challenge comes at the point when the initial enthusiasm wanes and competitors compete for the same target group, as shown in the following article under the heading: “The next step is usually the most difficult”. Here too, long-term customer loyalty is shown to be the solution.

So far we have talked about well-known “top brands” and startups. But what about classic medium-sized companies that are looking for new sales channels, such as for the distribution of spare parts, convenience items or other goods originally sold for wholesale and retail?

Basically, the same thing should be strived for here too: to create a lasting bond with the customer and to offer real added value.

Added value through D2C

Added value can be provided, for example, with additional information and content that cannot be found at a comparable retailer or marketplace because they sell in a much broader spectrum. A good example of this is the sports watch manufacturer Polar, which, in addition to watches and related sporting goods, also publishes blogs with training tips.

Another form of added value can be to put the price at the center of the effort through offers, good search optimization and marketing campaigns.

Online channel as most important component for D2C

In any case, the online channel is an important component. This should meet the usual expectations of the customer experience, i.e. have an appealing (mobile!!!) display, response time, clarity, search behavior, etc.

Cloud-based shop systems that can only be configured or expanded via modules offer a comparatively cost-effective entry, based on the motto “Just do it.” Such prototypes can be used to get to know the market and to gradually build customer loyalty.

Conclusion

Let’s summarize the points again:

D2C is not initially a technical decision. The smooth interaction of IT and marketing is very important here. To this end, such projects should also be under shared responsibility.
Success in D2C lies in customer or brand loyalty or exclusively in pricing and offer design.
Established means are

Added value through content (e.g. blogs) or social network presence
Customer loyalty through loyalty programs
Innovative concepts: subscription models, additional services, exclusive drops / pre-releases, apps
Pricing and offer design, customer engagement

4. Simple D2C prototypes are a possible approach, especially for medium-sized companies, to gain and expand experience in this area.

Written by David Scheffel