Does direct-to-consumer investment represent your most important retail channel in 2020?
Updated: Feb 24, 2020
By Matthew Kelly, Head of Digital and eCommerce @ PRECIOUS
Manufacturers who have invested in a DTC sales strategy said they had benefited from increased revenue (45%), growth in their customer base (38%) and increased speed to market (32%) according to a recent Barclays Corporate Banking Manufacturing report. The key question – is your brand being left behind?
DTC (Direct to Consumer) globally is growing. Manufacturers are waking up to the thought of bigger profit margins, owned customer data, speed to market and brand protection to name a few. Nike, the undisputed leader in the sports apparel business, has pulled away from amazon and is focusing on its direct-to-consumer (DTC) channel.
In the UK alone, a recent study by Barclays Corporate Banking says 77% of all manufacturers intend to invest in DTC in 2020.
Is DTC a ‘fad’ or here to stay?
With Procter & Gamble flexing its muscle by buying the 2-year-old DTC start-up brand Billie, a growing subscription-based grooming brand, targeting millennial and Gen Z women and Nike’s recent announcement to cut ties with Amazon and focus on selling direct to consumer speaks volumes. Two powerhouses investing in their direct-to-consumer suggests this fad has legs….
"57% of consumers in 2019 bought direct from brands rather than mainstream retailers" KMPG 2019
Pursuing a DTC Strategy for your Business
For brands that see the potential for DTC to improve – or even transform – their business, there will still be some challenges to overcome. The biggest initial hurdle will be one of skillsets and resources.
There are multiple facets to consider:
Channels to Market
Rich Asset Content
Channel conflict (if already selling through multiple retailers).
Let’s look at a Wine brand example. For the purpose of the below example, we assume the website has full eCommerce capabilities and customer service facilities.
The brand has been going for 5 years and is looking to gain brand awareness traction within the millennial audience whilst driving sales across the portfolio.
Retail price for the wine ranges from £20 through to £45. Total media budget is £30,000.
How we would approach the campaign here at PRECIOUS.
1. TARGETING Persona and demographic driven to pinpoint the most applicable audience.
ENTRY: Basic food pairings and serving suggestions
ENTHUSIAST: More an investment of passion
CONNOISSEUR: Knowledge that goes beyond knowing how to taste wine or having a deep appreciation
2. TACTICAL ACTIVATIONS: Overlay the above with Occasions and Key Selling Periods (i.e. Father’s Day).
First impressions matter. Landing pages give website visitors an initial glimpse of what your brand is all about.
4. CONTENT STRATEGY: Some ideas around storytelling include:
ENTRY: The 4 best cheeses that go well with Red Wine
ENTHUSIAST: How to optimise your Wine with these must-do tips
CONNOISSEUR: Limited Edition: The perfect vintage for your Wine cabinet
5. MEDIA BREAKDOWN: Programmatic (native content), further backed up with Social Media and Search. Native programmatic serves as a great channel to drive top of the funnel brand awareness.
Programmatic: 45% (£13,500)
Social Media: 30% (£9,000)
Search: 15% (£4,500)
Remarketing: 10% (£3,000)
CPC on native: £0.30 to £0.40
CPC across search, social and remarketing: £0.30 to £0.70
2% conversion to sale with a ATV of £28
1,300 orders generating £37,000 in sales
What’s your DTC Strategy?
As more retailers aggressively pursue this strategy, the brands that can deliver the best experience — both to their customers and to their partners — are in a position to win.
The key question that you need ask yourself - does your business have a DTC sales strategy? If not, you most likely need one!
"77% of all manufacturers intend to invest in DTC in 2020" Barclays Corporate Banking Manufacturing report
Precious is a content marketing and digital commerce agency that helps brands strategically and tactically use content to improve sales. Get in touch with us today to find out more.