What Is The Next Evolution of Direct-To-Consumer Disruption?

Direct-to-consumer (DTC) brands are often referred to as disruptors because they use digital and mobile channels to sell directly to consumers. By bypassing distributors and third parties, DTC brands can deliver a more convenient shopping experience while building a more direct relationship with customers. 

The movement toward DTC gained even more momentum during the pandemic. In fact, direct-to-consumer trends show that US DTC ecommerce sales have more than tripled in the past six years. Experts estimate that by the end of 2024, the market will grow to over $212 billion.

But how will DTC continue innovating and expanding to compete against traditional retailers? Let's review the key factors influencing the next evolution of direct-to-consumer disruption.

Key takeaways:

• Direct-to-consumer brands use emotionally charged messaging to build one-on-one customer relationships.
• Most DTC brands find success, meet consumer needs, and accelerate growth using a single channel.
• Successful DTC brands know how to maintain emotional connections by expanding customer loyalty programs.

How Has DTC Disrupted Traditional Retail?

With the rise of digital commerce, the modern consumer prefers personalization and direct engagement with the brands they buy from. The DTC model is built on relationships, and that's one of the main reasons these brands have seen so much success in recent years. DTC brands also offer other advantages over traditional retailers, which gives them a competitive edge.

These include:

• Emotional storytelling: according to direct-to-consumer trends, companies in the DTC space are pivoting to "ethos" as a competitive differentiator. Instead of focusing on manufacturing and distribution, the focus is on building one-to-one relationships through emotionally charged messaging on mobile and social media platforms.
• More attractive pricing: DTC brands enjoy more profits by eliminating the middleman. This approach provides more control over pricing and discounts, leading to better margins and perception of product value.
• Better customer experience: having access to detailed customer data is a huge advantage for DTC companies. That's because customer insights give brands visibility into who their ideal buyer is so they can deliver a personalized customer experience.

However, while direct-to-consumer trends indicate incredible growth, traditional retailers and wholesalers are catching up. So, how do DTC brands evolve to remain competitive? The answer is embracing an omnichannel marketing strategy.

DTC Embraces Omnichannel

Most DTC brands reached success by leveraging a single channel. Think about these hypothetical scenarios where that's the case:

A mattress company launched its website featuring one model at an affordable price delivered directly to a customer's home. That company reached $100 million in sales in less than two years. In another scenario, an eyewear brand launched its website in 2010. The goal is to deliver high-quality frames to a customer at a low price. Five years later, that company's value reached $1.2 billion.

But these companies have had to embrace an omnichannel marketing strategy to accelerate growth and meet new consumer demands. That means relinquishing control over some areas of distribution. For example, the mattress company sells its products through stores and conventional retailers.

That takes us to another hypothetical scenario. A men's razor company launched its website in 2013. But, today, these products are sold primarily in large retailers. As a result, the meaning of D2C has expanded. It no longer describes brands that only sell through their own direct online channel. Today you can find small D2C brands on Amazon that also have their own website. And then you have big brands that have their own online presence.

Expansion of Customer Loyalty Programs

D2C brands rely on the power of marketing much more than typical brands. Specifically, top-of-funnel branding activities are crucial in helping launch a product successfully. Then, as those brands grow, they must find ways to carry the emotional connection they have established to customer retention models. Retention is a powerful growth lever. For one thing, loyal customers spend 67% more than new customers. Then combine that with the fact that it costs five to 25 times less to retain a customer than acquire a new one.

D2C brands must evolve, or they'll perish over time. That means leaning into omnichannel marketing strategies and leveraging customer loyalty programs. Fortunately, those elements align with emotional storytelling and connection components that propelled D2C companies early on. With a view into 1 in 2 U.S card transactions, Cardlytics' Purchase Intelligence offers powerful insights that help brands shape their omnichannel marketing strategy. Contact us today for an analysis and campaign strategy customized for your brand.