Unlocking The Experience Of ‘Direct To Consumer’

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  • Consumers across all ages have shifted to e-commerce as they hunt for a broad range of ideas and solutions online
  • The pandemic has spurred brands to reinvent the experience of shopping for beauty and fashion online from real-world inspiration.
  • However, 66% of consumers still prefer to purchase products at brick-and-mortar stores and 58% of respondents are likely to test the product before buying. (YouGov, 2019) 
  • Social shopping is influential in brand choice and purchasing, as 8 in 10 customers say that social posts or reviews from friends and family influence their purchasing decisions (Stackla, 2020) 
  • Research shows that 37% of customers want to visit DTC stores to get a sense of product, 32% for convenience and 28% to get the product right away (Diffusion, 2020). This shows that the demand for physical stores is still as high as ever before.

In this regular column, creative agency Household explores how modern wellness businesses can leverage consumer behaviour to create brand stories and experiential points of discovery for customers. 

This month it is examining how the coronavirus has refuelled the direct to consumer (DTC) model — exploring the customer behaviours driving the DTC evolution, how digital brands have responded to customer demands, and how this will influence the role of physical retail.

The coronavirus pandemic has forced a mass embrace of the ‘new’
Consumers across all ages have shifted to e-commerce as they hunt for a broad range of ideas and solutions online, and brands have had to quickly adapt and respond by increasing their digital capabilities and by creating different approaches to reach customers. 

We have tracked a number of brands evolving the direct to consumer (DTC) model. The pandemic has been a catalyst in how these brands have re-invented the DTC model across multiple sectors, from culture and entertainment to FMCG categories. It’s no longer the stomping ground of progressive speciality startups, but for all brands looking to drive preference, loyalty and repeat sales through a directly owned relationship. 

Over the last few months we’ve seen DTC brands innovate across four categories, to improve their online brand experience: 

  1. Virtual test and trial
  2. Influencer communities
  3. Social shopping
  4. Brand activists

Here, we explore each of these categories in more depth…….

Virtual test and trial
Experimenting with products is an essential part of the beauty and wellness buying process, as it allows consumers to make confident purchases, which increases the likelihood of repeat buying. 

It’s also no surprise that many DTC beauty brands have physical stores since 66% of consumers still prefer to purchase products at brick-and-mortar stores and 58% are likely to test the product before buying (YouGov, 2019).

However, when stores around the globe closed in response to COVID-19, brands were forced to create agile solutions, leveraging AR/VR technology to enable virtual test and play, as well as reinventing the experience of shopping for beauty and fashion online, using real-world inspiration.

Retailer Ulta Beauty recently unveiled a digital product try-on feature ‘GlamLab’, as an alternative option to in-store product testing. Users can test products virtually on their skin tone before purchasing in-app to have products delivered to their home or for curbside pick-up. Designer apparel and beauty brand Gucci, meanwhile, has utilised Snapchat’s AR lens to allow users to virtually try on shoes and immediately purchase them within its app. Elsewhere, many other brands are starting to simplify the purchasing journey by creating convenient in-app purchasing features that also encourage impulse buying. 

Going forward, we predict that DTC brands will move towards using AR/VR apps to seamlessly connect online and offline customer journey touchpoints. This will make virtual try-on an important aspect of in-store beauty and wellness shopping, leaning into convenience, safety and personal preferences.

Unlocking The Experience Of ‘Direct To Consumer’

Image: Ulta Beauty

Influencer communities
Trusted personalised guidance and advice from sales associates is an important factor when purchasing new products, so it’s not surprising that a growing number of brands have re-evaluated the role of sales associates for a post-COVID digitally boosted era. 

From Bobbi Brown to Currys PC World Live, businesses are responding by creating live and on-demand virtual consultations to connect fans with brand ambassadors. This gives access to guidance online that consumers would expect in stores, allowing brands to establish 1-to-1 relationships with customers. However, this digital solution may be difficult to scale.

To overcome this, some brands have started to host live-stream virtual shopping events to tap into their online communities and build hype around the latest products and trends. For pride month in June, NYX and Urban Decay held live masterclasses hosted by beauty influencers to educate and entertain. The beauty brands incentivised people to join by giving away perks such as free online delivery. 

