The volatility of COVID has led to significant shifts in the consumption patterns and daily habits of consumers. Whether by necessity or by desire, consumers have moved online. Australians spent a record $50.46 billion online in 2020 and we are seeing a consistent strong growth with around 5 million households shopping online each month.1
The old way of doing business is dead. Brands are reinventing themselves to reach directly to consumers and as a result direct-to-consumer (DTC) eCommerce is gathering pace. With the benefit of selling directly to consumers and bypassing third-party retailers, it is an opportunity that an unprecedented number of organisations are adopting. Additionally, Business-to-Business (B2B) organisations are exploring the potential of this profitable new growth channel, but this transition poses interesting questions.
Failing to understand the pros and cons of DTC could lead to lost opportunities or even damage your brand.
The global pandemic brought a step-change for ecommerce in Australia
With millions of people consigned to their homes due to lockdowns, eCommerce engagement has soared like never before. Entire industries have adapted and evolved in response to these changes, with many companies thriving due to their existing set ups. Conversely, many had to deal with a ‘baptism of fire’ in the absence of their traditional bricks and mortar channels. This dramatic shift looks set to alter behaviour across companies, customers, and the number of sales DTC accounts for in the coming years.
Although the pandemic has accelerated these changes, the main driver for changing business models is the growing prominence of eCommerce within the marketplace. This prominence is giving B2Bs a unique opportunity to reach customers at any time and potentially reduce costs.
The DTC opportunity
By creating an effective DTC solution, the far-reaching environment and significant advances in eCommerce technology have made it possible for brands to scale and build awareness far quicker than if they were to create a physical store. Some benefits of going direct to consumers are:
- Grow revenue: B2B organisations can now easily flourish their revenues by adding an eCommerce platform to open up a new selling channel.
- Gain and control valuable customers insights: DTC organisations have access to deeper customer data and insights compared to that made available through retail partners. With new insights easier to attain, businesses will learn even more about their customers’ needs when developing new creative solutions.
- Manage DTC and B2B sales from one location: B2Bs can maximise technology investment by utilising one eCommerce platform that serves B2B and DTC customer groups. This will future proof your business and improve efficiencies, giving businesses a single view of their world to help with elements like a smarter use of data. Furthermore, with disruptions to markets commonplace, a new DTC model could decrease the risk those disruptions are having.
However, it’s not all plain sailing.
While growth in the DTC sector is undeniable, we continue to see B2B organisations experience major growing pains on the path towards launching DTC eCommerce solutions.
Despite many B2Bs being well established in their existing models, the dynamic DTC landscape is uncharted territory. B2Bs now face the same challenges all brands face online – standing out in a highly competitive and crowded environment.
Additional challenges such as, no longer sharing costs, managing your logistics processes, and measuring the impact on existing channel relationships will need careful management to ensure customer experience is not jeopardised.
A customer-centric approach
Cultivating a unique product and service offering for customers is about creating a platform with the capacity to evolve. Today’s competitive eCommerce market means organisations who evolve with their customers stand the best chance of capturing market share. As customer demands change, so must the products and services DTC organisations offer them.
Kennards Hire, one of the biggest players in the equipment hire market in Australia and New Zealand, realised they needed an eCommerce platform that is flexible and supports the evolving needs of their customers – to not fill out a paper form for renting an equipment. With help of Adobe Commerce, Kennards developed a ‘click and collect’ online tool rental business website that would unite a customer with a concrete mixer at the press of a button. The website also incrementally evolved to build a function to reach business customers and consumers working on DIY projects. The platform allowed the brand to customise offerings and create unique experiences for its varied customer base, bringing the brand closer to customers and creating loyalty.
While companies will find themselves in a learning phase, the ones who demonstrate intimate knowledge of their evolving customers will be able to continually innovate their offering as per their needs.
Is DTC the future?
With substantial growth figures, it is tempting businesses to throw all their energy into DTC, but this needs to be balanced against what the customer requires. With everyone still trying to work out what ‘normal’ will look like in the near future, one thing remains clear, DTC is the model an increasing number of businesses are clamouring for. The approach not only allows you to go beyond the limitations of conventional retail but could safeguard short-term future and grow a long-term strategy.
Scott Rigby is technology advisor and principal product manager for Asia Pacific at Adobe.