The role of D2C in a unified commerce strategy

The concerns from some quarters over the high cost of a D2C business model are quickly dispelled once the value of first-party data is fully understood, now that brands are developing their D2C models to embrace wholesale and retail, says Emma Sahota, Managing Director UK, Astound Commerce.

Concerns over the growing cost of running a D2C retail operation, including the rising costs of digital marketing, returns, and cookie restrictions, will be dispelled once it is clear what is at stake if brands fall back solely on traditional channels to market.

However, macro market conditions indicate that brands need to diversify and embrace an omnichannel approach, creating a unified retail solution where there is harmony between wholesale and D2C channels as well as emerging channels such as social media.

Today, forward-thinking brands are already diversifying their channel mix, with Nike and Under Armour extending their respective wholesale partnerships, having shifted toward D2C during the pandemic, while other brands are utilising marketplaces to extend their reach.

Brands are also recognising that D2C is crucial to the success of the wholesale channel because it enables them to create a brand that wholesalers can believe in. Recent research from Asendia shows that more than half (56 percent) of global shoppers feel D2C brands are more authentic than retailers who operate via marketplaces. But by expanding the D2C model to embrace third-party retailers, brands can gain access to a level of reach they would otherwise have to pay so much to develop alone.

This unified strategy must include stores as well but under a D2C rather than a wholesale model. For instance, Nike, which owns the Jordan brand, has moved away from some of its retailer relationships and opened Jordan-only brand stores. Hair care brand MASAMI calls its strategy “D2C-Plus” and has a store where it sells its own products alongside other brands whose core values are like its own.

Emma Sahota, Managing Director UK, Astound Commerce

D2C is also crucial to obtaining first-party data that will drive wholesale, D2C itself, and other channels that are part of a unified strategy. First-party data enables brands to know their customers and therefore harmonise their channel mix based on insights. Some brands have gone further, with H&M saying it would no longer just be a fashion but also a data company.  “Data is everything today,” H&M’s CTO Alan Boehme said. “We must listen to the stories data has to tell and not simply confine them to supporting only the story we want to tell.”

The investment in D2C, and therefore first-party data, is justified by the following data: In a ChannelAdvisor and CensusWide survey of more than 300 CMOs at UK brands selling online, almost half (47 percent) say they believe D2C channels will offer greater control over how their brand is portrayed. Furthermore, 43 percent say they are excited about the value first-party data D2C will offer. And the demand is there: Research from GfK shows 70 percent of consumers switched from traditional brands to D2C in at least one category in 2021, while 58 percent of shoppers worldwide buy D2C because they believe they are offered better prices by buying direct.  By the end of 2022, Statista reported D2C in the US alone was predicted to reach US$151 billion.

The benefits to consumers are direct delivery, a price reduction due to eliminated overhead charges faced by the manufacturer, and a personalised experience, meaning more of them are likely to migrate to D2C brands if the cost of living increases. In fact, even as inflation in the UK is predicted to fall from the middle of 2023 onwards, no one is predicting prices to fall back to pre-inflation levels.

In proud partnership with

For more information on content placements with TheIndustry.fashion, please email [email protected]