The surprising truth about D2C
Direct to consumer (D2C) is a real game changer for many organisations. It gives businesses a unique opportunity to engage consumers directly, build long-term loyalty, generate priceless data and insights, and launch new business models.
But D2C is hard for established businesses. It cuts across traditional routes-to-market and competes with valued customers. Done badly, it can spark viral moments that draw attention to a company’s mistakes and seriously damage their brands.
In our previous article, we outlined how D2C offerings can help businesses of all sizes achieve hyper-growth. Using findings from our interviews with more than 1,000 UK consumers, we explored how social media has created a new, data-rich, customisable and scalable sales channel.
In this article, we’ll aim to answer the question on everybody’s lips. What do businesses need to get right in order to successfully execute a D2C strategy?
Our research revealed some findings that we expected, and others that were surprising.
The really surprising bit
Most consumers aren’t willing to pay a premium for sustainable goods. Consumers are increasingly aware of sustainability – particularly as we’re seeing more extreme weather events, such as flash floods, typhoons and wildfires. But although 63% of consumers say they make environmentally and socially responsible choices when shopping, only 23% of consumers are willing to pay extra for more ethical and sustainable products.
But there is hope. Millennials have increasing buying power and influence, and sustainability is a major factor in their purchasing decisions. This trend is set to accelerate with Gen Z – an age group that cares a lot about the planet.
The surprising bits
Price trumps convenience – except when it doesn’t. Consumers rate price as the single most important factor in a purchase (this isn’t a surprise). However, most are prepared to pay extra for value-added services – such as delivery passes, subscriptions and extras like driver tips – even though these services can significantly inflate the total cost.
Brand identity is important. The more consumers trust a brand, the higher they rate its product/service quality.
The measure of quality has changed. When consumers judge quality, they don’t just think about the product/service they have bought. They take into account the purchasing experience, the speed of gratification (availability, flexible delivery, etc.) and the feedback loop (ratings, reviews, etc.).
The less-surprising bits
Convenience, price, quality and speed are the key quartet in D2C. These are the top factors that drive consumers’ purchasing decisions.
Covid-19 forced consumers to go digital, and they won’t be going back. Growth in eCommerce continues to significantly exceed pre-pandemic projections. In fact, forecasts predict that 25% of all retail sales (excluding fuels) will be transacted online in 2022.1
Why the UK is a good market to examine
We focused our consumer research on the UK, because it’s the most developed eCommerce market in Europe and the third most developed in the world. This means it’s a good indicator of where the D2C market is going.
When looking at D2C relevance in other countries, we advise clients to look at what has and hasn’t gone well in the UK, and see what they can learn. There will always be local market nuances, but price, convenience, speed and quality are universal.