The promises and challenges of Direct to Consumer Marketing (D2C)

Brands should face the challenges of D2C using the right martech tools and the right people to come up with the best outcomes..

The Direct-to-Consumer (D2C) strategy brings brands to consumers directly, eliminating the middle-man entity and providing businesses maximum control over their sales and marketing tactics. Because producers directly engage with consumers, they become more sensitive to their needs. Hence, companies that embrace D2C greatly benefit from direct customer relationships, promoting good business reputation and attaining sales objectives fast and easy.

However, like any other business marketing strategy, D2C also faces struggles. With the tough market competition, it is crucial to have a D2C-specific strategy for consumers to notice a brand. So, what are the marketing technology (martech) tools and strategies applicable to use to make this happen?

Take a look at the following promises and challenges of direct to consumer marketing  (D2C) in businesses today and how martech can be of help.

D2C Promises

  1. D2C As A Lucrative Marketing Strategy
    During the new normal, D2C is lucrative because of social media marketing, advanced analytics, and cloud-based and outsourcing platforms. All of these martech tools help understand consumer needs better and promote a seamless buyer’s journey.

    Singapore multinational company Grab Holdings Inc. embraces the D2C ecosystem by partnering with DON DON DONKI, a Japanese retail brand. This partnership aims to provide a more convenient in-store and online shopping experience to consumers. Customers can shop, pay, and deliver DONKI products through GrabPay and GrabMart.
  1. Advanced Analytics Drive Dynamic Real-Time Business Processes
    The shift towards D2C and its remarkable benefits as a retail model can be attributed to digital shift acceleration and the desire of consumers to try new brands during the COVID-19 pandemic. The D2C marketing model also became appealing to big legacy brands because it promises to provide more control over the buyer’s journey and recover from the impact of the crisis to supply lines.

    Because consumers are forced to stay at home, brands need to think of ways to get into their homes. The martech solutions to realise this goal include taking advantage of Internet of Things and advanced analytics. Mobile devices, smart TVs, and other connected devices and computers are the new marketing vessels. Advanced analytics help D2C brands embrace dynamic real-time business processes such as inventory, billing, customer service, and strategic business decision-making.
  2. D2C and Cloud-Based Capabilities Impact Capital Investments
    D2C brands utilise martech tools, such as e-commerce channels and social media marketing to drive consumer base and later distribute products offline as they scale. With D2C marketing, companies find ways to make the most of internal talents. Thus, supply chain as a service is emerging with cloud and outsourcing platforms, which help lower upfront capital investments while boosting D2C sales.

    Asia Pacific companies are seeing the huge potential of D2C brands and investors are betting on them. Top investors in India such as Sequoia Capital India, Elevation Capital, and Verlinvest double down on bets on D2C brands. These investors have great interest in D2C brands such as beauty and personal care, fashion, electronics, and food and beverages because they expect these brands to become a US$100 billion business in the country by 2025.

    Sequoia increased its stake in Wakefit, a home products maker at US$30 to 40 million and Mamaearth, a skincare brand. On the other hand, Elevation Capital plans to invest US$10-15 million in Sugar, a cosmetics brand and US$14 million in Country Delight, a dairy products brand.

D2C Challenges

  1. Consumer Data Protection Compliance
    Social media marketing opens a big opportunity for targeted advertising. Startup D2C brands can raise consumer consciousness by implementing viral social media marketing campaigns. However, one of the challenges that D2C brands face is complying to consumer data protection rules.

    A 2019 survey shows that Asia Pacific consumers are becoming greatly concerned about data privacy and the highest percentage is among those who are technology and business focused. More people are now more aware of how to restrict data that businesses collect, such as hiding phone numbers and installing ad blockers.

    D2C companies cannot rely much on readily available consumer data in social media. Therefore, brands should use other martech tools to obtain the right and enough information they need, such as analytics to study consumer behaviour and produce excellent quality social media content that can capture a brand’s target audience.

    Social media management platforms are available that can perform the roles of a social media manager such as scheduling posts and measuring ROI. Brands don’t need to access the data of social media users to know their voice. Social media listening is possible by using social media management tools to track key terms and phrases across social media users’ posts to determine when and where a brand is beneficial. Social media management tools bring in more new clients by being highly in tune to consumer needs.
  1. TV Is Still The Big Storytelling Medium
    While digital devices are growing in sales and usage, the biggest storytelling medium in Southeast Asia is still television according to Ajay Sohoni, ASEAN and South Pacific Operating Unit vice-president at The Coca-Cola Company.  However, it doesn’t mean that traditional TV and digital solutions should be separated. Messaging through simple and clear ad copies and campaigns and assigning rightful roles play a crucial role in D2C marketing.

    In fact, Southeast Asia experienced a surge in using digital devices and services in e-commerce, online payments, and food delivery due to the COVID-19 pandemic according to a news report. About 40 million people in six countries engaged online for the first time, pushing Southeast Asia’s total number of internet users to 400 million.

    Of course, OTT marketing and D2C marketing are seen as ideal partners in feeding people’s need to still watch TV. OTT streaming platforms have grown over 400 million viewers in Asia. Viewers in markets such as Indonesia, the Philippines, and Australia watched more OTT content than TV and other video platform content. About 66% of OTT viewers watch content on smartphones and other mobile devices, with increasing smart TV viewership in Singapore, Vietnam, and Australia.
  1. Targeting The Young People
    Gen-Z is considered the largest generation, which makes up 32% of the world’s population. Young people prioritise more meaningful experiences than material products. The pandemic brings a new generation of more informed consumers who are willing to spend their money on things that can provide a high return on investment (ROI). These consumers expect a great ROI on their purchases, either financial, education, social, or happiness.

    For this reason, D2C brands face challenges in providing great value to their products and services. Martech tools can help companies create their buyer persona to guide young consumers in the entire customer journey and sales funnel. With data analytics, marketers and stakeholders can better understand the context of their efforts.

The New Era For D2C

The new era for D2C is right when the pandemic hits. The closure of brick and mortar stores makes brands pivot to a D2C business model, simplifying propositions or selling directly to customers through digital and mobile channels. A host of traditional brands have shifted towards a D2C marketing proposition, building relationships directly with customers. D2C puts agile startups and challenger brands at a competitive advantage.

Brands should face the challenges of D2C using the right martech tools and the right people to come up with the best outcomes.