By integrating Influencer marketing into the DTC model, brands can build emotional connections with consumers by leveraging the trust they have with an influencer. Live events, meanwhile, target new customers, widen reach and raise brand awareness. 

One of the most iconic events during lockdown was rapper Travis Scott’s live virtual in-game concert in video game Fortnite, which attracted over 12 million viewers. We predict that live-stream events will play an increasingly important role in virtual product launches and will be live-streamed in stores to connect to the offline experience, creating a different energy and buzz.

Unlocking The Experience Of ‘Direct To Consumer’

Image: Fornite x Travis Scott

Social shopping
For many, shopping in stores is where we connect with friends and family over a shared love of brands and experiences. Social shopping is influential in brand choice and purchasing, as 8 in 10 customers say that social posts or reviews from friends and family influence their purchasing decisions (Stackla, 2020) 

DTC brands have explored new ways to connect fans and peers. Squadded Shopping Party has developed a solution where users create ‘squads’ with friends to interact, comment on and give styling advice on chosen products. For consumers, this feature brings socialising back to shopping, whilst enabling them to easily ask for trusted advice from peers. For DTC brands, integrating socialising features into websites and apps allow for brand communities to form, which helps to raise brand awareness as it draws traction. 

Brand communities play an important role for DTC brands as they tap into people’s desire to achieve both a sense of individuality and belonging to something bigger, a key behaviour we recognise as ‘Identity’.

DTC brands Peloton, Glossier and Glow Recipe have utilised brand communities to build trust and drive loyalty with fans. When DTC brands like these establish strong communities online, it establishes the opportunity for them to create physical spaces for their loyal fans to interact and connect. 

Brand activists
Today, there’s a heightened desire to feel and live better, both personally and for the good of others. 

During the pandemic, people re-evaluated their consumption habits, re-defining what they view as an essential item and re-thinking the brands they buy from. People are driven to make ethical choices and are not afraid of boycotting brands — 76% of people say that supporting companies that address social and environmental issues helps them feel that they are doing their part. (Porter Novelli, 2019)

And so, brand activism is no longer optional. 

Customers expect DTC brands to stand up for them and take action on issues that affect them and their communities. During the Black Lives Matter protests, several brands pledged to drive change, Ben and Jerry’s unveiled four ways to dismantle white supremacy, Glossier launched a grant initiative for Black-owned businesses and Rent The Runway is encouraging retailers to give 15% of their shelf space to Black-owned businesses. 

We also saw a number of beauty and wellness brands participate in the #pullupforchange challenge, detailing the genders and ethnicities of their employers and outlining future diversity and inclusion plans. This only highlights the level of transparency consumers now expect from the brands they buy from. Transparency is key in building trust and establishing an emotional connection with customers. This, in turn, will drive loyalty and preference. 

Unlocking The Experience Of ‘Direct To Consumer’

Image: Ben & Jerry’s

A post-COVID future
As the lockdown eases, many brands have unveiled intentions to accelerate and focus their retail strategies to digital, after successful Q4 sales. Retailer The Hut Group recently announced that it signed £100m worth of beauty brand partnerships to sell on its website, as it aims to transition to a DTC model. Nike, which has a disruptive physical retail presence, is also shifting its focus to its ‘Consumer Direct Acceleration’ strategy to create the digital marketplace of the future. But as brands look towards a digital era, what role does physical retail play for DTC models?

The new role of DTC in physical retail
In a post-COVID world, physical retail is still important. In the past, many DTC brands have opened their own pop-ups or have forged mutually beneficial partnerships with big-box retailers. 

We think pop-ups will now become an even more important retail strategy to both DTC and legacy retailers, in a bid to drive footfall, raise brand awareness and tap into a new customer base. Research shows that 37% of customers want to visit DTC stores to get a sense of product, 32% for convenience and 28% to get the product right away (Diffusion, 2020). This shows that the demand for physical stores is still as high as ever before.

While the pandemic has refuelled the DTC model, brands now need to focus on connecting online and offline touchpoints to create a connected, seamless omnichannel experience. 

To build a successful DTC model, brands must do more to connect with customers. This is especially important in the beauty and wellness industry where new customer trends are driving constant product and service innovation. By innovating in the four experience areas we have identified: virtual test and trial, influencer communities, social shopping and brand activism, brands have the power to tap into the emotional connection and participation opportunities consumers are looking for. 

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