In the e-commerce industry, Direct-to-Consumer (D2C) brands get a lot of attention. They cut out the third-party vendors from transactions and build direct relationships with customers which boost their own profitability and brand value. This concept has become so increasingly popular that in 2022, D2C e-commerce sales in the U.S. are expected to increase by 16.9% compared to 2021 and reach $151.20 billion. Clearly, the future of D2C appears to be rosy!
But here’s one bummer – the success is only for those brands that are an exception and have become successful by being strikingly different in the market. The other brands may fail drastically due to the mistakes they make which costs them more than some bucks.
In this first segment of the Reviving D2Cs series, we will highlight the common reasons for the failure of D2C businesses.
They Fail to Price their Products Correctly
Affordability is one reason why consumers prefer D2Cs. These brands usually sell their products at prices above traditional wholesale, but lower than retail. This “discount” makes a huge difference to customers and pulls them to make the purchase decision. The phenomenon naturally leads to a healthy profit for the brand.
The key to striking this deal and maintaining a robust bottomline lies in correctly pricing a product. And this is where many D2C brands struggle.
However, it’s not always easy to identify the “right” pricing strategy that allows brands to both define an appealing price point to attract customers and earn a profit. That’s why it’s crucial for D2C brand owners to research various pricing strategies and make an informed choice, instead of simply guessing a price that can possibly be the best for them.
They Fail to Communicate their Product’s Unique Value Proposition
Although customers are mainly attracted by the low prices and convenient shopping experiences promised by D2C brands, it doesn’t mean that brands should not make an effort to differentiate their offerings. And yet – this is exactly where many brands fall behind.
A run of the mill brand generally ends up offering products whose features and packaging look like “me too” copies of others. Their products either do not offer a unique value proposition, or fail to communicate this value proposition to their target audience. Consequently, the brands find it difficult to stand out from its competitors – much less get a leg up in the increasingly crowded D2C space.
To achieve differentiation, it’s crucial to place the product’s unique value proposition at the front of every customer interaction and every marketing collateral. Whether the product’s unique trait is that it is cheaper, more luxurious, locally produced, or anything else. Communicating this trait in a unique brand voice is also crucial. Whether this voice is authoritative, serious, playful, humorous, or irreverent – the brand has to decide on that based on the image it has either already established or about to establish in the market.
They Try to Please Everyone
Remember the old fable about the farmer, his son, and their donkey? The father-son duo listened to the comments and “feedback” of every passerby and tried to satisfy them all. Ultimately, they ended up losing the donkey and a potential source of valuable income. The moral of this fable? Please all, please none.
D2C brands that don’t live up to their potential often make the mistake of trying to please everyone. They don’t identify their unique target audience, create customer personas, or map out their customers’ journeys. Equally important, they fail to create a product and messaging that appeal to the needs of their particular audience. In other words, they try to please all. The result – they end up pleasing none!
They Don’t Communicate with Customers
D2C brands hold a lot of appeal for their consumers, not only because the consumers can access a wide range of affordable products, but also because the consumers feel that D2C brands “listen” to them and understand what they want. The brands also tweak their messaging and offerings to resonate with the consumer’s needs, pain points, and aspirations. All of this is crucial because 60% of (millennial) customers prefer to buy products that “speak” to them.
The most successful D2C brands regularly strike personalized communication with their customers. They also convey their brands’ story, and ask for feedback to improve the offerings. By involving customers in such discussions, these D2C brands deliver the kind of products and shopping experiences that the customers need and are willing to pay for.
Further, by converting customer feedback into actionable objectives and tangible outcomes, the brands show that their customers’ voices and opinions matter to the brand. This is a great way to form stronger relationships based on mutual trust, earn long-term loyalty, and convert the customers into brand advocates and super fans.
The brands that don’t – or can’t – do any of the above often leads to their eventual collapse.
Successful D2C brands differentiate their offerings and brand voice. They offer affordable products and convenient shopping solutions. They also listen to customers, make an effort to personalize their messaging, and focus on continually enhancing consumer experiences.
In the D2C space, there’s a lot of potential for a brand to make a successful run. The mistakes they make are avoidable. By accepting what they’re up against and knowing how they can avoid these missteps, they can successfully participate in and profit from the D2C revolution sweeping the world.
If you are a D2C brand owner, we hope you found this article useful. Come back and check out Part 2 about how technology can help you create a successful D2C brand!
Ergode empowers customer-centric D2C brands to scale their operations, expand their presence, and deliver amazing and authentic consumer experiences. Contact us to know about our AI-powered e-commerce solutions that enable promising D2C companies to achieve consistent brand growth and a solid bottom line.