February 5, 2020
  |   Digital Marketing, Ecommerce, UX / CX

What is the Future of Direct-to-Consumer?

The direct-to-consumer (DTC) landscape is like the weather – constantly changing and never quite what we expect. Hundreds of digitally native and legacy brands have disrupted their industries with personalized customer experiences, streamlined product lines, and data-driven marketing campaigns. Some DTC brands were created to fill a gap or ease customer frustrations, others were built to offer customers something unexpected but delightfully accepted.

We expect to see innovative as well as creative experiences and products in the future of DTC, largely driven by increased competition and new technologies. We have gathered our top predictions for the future of DTC:

1. Direct-to-Consumer Brands Will Diversify Their Marketing Efforts

Many DTC brands rely heavily on influencer marketing campaigns to reach new customer segments. However, the increasing number of influencers that pay for engagement and followers on Instagram or other social media channels diminished the benefits of this marketing strategy. As a result, brands will diversify their marketing efforts and take an omnichannel approach.

  • Transform pop-up shops and brick-and-mortar stores into lifestyle experiences. While younger consumers use the internet to compare options and prices, they seek physical stores to learn more about the brand, discover new items, and try products in person. 37% of consumers would visit a DTC’s physical store to get a sense of the product before they purchase it. To cater to this segment, digitally native brand Warby Parker opened physical stores across the US to offer eye exams and in-store try-ons.
  • Turning customers into brand advocates. When Bonobos first started, they didn’t invest heavily in traditional and digital marketing campaigns or influencer partnerships. Instead, they focused their marketing spend on customer service. By investing in customer satisfaction, they reached customers through word-of-mouth. According to Hubspot, 90% of consumers trust recommendations from friends—more than other advertising avenues. As the DTC landscape gets more competitive and the cost of acquisition increases, we expect more brands will lean on customer service to turn customer relationships into profits. 
  • More focus on brand marketing. It’s no secret that customers, particularly Millennials and Gen Zers, actively seek brands with a compelling story and a mission that aligns with their own values. We expect brands will use avenues like podcasts, videos, or even magazines (see: Away’s Here magazine) to tell their brand story and reach customers and connect in an authentic way.

Download Blue Acorn iCi’s Complete Customer Experience Report to learn how to create an unforgettable, personalized customer experience.

2. More Legacy Brands Will Enter the Direct-to-Consumer Market

Digitally native brands entered the DTC scene and completely disrupted their respective markets. Their advanced digital ecosystems allowed digitally native brands to create data-driven shopping experiences that centered around the customer. The personalized, streamlined customer experiences motivated shoppers to explore new brands that align with their needs. 

Amazon seemed like an easy answer for legacy brands to compete with digital natives. However, it quickly became clear that the online retailer giant gives brands little to no control over the customer data or the experience. At this point, many legacy brands have gone through the stages of denial, pain, and anger and finally reached acceptance of DTC: 80% of traditional B2C brands believe DTC brands are impacting the market. We expect to see more legacy brands entering the DTC market through two main avenues: Acquisition or Creation.

Acquiring a Digitally Native Brand

In 2017, Unilever purchased Dollar Shave Club, a digitally native company known for their comedic marketing and quality razors. Similarly, Procter & Gamble recently purchased Billie, also a digitally native razor brand. In many cases, it’s a win-win for the legacy brand and the digitally native brand. Unilever increased their razor market share to 16% in the US immediately following the acquisition and gained access to Dollar Shave Club’s trove of customer data. For Dollar Shave Club, the acquisition gave them access to Unilever’s multi-national resources, freeing up the founder’s time to focus on business growth rather than day-to-day operations.

Creating a Direct-to-Consumer Channel

Some legacy brands will choose to create their own DTC brand in-house or with the help of a digital customer experience company. For example, Le Creuset traditionally relied on retail partners for customer acquisition and to sell their products. Blue Acorn iCi optimized the cookware brand’s DTC store to reflect the high-quality of their products and content. As a result, Le Creuset saw a 67% revenue increase year-over-year.

3. Direct-to-Consumer Brands Will Enhance Visual Experiences

90% of what we process is visual. Consider sitting on your couch scrolling on Instagram. In a 10-minute window, it’s easy to consume 50 or even 100 images. Brands have been implementing visual marketing since the beginning of advertising, but how it’s created and distributed has changed. With the drastic growth in ecommerce sales, customers expect brands to offer a visual experience that emulates the in-store experience and enhances the overall customer journey. While many brands have taken steps to include user-generated content and customer reviews, shoppers also want to see more branded and product imagery.

Threekit, a product visualization platform, calls this trend the “Visual Economy,” which is the notion that the product experience is defined by the quality, volume, and engagement of product images. We expect brands to up the visual ante across their ecommerce, social, and physical channels.

New features DTC brands will leverage to enhance the visual customer experience:

  • Add more images to show different angles. 83% of consumers say product images/photos on the product detail page (PDP) are influential to digital purchase decisions—more than any other feature on the PDP. To ensure the site reflects the brand aesthetic and the quality of the products, all images need to be high-quality and large enough for the shopper to see the details. Compelling images will not only attract shoppers to the site, but also to your social media channels. 
  • Incorporate 3D visualization technology. 3D technology, such as 360-degree rotations, allows brands to stitch together images so the shopper can move the image 360 degrees. Real-time interactive 3D images offer the same rotating abilities, but users can customize the product and see how it looks instantly. While customers typically see 3D technology on product pages, Google announced a 3D ad tool in 2019. Brands can create 3D paid ads that users can zoom in and out, rotate the product, or play an animation.
  • Explore augmented reality. On The Funnel, Blue Acorn iCi’s ecommerce podcast, Threekit CEO, Joachim Klein, predicted more brands will explore augmented reality (AR). While it’s unlikely most brands will be ready to implement AR and virtual reality (VR) in the next year, brands will start researching and identifying ways AR and VR fit into their digital strategies. Listen to Threekit’s episode or subscribe to The Funnel on Apple Podcasts, Stitcher, and Spotify.

As the cost of customer acquisition rises and the competition gets fiercer, legacy and digitally native brands will focus their efforts on customer-first initiatives that foster brand loyalty. From data-driven experiences to implementing a DTC strategy, the DTC landscape will continue to evolve.

You can find all of our predictions for the future of direct-to-consumer in Blue Acorn iCi’s report, Own the Customer Experience: Making the Switch to Direct-to-Consumer. Download your copy here.

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