Seven Traits Of The Winning D2C Business Model
Why Brands Need To Do Many Things Well
All brands have had to reckon with massive changes in the macro business environment over the last 18 months. A pandemic, the acceleration of climate change, and a whole new generation coming of age — these factors are all coinciding to create very different consumption patterns and customer expectations than the industry is accustomed to. All the while, supply chains and logistics networks are being stressed and squeezed like never before. But it’s not all bad news, retail technology innovation has reached a whole new level of maturity and the industry has, over the last decade or so, accumulated latent knowledge of how to operate in this new world.
Legacy brands that are building a clear direct-to-consumer value proposition are doing so by tapping into these opportunities and adopting a multi-pronged approach to change. In our conversations with The Direct 60 nominees, we found brands that are succeeding at D2C are having to do many things well at the same time. Below are the highlights from our conversations and areas we found our Direct 60 List excelling.
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Regaining Cultural Relevance as a Brand
The consumer-brand relationship has undergone a massive transformation. To stay relevant, brands need to speak to the consumer like a friend, engage them in co-creation, and stand up for their values. Many legacy brands are taking a page out of the digital-native brand playbook changing the ways they relate to their customers.
Building Modern Customer Experiences
Technology solutions such as augmented reality, concierge-based shopping, QR codes, and digital signage are no longer on the fringe or reserved for large retailers — they have become enablers of modern online and in-store experiences for successful D2C brands. Executives on the Direct 60 list are adopting cutting-edge technologies to deliver state-of-the-art shopping experiences.
Physical Retail & Omnichannel Capabilities
Many legacy brands are expanding or reevaluating their physical footprint. They are redesigning the store experience to make stores just as easy to shop as their websites. Omnichannel fulfillment is also now firmly established as a necessity of doing business in these times. Finally, forward-thinking brands are now using stores to gather customer data.
Digitizing and Streamlining the Supply Chain
Direct-to-consumer business models require brands to move away from seasonal production cycles and towards smaller, more frequent “drops”. It’s no surprise that 3-D sampling and digital product creation have been a recurring theme in our conversations with D60 supply chain executives. A key goal for many on the list is to define and grow sustainability measures end-to-end.
Investing in Future-Ready Infrastructure
Legacy brands are digging out of technology debt. And the pandemic has accelerated the tech adoption roadmap for many of the Direct 60 executives. These leaders are moving to cloud and service-based architectures that will enable them to be ready for whatever the future holds.
Business Transformation & Change
From technology to merchandising, all parts of the organization need to be realigned to deliver on the new business imperatives. The Direct 60 executives are redeveloping business practices, changing org structures, and reassessing incentives. But most importantly, they are realizing that a cultural shift is needed to truly affect change and they need to identify and empower the right individuals to bring it about.
Use of Customer Data & AI
Running a successful direct-to-consumer business starts with understanding the customer. And being customer-centric is fast becoming synonymous with being data-driven. The D60 are investing in customer-data infrastructure, applying data science, and infusing AI in organization-wide decision making.
If the last 18 months have taught us anything, it’s that we can’t predict the future as well as we thought we could. Consumer behavior is changing rapidly and sometimes in unexpected ways. As they focus their businesses to a direct-to-consumer paradigm, brands need to be nimble and invest in a technology infrastructure that allows them to do so. For instance, AI can help brands identify and adapt to sudden changes in behavior and make decisions in real-time. To illustrate this point, we talked to Kris Zanuldin, VP of Product at Forter, a leading AI-based fraud prevention and protection service.
“Too many businesses still rely on traditional rules-based systems for fraud prevention that are not automated and cannot keep up with fraudsters who use modern tools like bots, device emulators, and machine learning (ML). These systems also can’t adapt to sudden changes in consumer behavior or an influx of new online users. Between March 2020 and March 2021, when the number of new online buyers suddenly skyrocketed, merchants with rules-based solutions saw a spike in false declines and a massive backlog of manual reviews.”
Businesses need to move beyond the previous generation of technologies and systems towards dynamic technology that learns and evolves with changes in the business environment. And luckily, through our conversations with The Direct 60 executives, we’ve learned these changes are more possible than ever for brands today.
Forter is the leader in e-commerce fraud prevention, processing over $200 billion in online commerce transactions and protecting over 750 million consumers globally from credit card fraud, account takeover, identity theft, and more. The company’s identity-based fraud prevention solution detects fraudulent activity in real-time, throughout all online consumer experiences.