In an effort to keep up with changing consumer shopping habits and the acceleration of eCommerce, many manufacturers have chosen to adopt a direct-to-consumer (D2C) strategy. Rather than send their products in bulk to a third-party seller, companies are increasingly relying on their own channels and selling products directly to their customers wherever possible.
According to Statista, D2C eCommerce sales are projected to reach $21.25 billion by the end of the year in the US alone. While a D2C business model can be an exciting proposition for many brands today, executing such a strategy isn’t possible without overcoming a few hurdles.
We’ve compiled eight D2C challenges that brands will face in 2021 and beyond, with some useful tips to overcome them.
1. Increased Competition
Arguably the most significant challenge that D2C brands will face this year is the increase in competition in the digital space. Over the last few months, more and more brands have shifted their operations online out of necessity.
Also, major retailers such as Amazon have continued to strengthen their foothold in the eCommerce space. All of this means more brands are competing to sell similar products. If your brand isn’t able to provide customers with what they’re looking for, they will turn to others instead.
How to Overcome: The way to overcome increased competition is to stand apart, be differentiated, build your brand, and focus on improving the customer experience. When visitors come to your eCommerce website, they should be greeted by fast loading times and a user-friendly interface.
But once they’re inside, promotions, giveaways and the opportunity to be part of a community are some of the things that will ensure they choose to purchase from you and not a competitor.
D2C companies also need to cope with increasingly demanding customers and provide them with precisely what they’re looking for at exactly the right time. This requires brands to double down their efforts at personalizing the customer experience.
Customers expect brands to cater to them from the moment they arrive at an eCommerce site, showcasing products they might be interested in based on their location, demographic profile, past purchases, and other factors, or risk losing their attention.
How to Overcome: To overcome the challenge that personalization can present, brands need to collect and leverage a vast amount of customer data. This customer data can provide them with the insights they need to give customers the best experience possible, providing content and product suggestions based on their profile Combined with the engaging content and imagery your brand is already producing, this differentiated experience will drive affinity and connection and, over time, will help to build brand loyalty.
3. Product Differentiation
With more competition and online consumers often in task-oriented mode, seeking things they need vs things they may want, many D2C brands may be at risk of their product becoming commoditized and being overlooked. Brands often have similar packaging, brand voices and target markets, so finding a unique selling point and a way to differentiate is becoming increasingly difficult.
How to Overcome: Encouraging brand loyalty and building a connection with customers is one way to overcome the challenge of product differentiation. With many brands offering similar products, focusing on the emotions of customers and providing them with a unique experience is essential.
One way to do this is by giving customers the ability to customize and personalize their products through product configuration. Instead of simply scrolling through similar products with only different logos or backgrounds, a product configurator can help brands to showcase their products to customers in a unique way.
For example, furniture company KILO uses a product configurator to allow customers to tweak the dimensions of the furniture they’re interested in so that it fits their specific needs and lifestyles.
4. Advertising and Growth
As social media platforms rose in popularity, so too did the idea of running paid ads on these platforms. Over the years, however, it has become ever more expensive to run ads on platforms such as Facebook and LinkedIn as more people sign up on the platforms and organic, non-paid reach diminishes. An article from Forbes showed that Facebook ad costs had increased 90% year-over-year between 2018 and 2019. While advertising varies per industry, depending on the brand’s size, it may be difficult to keep up with competitors that have larger advertising budgets.
How to Overcome: Brands can turn to content marketing to produce valuable content that attracts new customers, builds awareness about the products and engages their target audience. From blog articles to podcasts, video channels and more, content marketing can provide a way to level the playing field and get more out of a limited marketing budget for D2C brands.
5. Changing Customer Habits
Customers are no longer just visiting websites from their desktops and laptops with their credit card at the ready. Instead, they are increasingly embracing shopping on multiple platforms, from mobile websites and apps to tablets and more. Buying directly from a social media platform may have seemed strange a few years ago, but now it has become a viable option for consumers. This means that brands need to be able and willing to embrace new channels early and often.
How to Overcome: Brands need to stay on top of new technologies and changing customer habits. The opportunity for customers to learn more about a brand and make a purchase from them on more than just their main eCommerce website continues to grow. Consequently, eCommerce stores should begin considering how they can incorporate emerging technologies such as AR, VR, and IoT connected devices into their shopping experience to prepare for today's customers and those set to come in the future.
6. Technical Infrastructure
To properly execute a D2C strategy, brands must have the proper technical infrastructure in place to allow them to meet customer demands. This means having a platform that enables them to manage content and digital assets, handle eCommerce functionality, integrate analytics, and more. Plus, this infrastructure needs to be flexible enough to allow them to adjust to changes and continue embracing new technologies in the future.
How to Overcome: Building technical infrastructure using a Microservices-based, API-first, Cloud-native SaaS and Headless (MACH) architecture can provide brands with the capabilities they need to embrace these changes. By adopting this future-proof infrastructure, brands can improve the digital experience for their customers rather than be limited by legacy monolith systems that have become outdated, expensive to maintain, and slow down progress.
7. Omnichannel Shopping
Customers are expecting a seamless shopping experience no matter which device they choose to interact with brands. They expect to start shopping for a product on their mobile phone and then go home and finish purchasing while they browse other similar products and even spy on your competitors to see who offers the best price.
Even when shopping in-store, they want the option to see a product on the shelf and then visit your eCommerce store to find a potential discount or alternative product. This omnichannel shopping experience is becoming more common, and D2C brands need to add it to their strategies if they want to compete.
How to Overcome: Headless commerce is the ticket to ensuring your eCommerce store can fulfill the goal of omnichannel shopping. Instead of the traditional shopping experience that tightly couples the backend data and content to the frontend eCommerce website, headless commerce gives you the flexibility to share valuable content and facilitate shopping on any device.
8. Putting it All Together
For any D2C brand, the increased competition, need for personalization, and swiftly changing customer habits can be a lot to handle. Plus, the biggest challenge is incorporating new tactics and technologies to help overcome challenges. However, there is a way to put it all together without getting overwhelmed.
The way forward is by partnering with an agency like Salsita. Our expertise can help you take your eCommerce experience to the next level to matter the approach you want to take: overhauling an existing tech stack to incorporate MACH architecture and headless commerce, upgrading the eCommerce shopping experience with a product configurator or simply ensuring that your eCommerce store has all of the primary ingredients required to remain competitive.
Learn more about getting your eCommerce store set up the right way by reviewing our 56 Point: eCommerce Audit Checklist.