The surge in digital sales since 2020 has been phenomenal. For example, Nike registered a 36 percent sales growth through this channel in the first quarter of 2020. It plans to grow its Direct-to-Consumer (D2C) sales to 50 percent (from the existing 30 percent) with the Nike Digital store as its marketplace of the future.

The post-COVID pivot to the D2C model is here to stay! However, going D2C could pose several challenges to Consumer Packaged Goods (CPG) companies, including:

  • Encountering possible channel conflict and cannibalization of retail business

  • Deciding whether to go on their own or collaborate with retailers

  • Achieving a better understanding of consumer buying behaviors and aligning their engagement with consumers to deliver personalized experiences

  • Making D2C profitable despite higher logistics costs

  • Building supply chain capabilities to deliver a seamless customer experience through new distribution channels – DC to Consumer, Retailer to Consumer, Buy Online, Pick Up in Store (BOPIS) and Last Mile Logistics

The D2C business model requires CPG companies to gather consumer data that can enable them to personalize experiences and speed up new product launches. For example, Unilever, through its online Ben & Jerry store, has been able to create new bestsellers, such as Fruit Loot and Frozen Flakes, which have been replicated by competitors.

Know. Understand. Act.

Let us understand some interesting realities about the changing consumer canvas. If the pre-COVID visitor came to browse in stores, visits to stores today are limited to targeted purchases. They demand greater visibility of the end-to-end supply chain.

The D2C model aligns very well with the way customers want to interact with brands. However, without a thorough and nuanced understanding of the customer, it is a no-go. CPG brands must know, understand and act on the following customer imperatives:

  • Create an engagement platform that incentivizes consumers to share their preferences and perspectives at every stage of their decision journey

  • Share the right and relevant information and content directly with consumers

  • Remove any possibility of channel conflict for the consumer through a seamless omni-channel strategy

Nestle’s D2C shop, KitKat Chocolatory, encompasses all of the above. It allows the users to design their premium choice of KitKat, with various types of chocolates and ingredients – and even personalize the packaging.

What makes such an intimate understanding of the consumer possible? Advanced analytics, of course!

Using Knowledge on Consumer Behaviors as Foresight, Not Hindsight

Intimate foresights on consumer purchase behaviors are fundamental to designing the right sales and fulfillment strategies. Consumer analytics makes it possible to develop a compelling D2C platform that seamlessly aligns consumer insights to sales and fulfillment. In a single continuum, it brings together the following:

  • Social listening and search scraping to provide deep and wide consumer insights

  • User experience analytics for predictive foresights to enable personalization through dynamic content management

  • Data integration with retailers for a comprehensive and minute understanding of consumer behavior

  • E-commerce analytics for efficient and effective recommendations

  • Supply chain analytics for real-time order fulfillment

Different Strokes for Different Consumer Requirements

CPG players can fulfill diverse requirements with their D2C platforms. It can be an engagement platform to motivate consumers to share their opinions and preferences – thus enabling personalized innovation. Or, it could deliver outstanding brand experiences through the direct sharing of information. It can also provide omni-channel engagement to positively control its customers’ pre-purchase online research – what Google calls the “zero moment of truth.” Some may even want their D2C platform to be a sales platform to position themselves as retailers.

Whatever be the driver, it comes back to understanding the customer in multi-dimensional aspects –preferences of personalized subscription models, package sizes, fulfillment, communication, recommendations and more. CPG companies must aim to be equally adept at technology and D2C data analytics. Having the right partner with expertise in domain, data and digital will go a long way in blending the right brand experience with a differentiated value proposition.

In the next blog, we will discuss how analytics can help significantly improve D2C profitability.

Read how data and analytics is helping unlock opportunities in CPG – a report by Forrester Consulting, commissioned by WNS

WNS Triange, our data, analytics and AI practice, powers growth and innovation for leading global enterprises across 10+ industries. Read IDC Market Note on how Triange is enabling large-scale data and analytics-led transformations, right from concept to execution.

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