The COVID-19 pandemic has transformed the way we shop.
Consumers the world over have flocked to digital channels to continue to get the products and services they want. This meant business leaders – many of whom were forced to close their doors – needed to seek new ways of reaching their customers directly.
In this context, one of the breakout sessions at Our Digital Future focused on the future of customer commerce. I was joined by a panel of experts to explore how business leaders can maintain access to their customers – and find new ones – in the remainder of the pandemic and beyond.
Our panellists were:
Global KPMG surveys taken throughout 2020 highlighted the emergence of a new breed of consumer during the pandemic: one who is financially cautious, digitally savvy, and keen to engage with trusted brands.
Social restrictions have driven the consumer online. And our research suggests that this trend will sustain: 45% of people say they’ll continue using online channels in the future. As David put it, the pandemic has “brought online retail forward by about five years”.
The shift to online has turbocharged consumer businesses’ use of digital technology to establish D2C routes to market.
But D2C is much more than a website where consumers can buy a brand’s products and services. Encompassing the entire offering and all customer interactions, it enables businesses to:
As such, creating a D2C operation requires technology, data, people and supply chain capabilities; the right strategic partnerships; and a set of business rules to safeguard profitability.
So, what should a D2C model look like? How much investment will be needed to create a digitally-led, truly omni-channel (not multi-channel) proposition that consumers recognise, trust and want to engage with?
When planning or expanding a D2C venture, the first consideration should be the strategic rationale for going direct. There’s no single reason for embracing D2C – each organisation will have its own specific aims.
With this in mind, we asked those attending our session to give us their central reason for considering, or setting up, D2C operations:
Clearly, business leaders are thinking hard about their objectives; our results reflect the fact that D2C isn’t merely a cheaper way of getting products into customers’ hands. I was reassured that brand engagement is the most common goal; I see this as the primary opportunity where D2C is concerned.
Just as there’s no one overriding motive for establishing a direct model, there’s no one-size-fits-all approach to doing so. However, as Oli pointed out, the first step is to ensure a crystal-clear understanding of:
These factors will then influence which D2C model you should implement. There are four models to choose from marketing, marketplace, new propositions or platform play.
Whichever you opt for, remember that physical shopping will bounce back in the post-COVID-19 world. Whilst 45% of consumers said they will continue to use these new ways of engaging, 55% did not, and over 80% of grocery shopping remains in-store even during a pandemic. So when physical does return, consumers will want to move between physical and digital channels at will – so don’t think of them as separate entities. You’ll need to provide a consistent experience across channels: what I call a ‘unified commerce’ offering or truly omnichannel.
Having selected your D2C model, the next question is: can you build it yourself, do you need to buy it in, or should you rely on partners to provide it?
As CEO of a delivery management platform for retailers, David was ideally placed to give us the partnership perspective. He emphasised that partnerships are “essential in today’s market”, as they help businesses adopting D2C to achieve speed, focus and innovation.
With the groundwork done, what must businesses think about when setting up a D2C operation?
Iain advised that they should prioritise the following:
Oli drew attention to how service levels caught brands out early in the pandemic. Some businesses built effective digital sales journeys but neglected the post-purchase experience. And they quickly lost brand equity when unable to process refunds and returns efficiently.
D2C may be essential in today’s market, but it’s not something a business should go into lightly. There’s a lot to think through.
Our panellists gave an excellent overview of the key considerations. To my mind, the three most important takeaways from their insights were: