16th July 2020

Shifting to DTC? Prepare for the long haul

Covid-19 is accelerating the transition to the direct-to-consumer model, says Mike Foster, Founder & Creative Director, but this is a long-term shift that requires smart tactical and strategic decision-making.

How will you reach your customers in this time of disruption to protect or even increase your sales? The answer is that you need to accelerate your efforts to build a brand that is easily found, well-understood – and, ultimately, loved by your customers. You need to live your brand from the inside out.

This is not a new imperative. The impact of the Covid-19 pandemic has been so dramatic that it’s easy to assume that businesses must make sudden changes of direction or respond to completely new trends. But the truth is that many businesses are simply speeding up their plans – you now need to do more of what you were doing before and to do it more quickly. The shift to the direct-to-consumer (DTC) model in wholesale and retail is an excellent example.

Naturally, PepsiCo’s launch in May of PantryShop.com and Snacks.com, two significant new DTC platforms, inspired Covid-19 related headlines. So did Heinz to Home, a similar initiative launched by Heinz in the UK in late April. But these were just the latest big-name consumer packaged goods giants to trial such initiatives, with many pre-dating the pandemic. Unilever paid $1bn for Dollar Shave Club as long ago as 2016. Campbell Soup invested in Chef’d not long after. Nestle’s Nespresso venture goes back decades.

In some cases, the big brands are pivoting towards DTC in the face of disruption. New brands, typically internet-based, such as the subscription-based shaving company Harry’s have proved highly successful and begun taking share from rivals sticking with traditional wholesale models. But DTC offers plenty of attractions in its own right, including the opportunity for you to build much closer relationships to customers and to exploit new marketing channels such as social media.

In other words, the shift to DTC is an ongoing story – and one that is likely to be accelerated by Covid-19. Joining the big brands and the digital disruptors are plenty of other new entrants, from the fruit and veg merchants that previously serviced only the restaurant trade to mid-sized companies across the retail sector for whom a direct relationship with consumers was until recently commercially unviable.

Overcoming the barriers to DTC

So far, so good – at least in theory. But the reality of putting a DTC strategy into practice is that it requires different competencies and capabilities. If you have never previously operated in this way, the learning curve can be steep. The good news is there are services set up to help DTC brands with logistical issues such as transaction management and distribution. Using these will accelerate your time to market – and once your success grows, you can bring these functions in-house.

Meanwhile, you can focus on your brand – working out how to position your business in this new world and how to make a powerful connection with your new customers, based on the values that you stand for. The goal is to establish emotional engagement with your customers; where your values shine through everything you do, you will naturally build strong relationships with those who share them.

That will mean embracing cross-channel (omnichannel) communication strategies – engagement on every social media channel, for example, as well as traditional communication conduits. You’ll need to be able to tell stories that set you apart and give customers a reason to try you out. You’ll need to keep engaging to ensure customers keep coming back – that they buy into you as well as buy from you.

Even your product proposition may need to change – the prevalent subscription model, for example, depends on the seller providing a regular supply of products that may also need to change each time, rather than a one-off purchase. Some experiments will prove more successful than others – it may be, say, that we are approaching the limit of subscriptions, given the large number that many households are already juggling.

You may have to make trade-offs. Businesses pivoting to DTC will often be maintaining their traditional models too or returning to them in cases where Covid-19 has temporarily made them unsustainable. You’ll find it challenging to meet the demands – sometimes competing – of two different types of customer.

In many cases, these issues will only begin to come to light over time, but it’s worth thinking and talking about them at an early stage. Your strategic considerations may well have implications for tactical decisions – to reach new customers.

Shifting for the long-term

For all these reasons, you need to think about the shift to DTC beyond the context of Covid-19. The pandemic may have accelerated this trend – and prompted you to think about DTC for the first time – but making the shift successfully will require more from you than a short-term solution designed to combat the virus.

Don’t be afraid to ask for help. We can help you work through some of the issues you’ll face as you adapt your business for the new world. As a starting point, think about:

  • How you’ll get the basics right: what support do you need to meet the practical demands of DTC, from website optimisation to payments and distribution?
  • Which acquisition channels to target: what are the right channels for your particular brand and product?
  • How to stand out: what are the values that make your brand special, and how do you ensure they shine through?
  • How to keep your existing customers happy: what are you doing to ensure today’s customers don’t fall out of love with your brand?
  • How to adapt from today’s model: do you have existing DTC channels that provide the foundations for brand engagement?
  • How to exploit data: what do data and insight tell you about how customers are responding to your efforts to connect?