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With retailers discovering the perks of selling their products directly to the consumer (including cutting down costs, establishing autonomy over supply chains, and experimenting with distribution strategies), a new wave of D2C eCommerce is here to challenge the traditional online marketplaces.

Bridging the gap between products and consumers, the overall growth of the D2C sector is expected to grow by 24.3% from the previous year.

But with new opportunities, come new challenges

The biggest one being able to capture consumer attention in a cut-throat competitive market.

Status Quo Of D2C Brands

As customers embrace the prospect of buying their favorite products directly from manufacturers, cutting down middlemen (retailers), businesses are still relying on the same age-old strategies to win them over to reach them.

Spending heavily on social media and search ads, running glamorous influencer campaigns, and expanding presence across channels to improve brand awareness and recall, they’re doing it all.

In fact, D2C brands have increased their ad spends by 30% since the beginning of this year – a trend smaller businesses might not be able to keep up with. As it turns out, this model is neither sustainable nor scalable as quoted on Modern Retail.

Businesses have to compete for the same limited mind space with dollars. Especially now that newer D2C brands are coming up almost every day.

Apart from solving operational and logistical challenges that arise every other day, businesses are now struggling to even establish their presence online. They’re continually combatting the rise in customer acquisition costs, competitive pricing and dynamic demands of consumers.

The game is in the favor of those who can play their data right.

Why A Shift In Approach Is The Need Of The Hour

The digital landscape is diverse, unpredictable, and inconsistent

Is the internet eating the world? Yes. Are your customers’ purchase decisions guided by the internet? Also, yes.

So, the pressing need for doubling down on your digital marketing efforts is essential. However, you need to focus on the right channels.

Some of the questions you need to get concrete data on for answers include:

Without specific answers to these questions, you would just be spreading your budget and efforts in all directions, thereby reducing your marketing ROI.

The competition is ruthless and never-ending

Competition for market share is at an all-time high. D2C brands are fighting for the limited attention spans of similar consumers.

Consumers are spoilt for choice, while sellers are having a tough time reaching them and keeping their attention captive.

Another reason why an average internet user sees up to 5000 ads per day. The competition is endless and unless you know who you’re talking to and where to reach them, there is no way for you to win this battle.

The spray and pray technique will not work.

The needs of every customer are different and dynamic

Apart from their interest in your brand and products, there might be nothing common between your customers.

While some are looking for exclusivity, others could be looking for cost-friendly purchases. While some have a regular need for a product, others may find occasional buys enough.

Their motivations to make a purchase are definitely different.

Blindly advertising to win them over without understanding their preferences, likes, and pain points might cost you more. Other than that, 80% of consumers expect personalization from brands.

The pricing is no longer the only buying criterion

Gone are the days when all that buyers used to look for while making a purchase was a low price point.

Today’s consumer demands a holistically delightful shopping experience, assurance of quality, trust, and credibility, and a smooth post-purchase experience.

In fact, availability, convenience, and value for money have been the strongest drivers for purchase in 2020 as per Mckinsey’s latest study on consumer behavior shift. Therefore, for D2C brand owners, the challenge is not to offer the lowest pricing point but also to learn and meet the other criteria.

The demand of products is ever-evolving and erratic

Customers’ needs are driven by market trends which tend to fluctuate frequently. The year of the pandemic is proof to this.

Our need to adapt to seasonal trends and the situations around us results in a change in demand for most products.

For instance, during the pandemic, the shopping intent for essentials like toiletries and sanitizers peaked like never before. While the other industries saw a slowdown, the high demand for these products choked supply chains for many.

Businesses need to be able to predict these changes in time to be able to adjust to the demands.

The loyalty of consumer is hard to win over

Studies suggest that millennials are the most experimental consumers. With more information at hand, they are more willing to give newer brands a chance.

With an endless array of options now available, customers are naturally going to be inclined towards more than just one brand in a particular category. This makes it exceedingly hard for you to win over their loyalty as it might be divided between you and your competitors.

The similar strategies that most brands use to entice online shoppers make this harder.

The Way Forward? Data And Not Guesswork

The only way to combat competition is to bulletproof yourself with data. eCommerce businesses need to continually gather, analyze and put their data to work.

Get to know your customers better

Your store data can help you find answers to questions such as – where your customers prefer interacting with your brand and store, the device they use to browse your store, what are their demographic attributes, their purchase behavior and motivations among many othersso you have to don’t rely on guesswork to know who you’re talking to and how you can get them to buy from you.

When you understand your customers better, you can create consumer segments. With consumer segments in place, you ensure better personalization, leading to more than 50% of them becoming more willing to spend.

For example, you notice that a major bunch of your first-time customers don’t return to your store. To systematically win them over, you can target this customer segment with exclusive and irresistible deals periodically during their inactivity.

Understand which marketing channels work

Spending enough time analyzing your web analytics data can help you discover the channels that are actually working well in driving traffic to your store as opposed to ones that are not performing well.

Once you have this information, you can use it to optimize your marketing spends so you allot the maximum budget to the best performing channels. You can also work out a plan to strategically improve the ROI on other channels.

For example, if your analytics data tells you that 65% of your web traffic comes from organic search, you can further polish your SEO strategy to rank better for the relevant keywords and improve the traffic you bring in.

Figure out the performance of your products

Products’ performance analytics is an extremely crucial use case of web analytics that helps you understand trends and patterns in your products’ demand and also predict it. This not only helps you plan your inventory and marketing activities better for hot selling items but also for cold ones so you can decide in advance how to clear your stocked-up shelves.

Your product data also helps predict consumer demand and map the changes there may be in current product consumption.

A/B test pricing, discounts, and other charges

Instead of blindly trying to beat your competitor over every pricing point, it’s wiser to simply A/B test your pricing strategies and figure out what works best for your target audience, and driving the most amount of sales.

For example, data shows you that your checkout page has a dangerously high bounce rate, and upon analyzing it further you deduce that maybe the fact that shipping charges getting added at the very last step is causing people to drop off.

You can simply note this observation and devise an A/B test to test it out and if your hypothesis proves to be right, you can make the change live universally and be confident of improvement in the performance of the product’s sales.

Boost customer loyalty

Once you have created smart customer segments and identified your high-value customers, you can target them specifically with a loyalty and rewards program so you can steadily win over their trust to drive repeat purchases.

Considering how repeat customers tend to spend 67% more on your products, we think this is a strategy that new eCommerce businesses cannot miss. But identifying customers who are more likely to join your loyalty program is the first step. That circles back to customer segments!

Conclusion

With the relentless competition that is only predicted to rise in the future, your best bet would be to turn inwards and leverage your own data to best understand the market and your customers so you can confidently fuel growth.

By piggybacking on data that tells you what works best for your target audience, you can unlock limitless growth opportunities that had just been lurking in plain sight. Or maybe even identify a new one!