A recent report by McKinsey shares that the COVID-19 pandemic has changed the retail landscape, forever. We discuss 5 reasons why Direct-To-Consumer (DTC) is the new normal and how this model can bring you success as well as resilient growth for the future.

1. Convenience

If COVID-19 has taught us anything, it’s that the world will adapt to change. The way we spend money, the way we consume entertainment — even the way that we travel has changed.

This change is why the food and beverage industry has had to adjust to consumers needs. This shift would have most likely happened anyway, much like remote working was on the horizon, COVID has accelerated its adoption. People are now locked down in their homes, have limited their travel or have simply just changed their behaviours. Food and beverage suppliers need to accommodate this convenience shift, and that’s where DTC ticks all the boxes.

Weekly subscriptions, as an example, show that you can have something bespoke to your needs delivered regularly without any further thought.

Much of the convenience of DTC is that you get what you want without leaving your house from the brands you love, who may not necessarily have a retail outlet nearby.

DTC has even opened new categories, ‘Foodboxes’ being a perfect example of convenience delivered directly

The new normal is having the convenience of going to your favourite supermarket, restaurant or coffee shop without leaving your house. Your PSL is coming to you.

2. Speed

The growth of fast fashion shows that speed to the consumer is a crucial trend of the digital age. Consumers want convenience. They want it now.

With COVID-19 shutting down many traditional routes to consumers, securing a fast route directly to their door is now vital for the resilience and performance of many businesses.

By allowing the consumer to decide how they receive their goods, more markets will open up for manufacturers. The quickest route is direct to them which has implications for supply chains — arguably removing unnecessary intermediaries from the supply network. DTC doesn’t just result in better supply chain results but better resilience during these uncertain times, and most importantly, better profits. It also reduces the effect that transportation of these goods via middle-men have on our atmosphere (see point 4).

3. Loyalty

Nike is predicting $16.6billion in DTC sales for 2020, an increase of $6.6billion since 2015.

Going direct is helping brands to build better relationships with their consumers. By selling directly to consumers, companies can streamline the customer journey, envision how it should work and drive efficiencies through insights. It provides a closer connection between the business and the customer, with increased personalisation and tighter integration into the supply chain that even allows for customised products.

A perfect example of this customer insight-driven DTC selling is in an industry that has never had this model before, Tesla. You can order a new Model 3 in under 5 minutes (it’s arguably much more straight forward than getting an online prescription!).

COVID has accelerated the DTC market, and the loyalty built during this pandemic will be the key to businesses DTC strategy going forward.

4. Sustainability

COVID has changed the social contract between business and customers. Sustainability is no longer an afterthought, but a must. The pandemic has opened up the public’s eyes to how we must band together for the greater good and strive for connection.

Streamlining the supply chain to reach the customer sooner and via less air and road miles has positive effects on both P&L’s and the environment. This alone used to be enough for a business to say they were driving sustainability — but more needs to be done.

Millennials control almost 50% of the market spend and paying lip service to their aspirations for the future is also not enough.

Using Nike as an example again, they now use only recycled materials to make their packaging. This sustainable packaging promise is a consequence of sending their products directly to consumers — providing a degree of transparency that wasn’t there before.

DTC results in better sustainability, not only in the supply chain but across the whole product.

5. It’s The Future, Not Just the Now

“DTC channels are an opportunity to build up the lifetime value of consumers because brands can garner information about their customers and tailor personalised shopping experiences to them,” says Reuben S. Hendell, CEO of e-commerce technology provider BrandShop.

DTC isn’t going away — if anything it will accelerate even faster. Not just because of COVID but because of the points made above.

Companies like Timberland and Under Armour are finding success through expanding their DTC channels. It’s no wonder more brands plan to open their own experience-based retail shops and invest in their mobile and e-commerce sites. 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.

Our sustainable food and beverage supply chain technology can help you to create a DTC operation — convenient, fast, loyalty-driving, sustainable and timely. We created a proposition for Morrisons Supermarkets PLC at the start of the pandemic in just six days.

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