2020 has been the year of direct-to-consumer (D2C) and is slated to grow manifolds in the coming years. With more and more brands jumping onto D2C ships, the competition is heating up and the brands need to find new ways to differentiate themselves in order to stand out.
Here, we will cover the top 5 trends that will rule the direct-to-consumer market in 2021.
1. Subscription Products
Subscription commerce has been on a rise, led by brands like Dollar Shave, Stitch Fix, Blue Apron the subscription product offerings continue to grow. Mckinsey’s report shows that 15% of online shoppers have signed up for one or more subscription products to receive their supplies on a recurring basis (monthly, quarterly, or bi-annually). Over the last 5 years, the subscription commerce has grown by 100% into a number of categories including Wine/Beer, baby products, contact lenses, cosmetics, meal kits, vitamin supplements, apparel, etc.
Subscription offering falls into three main categories as highlighted in the following graphic from Mckinsey’s report.
In 2021, we will see more and more brands bringing their subscription offerings.
2. Online-to-Offline (O2O) Commerce
Simply put, this is a strategy where the intent is to bring online customers to brick-and-mortar stores. Sounds counterintuitive?
Well, it’s not. The idea here is to create a seamless digital experience before, during and after the purchase. Today, the fact is that most of the customers visiting physical stores actually end up buying online.
Brands like Casper that started online only, they have got around 60 physical sores now and even Warby Parker has 64 stores.
This is a new marketing tactic as these stores are not for sales, they are more to build communities, sense of belonginess, let people try their products, experience the depth.
The companies with such a blended online and offline presence tend to sell more and retain more customers. We’ll see more and more brands diving into physical channels in order to leverage on their success and build deeper relationships with their customers to ensure that not only retain their customers but also increase their market share.
3. Caused-based D2C brands
The new generation of customers don’t put brands in boxes and do not hesitate to try new brands and definitely are inclined towards brands that are more socially responsible, provide transparency & traceability around their product and supply chains and product ethical products. For example, buying for health and wellness products during the Pandemic has gone through the roof.
The digitally native brands have more control over this through the power of data and are positioning themselves around a cause be it Organic, Herbal, Traceability, Immunity etc.
This year, will further growth in this space with the emergence of many new brands and traditional brands launching products around a cause.
4. Acceleration of traditional retailers moving into D2C
With so much happening in D2C market, the traditional brands have realized the importance of and have dabbled into D2C by either creating in-house capability or acquiring the D2C brands.
Uniliver made their first D2C acquisition Dollar Shave Club in 2016 and recently P&G have acquired several popular brands like Walker & Company, Billie and Native.
This trend will continue.
While most of the D2C brands are digitally native, with evolving technology it’s not going to be easy for everyone to be on the top of their technology game. Some of the technology trends that are taking over the D2C space are:
Without a doubt voice is fast becoming de-facto mechanism the way people search and interact with brands. According to an Adobe report, 48% of all online search comes through voice. In 2021, the D2C brands must adopt Voice based approach by creating a voice-based strategy.
b. Data, AI & ML
Data is the oil and with customer being #1 priority, the D2C brands have to have an intimate relationship with their customer and need to know everything about them through the use of Data and AI/ML based intelligence to render personalize experiences.
c. AR & VR
Building amazing user experiences is the key for any D2C brand, AR & VR have already seen lot of traction and we will see more an more brands creating excellent immersive experiences using AR & VR not only online but also into their physical stores.
d. Go Headless
With customers going everywhere, the brands will need to follow them wherever they go. From online store, to voice assistants like Alexa and google, to shoppable and interactive TV you will find your customers everywhere and will need to target them everywhere. We will see investments in headless CMS and ecommerce because of the flexibility it provides to reach out to emerging channels in a personalized way.
We’ll see more and more businesses adopting technology to carve a niche for themselves and ride on this wave.
How can Originscale help?
Originscale is a Next-generation AI-powered Direct-to-consumer digital commerce platform helping businesses simplify, transform and scale. With our data-driven approach, we go beyond the surface and automate every aspect of your value chain by focusing on your number one asset i.e. customer.
Talk to us now to explore, how we can help you efficiently run your operations, provide end-to-end traceability, increase margins, reduce CAC, and retain more customers.