Nowadays, more and more brands are bypassing stores or retail partners through direct-to-consumer strategies – or DTC – in an effort to achieve greater profits and stronger customer relationships; the latter ultimately to improve loyalty.
The DTC market is exploding. 87% of brands have plans to launch a DTC channel, with 23% aiming to do so within the next 12 months. Nike’s DTC business contributed to 24% of the company’s revenue in 2016, up from 17% in 2013. It has plans to grow its DTC business by 250% in the next five years. DTC is also being widely embraced by shoppers – the majority (82%) of whom have bought directly from a brand in the last year.
Understandably, a huge number of brands are now following the gold rush to deploy DTC, but, as they do so, they must ensure they deliver the shopping experience that buyers expect. The service they offer must be second-to-none, at all points in the customer journey, to avoid falling short of expectations.
What is worrying is that brands have a tendency to overestimate how well parts of the experience are performing in relation to actual consumer experiences. Bad shopping experiences are commonplace – 61% of consumers have experienced an issue related to buying goods online in the last 12 months.
However, businesses seem inexplicably happy with their service. More than two-thirds of brands think they offer fast and frictionless experiences for their customers, but often this is a misconception; 42% of shoppers report they have abandoned a purchase in the last year from frustrating online experiences. That shows a huge disconnect between what brands think they’re offering – and what they actually are offering.
Friction is holding back DTC brands
Direct-to-consumer is not a passing trend – it is an evolution in the retail industry that puts the customer at the centre of business decisions.
Today’s buying experience also has many touchpoints that need to be acknowledged: from website, through checkout, and to delivery and returns. The moment a buyer begins a purchase journey, they are making countless choices that may or may not keep them on the path to ultimately purchase – and repeat purchase.
Becoming a true DTC brand, then, means owning the entire customer experience, from discovery to delivery and beyond. It means brands are responsible for every customer ‘click’, or step along a purchase journey. Brands must recognise that at any moment, they risk losing consumer dollars due to friction points in the buying journey – a scary prospect.
Identifying where the customer is experiencing issues, where there are gaps, is therefore a critical component for building a successful DTC strategy. However, recent research highlights many challenges to address, whether from a user experience perspective, technology capabilities or the ability to offer fulfilment at the speed and convenience that shoppers want and expect.
The biggest gripes for buyers who’ve had negative shopping experiences mostly relate to delivery and returns. In the past year, 60% of consumers said they’ve bought goods that have not arrived when expected, whilst 40% of shoppers have experienced items not arriving at all. A quarter of customers cite items being listed as out of stock after purchase as another major annoyance. After all, it’s a complete waste of time – and a massive let-down.
Frustrations also exist for many shoppers before they click to check out. Brands charging high shipping charges automatically puts off over two-thirds (68%) of shoppers and inconvenient delivery options would put off over two-fifths (43%). Over a quarter (28%) of shoppers say they wouldn’t order from companies that don’t offer free returns – representing a huge missed opportunity.
Each scenario in the buying journey, from pre-to-post purchase, should be recognised as equally important. All of them are linked, and all of them are essential to delivering the fast and frictionless experiences that consumers now demand.
Loyalty is at a premium
When you’re a DTC brand, shipping, returns and incredible response time are part and parcel of the proposition. Getting this right can turn consumers into regular customers and loyal advocates for your brand – however, If one touchpoint fails to deliver, then they all do, creating a poor buying experience for the consumer.
Experience is now innately tied to loyalty – research shows that almost two-thirds (69%) of customers would never shop with the same online store again after a poor experience. In fact, a third of shoppers now readily admit to being less loyal to brands than they were a year ago.
The consumer experience of a purchase journey greatly impacts upon their perception of a brand. In an environment of greater brand choice and increasingly fragile customer loyalty, a brand cannot afford to carry friction throughout its various touchpoints. During the purchase itself, brands risk losing customers if options don’t cater to their preferences, while post-purchase experiences, primarily related to delivery and returns, will influence a customer’s future loyalty to a brand. Collectively, each of these scenarios should be recognised as equally important touchpoints for strengthening customer loyalty.
Simply put, DTC is more than a channel – it requires thinking about the feeling you want to create for customers every step of the way.
Unwitting brands could be driving away business
The gap between brand perception of the customer experience, and what shoppers really think, is driving away customers. Buyers don’t have time to mess around – and quick check-outs with seamless payment integration and multi-delivery options can help persuade them to ‘add to basket’. However, the execution of the post-purchase experience is the most vital component to meeting customers’ expectations on speed and convenience – and it’s the area most in need of development.
For brands to meet the requirements of today’s shoppers for same-next day delivery, they have to have the right systems in place, such as technology that allows them to automate workflows like order management, inventory and fulfilment, and purchase ordering.
Excellent returns management is also essential to ensuring an optimal experience – failure can and will lead to frustrated customers who will take their business elsewhere. Businesses need a framework in place that allows returns to be processed quickly, accurately and easily, allowing brands to get products back into rotation sooner.
It’s clear that direct-to-consumer brands now need to up their game, or they could be eaten for breakfast by competitors who offer a more seamless buying journey. It’s essential to fix the issues that are causing shoppers headaches throughout the end-to-end buying journey if brands want to keep the orders rolling in.
The purchasing landscape is riddled with landmines for brands. Technology is the key to closing gaps in the end-to-end experience and strengthening the DTC model. Businesses that do this well, will exceed expectations and ultimately develop stronger relationships with their buyers – potentially turning fickle customers into long-term advocates for the brand.
Derek O’Carroll, CEO, Brightpearl