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The Direct-to-Consumer (D2C) model continues to gain ground in the global retail environment. According to eMarketer forecasts, the D2C market is expected to reach a value of 175 billion USD by 2024, representing a significant increase compared to previous years.
This growth is due to the increasing consumer preference for direct and personalised shopping interactions with manufacturer brands, which are generally able to offer a superior customer experience compared to multi-brand retailers.
Furthermore, the adoption of advanced technologies such as artificial intelligence and predictive analytics is making D2C channels more efficient, enabling companies to anticipate consumer needs more quickly and adapt their offerings effectively. Despite its considerable growth potential, adopting the D2C model can present significant challenges if a strategic and holistic approach is not taken. The transformation from a traditional B2B2C to a D2C business model is not only a matter of technological change, but also entails extensive operational restructuring and cultural adjustments in all areas of the company.
Evolving consumer habits and the impact on the D2C model
Evolving consumer behaviour shows a clear trend towards higher expectations of direct interaction with brands. Recent studies indicate that over 60% of consumers prefer to buy directly from manufacturers to ensure a more personalised and better quality experience.
In this context, companies that have not yet adopted this model are gradually losing ground. Without the ability to manage active online conversations, brands risk becoming disconnected from market dynamics, losing vital opportunities for engagement, direct feedback and customer loyalty. Indeed, the absence of direct communication and sales channels significantly limits companies’ ability to collect and analyse valuable data on consumer purchasing behaviour, preferences and trends, which are key elements for a successful market strategy.
Common mistakes when implementing the D2C model
Responsive rather than strategic approach
Many companies tend to adopt a responsive rather than strategic approach in their Direct-to-Consumer initiatives. These initiatives are often launched as an immediate response to emerging market trends or external crises, as was the case during the COVID-19 pandemic. A case in point are the many companies that, faced with the lockdown, quickly activated e-commerce channels fearing that their physical retailer network would collapse. However, once the emergency subsided, they found themselves unprepared to effectively manage these new channels, highlighting the lack of a long-term strategy. This lack of strategic planning frequently results in non-optimised investments and poor integration with core business operations, undermining the channel’s sustainability and efficiency.
Tech-driven rather than business-driven decisions
Another common mistake in implementing the D2C model is the tendency to privilege tech-driven decisions, rather than decisions based on business objectives. It is particularly common for technological solutions to be adopted based on their popularity or third-party recommendations, without a thorough analysis of the company’s specific needs. This practice can lead to a failure to consider crucial factors such as scalability, security and integration with existing systems. Such an approach risks undermining the effectiveness of D2C implementation, leaving the organisation vulnerable to operational inefficiencies and risks that prevent true digital transformation.
Key aspects
To overcome these challenges and establish a sustainable and successful D2C model, companies need to consider the following key aspects:
1. Alignment with company objectives
An effective D2C strategy must be perfectly aligned with the company’s overall vision and goals. This requires active commitment and continuous support from leadership at all levels. Management must not only approve, but also be actively involved in promoting and integrating strategies with existing business priorities. This alignment ensures that D2C initiatives not only strengthen existing operations, but also enhance them, contributing to an overall improvement in future business results.
2. Establishing the right objectives and expectations
When relatively new companies start up a D2C channel, they often only identify the objectives of increasing sales margins and volumes, leading to the failure of the project shortly after its launch. Objectives more in keeping with an initiative such as this must also be set in its initial stages, for example objectives in terms of end-customer engagement, collection of feedback that is crucial for the development of products and services, emphasising those components of the offer that are less well distributed or readily available from retailers, price control, and exploring new products.
3. End-to-end process planning
Brand reputation, customer esteem and their propensity to buy and recommend products/services to their personal network are something precious to be carefully preserved, protected and nurtured over time. Setting up an online shop requires detailed planning of all aspects, including: user experience, content, digital marketing and visibility, enabling technologies and their integration with the business ecosystem, logistics and shipping, payment and taxation, customer service, returns, policy and legal aspects. After all, a good first impression can only be made upon a customer’s first visit and first purchase. Taking care of all these aspects in detail during the planning stages is undoubtedly one of the key success factors.
4. Change in company culture
Adopting a D2C model often entails a significant change in company culture. This transformation includes staff training and development to equip them with advanced digital skills and a customer-oriented mindset. In addition, internal processes must be adapted to effectively support a direct sales model, encouraging a proactive and responsive approach to market and consumer needs.
5. Detailed scope, strategy and roadmap planning
This process includes planning a strategic roadmap that clearly outlines the channel’s launch, growth and maturation phases, accompanied by clearly defined performance indicators. These indicators allow progress to be monitored and strategic adjustments to be made in real time, ensuring that the adoption of the new model is always aligned with market dynamics and business needs.
6. Developing robust technical architecture
To effectively support D2C business processes, it is imperative to develop robust technical architecture. This must guarantee efficient management of all operational aspects, from front-end aspects, such as the e-commerce site user interface, to back-end aspects, such as order management, logistics and customer service. An embedded data analysis system must also be an integral part of the architecture, to provide an in-depth understanding of consumer trends and performance.
7. Selecting partners
Selecting partners is essential, but it is imperative to pick suppliers who are not only leaders in their field, but who have a proven track record in the industry and in adapting flexibly to the company’s specific characteristics. It is essential that the new technical solutions are consistent with existing business infrastructures to ensure smooth and seamless integration, avoiding operational discontinuity and potential points of failure.
8. Implementation and monitoring
After the launch, continuous monitoring of Key Performance Indicators (KPIs) is imperative to measure the channel’s effectiveness and to rapidly identify areas for improvement. This continuous evaluation process helps the company to remain agile, allowing it to react quickly to market challenges and optimise strategies in the process.
As the Direct-to-Consumer model continues to grow and prove itself to be a vital component of today’s retail business, companies must approach this transition with a methodical and strategic plan to make the most of its advantages. Success in this area does not only depend on adopting advanced technologies or eliminating middlemen, but requires a thorough understanding of the company’s internal dynamics and consumer expectations.
The projected growth of the D2C market for the coming years illustrates the importance of this model not only as a market trend, but as a substantial transformation in the way companies interact with their customers.
Companies that succeed in this evolution will benefit from greater control over the value chain, from production to the end customer, thereby gaining a better understanding of consumer behaviour and greater flexibility in their marketing and sales operations.
Only through a well-structured, holistic approach can companies turn the challenges of the D2C model into opportunities for growth and innovation. This will not only strengthen their position in the current competitive market, but also establish a deeper and more direct connection with their consumers, leading to greater customer loyalty and continuous improvement of their services.
Take a look at some of the most recent projects using our experience and expertise to launch new D2C channels:
Please contact us if you too are considering setting up a Direct-to-Consumer channel for your company. We will be happy to discuss your project and provide all the necessary expertise.
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