The direct to consumer renaissance

 

Nespresso storeDirect to consumer (DTC) models are nothing new.

Manufacturers who go direct to consumers have formed the foundation of entire categories like fashion and furniture.

Today, however, we are seeing the emergence of new categories, format innovation, and ground breaking retail concepts presenting an exciting era for consumers.

There are many examples of DTC, but not all were created equal. You just need to go into any shopping centre and see the woeful pop ups executed by otherwise killer brands.

The key to effective DTC models is adding value to the experience of the core product, rather than just being another cash point for purchase.

The DTC concepts we love have a few things in common when considering how their consumer touch point is designed.

1. Integrity

Every single touch point along the customer journey must be considered and seamlessly deliver on the brand promise.

No one else can be Apple, because no other brand lives and breathes the brand’s values of design, simplicity, and experience.

Apple Store

2. New membership

There is an emergence of brands delivering superior and intelligent service and experiences that go beyond the core product.

Nespresso isn’t just a coffee company. It is a menu of exotic coffees sold in boutiques and facilitated by five star concierge service.

No one needs their coffee service delivered by an impeccably groomed assistant, but it creates theatre and status we want to be part of.

3. Desirability

The store experience, whether it is online or offline, must motivate me to detour from my normal shopping trip.

A recent Magnum pop up shop wouldn’t have been half as entertaining or successful had it not been for the fact that you could design your own Magnum with beautiful, innovative ingredients. (Rose petal sprinkles anyone?)

Magnum sydney

Why even go DTC?

In all these examples, the experience has enhanced the commodity product.

Yes, there are many aggregators who deliver on these principles – Amazon, Sephora, and Wholefoods to name a few – but crossing the divide from manufacturer to retailer has been less successful.

Many global consumer companies are going to DTC online, but without the impact that the above examples have achieved, because these manufacturers are still learning the art of retail.

There is no reason why the global beauty brands couldn’t be the next Sephora. They have the range and diversity, not to mention some of the leading product in the category.

The Economist Intelligence Unit predicts that DTC will grow over the next year by 71 per cent, representing 40 per cent of all manufacturers.

Obviously, many of these will be online, but that doesn’t reduce the need for an exceptional customer experience.

In the DTC channel you keep control. Control of the margin and the experience.

But there are other sources of value too – to test new product, create community, offer exclusive lines, unique promotions, and ultimately open up a one to one relationship with consumers.

DTC is not for every consumer product, but when there is a genuine opportunity to leverage a brand experience for loyal consumers, it can be ground breaking.

The transformation that’s needed is to think like a retailer and not a manufacturer.

It’s a different business model and requires new types of capability and investment.

The product needs to be supported by theatre, service, relevancy, community, and a reason for consumers to engage that transcends the transaction.

Otherwise, why wouldn’t I buy it at my local aggregator when I’m shopping for the other brands that I need and like?

It’s convenient and price competitive. For the consumer and company alike, DTC must offer more.

Clair van Veen is a strategist and acting GM at strategic design agency, Designworks.

Comments

1 comment

  1. Avatar

    Fart inda bath posted on April 15, 2014

    You forgot Sony. They were selling directly to consumers long before Apple especially. reply

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