Three Steps to Evaluating Your Strategic Roadmap for D2C Adoption
Post-pandemic, brands have a surmounting pressure to re-evaluate their channel and sales strategies as direct-to-consumer (D2C) channel adoption increases, and the need for a nurturing customer experience is in demand. In tandem, brands are offered conflicting advice from channel partners, recommending staying away from D2C adoption. To guide brands, Gartner has created a strategic roadmap to support companies in making the right strategic decisions and technology investments to increase brand adoption, revenue, and future-proof their digital commerce vision. In this blog we break it down into three steps:
Step One: Your Current State
The pandemic forced brands to re-think their go-to-market strategy. Due to the shift in shopping behaviors over the past few years, the consumer-packaged goods (CPG) and branded manufacturer industries were the early adopters. However, D2C can be implemented across industries, from healthcare and medical devices to automotive and more. Reasons for holding off on adopting a D2C channel include the following:
- Mounting pressure from channel partners to stay away from D2C due to the presumed fear of cannibalizing the partnership
- Lack of company structure to support individual transactions and everything that comes with it (i.e., packaging, managing shipping and returns, customer support)
- Lack of an eCommerce presence - brands may only have content-based sites with the inability to support a transaction
Whatever the reason, brands that fail to embrace D2C may fail to see future growth in monetary terms, brand awareness, customer adoption, and brand loyalty, to name a few.
Step Two: Plan for Your Future State
Gartner believes that the future of digital commerce will include a mix of strategies and technologies that many companies may already have today. Gartner also believes that having an eCommerce strategy and indirect channels like a marketplace are not mutually exclusive. Building a multi-channel strategy can increase customer adoption by going where your customers are across channels. Doing this will drive customer loyalty and in turn increase geo-expansion and revenue.
In the not-too-distant future, we’ll see an increase in D2C sites where customers will have a variety of products available to them, often with the ability to create a subscription. The subscription offering will be unique to a brand's site, as this feature is not typically available through indirect channels. The benefit of incorporating subscriptions include recurring revenue and indirect customer loyalty.
When adopting a multi-channel strategy, Gartner recommends diversifying your SKUs across channels to create curated experiences versus offering all products in one channel. For example, you may feature an entire product line of pillow covers on your site but offer a limited-edition line of pillow covers on a 3rd party marketplace to create a sense of exclusivity and customization for that audience.
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Creating a multi-channel strategy will also open a world of ever-expanding data sets from products to customers and customer ordering preferences. Merging data from different channels will enable brands to create multidimensional strategies to further optimize their digital commerce vision. Gartner notes that in a future optimized state, companies will leverage from data sources such as:
- Web analytics from direct digital commerce sites
- Point-of-sale (POS) data from owned retail stores
- Digital shelf analytics from online marketplaces, retailers, and social channels
- Rating and review data from direct and indirect channels
- Data and analytics from order management and fulfillment systems
Step Three: Creating a Migration Plan
Migrating from your current state to your future state will depend on your company’s digital maturity. As a starting point evaluate the following:
- The technology you have in-place
- What technology do you need to get to a future state?
- The size of your company and the number of brands and products that will be incorporated into the plan
- Strategize how you will sort your products across channels
To learn more and leverage next-step recommendations from Gartner download the report here.