Dr Somdutta Singh, Serial Entrepreneur | MD, Assiduus Global | Investor | Bestselling Author | Advisor - Govt of India.
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Consider Casper, Dollar Shave Club or Allbirds. Yes, they are private labels, but how have they come to pique consumers’ interests? These names belong to a rising category of brands that are rattling the retail segment — direct-to-consumer (D2C) brands, a segment to which, as an e-commerce entrepreneur, I attach great importance.
These types of brands are not just transforming the way people shop; they’re also altering consumer preferences and expectations by using customer segmentation and effective growth strategies to their advantage. These businesses also reinforce the assertion that with innovative, affordable, “back-to-basics” products and ideas, a company can take big brands by the horns and carve a niche market for itself. Yes, technology, Amazon and social media have radically changed the world, but when it comes to consumerism, private labels are at the fore of accelerating global economies and disrupting markets.
What is D2C e-commerce?
Like the name itself says, direct-to-consumer brands produce and distribute their products straight to buyers without having to rely on middlemen or traditional stores. Suppliers have the power to make available end-to-end brand experiences to their consumers since the reins of the entire operation lie in their hands. The brand is accountable for making a product that is winning, innovative and competitive, presenting it smartly to customers, delivering the product effectively and providing high-quality customer experiences and communications. This empowers brands to amass customer data and be capable of attending concerns that crop up sans messages being distorted by a mediator.
As an e-commerce entrepreneur having studied and evaluated how D2C e-commerce models work and how efficient they are, here’s one thing I can say with conviction: The model is relatively cheap, easy to get the ball rolling on and reiterates the fact that 263 million Americans are expected to shop online in 2021 with the numbers increasing to 278 million by 2024, thereby engendering an indelible brand impact. In addition, when it comes to private brands, sustainability, explicitness and superior quality remain the driving forces for retailers.
Can private labels truly alter the e-commerce landscape?
Private labels are set to rekindle in 2021 and beyond after a sluggish 2020. A KPMG analysis in India from early 2020 found that between 2019-22, private labels were expected to grow 1.3-1.6 times more quickly than e-commerce platforms and, compared to external brands, would generate 1.8-2.0 times higher margins. Continued advancement in product innovation, massive e-commerce potential and customers’ mounting enthusiasm to try something new are accelerating the segment.
Modern private labels aren’t off-the-shelf mimics of luxurious products. Retailers are offering exclusive, standalone products by launching their own premium private label brands. As an owner of three private label brands across diverse genres, we focus on offering products with superior features, high-quality ingredients and sustainability. Also, as a consumer, I know how I care not just for the value of a product but also the role it plays in my life and, thereby, the planet as a whole.
From what I’ve seen, private label brands aren’t just claiming product values; they’re delivering on their word, a significant selling point influencing purchase decisions. From groceries to beauty products, from household items to clothes, private label brands have been able to evolve by understanding buyer needs and delivering what consumers desire with a quick turnaround.
What is the private label advantage for an e-commerce entrepreneur?
While selling business to business to retailers and distributors, revenue oscillations may occur, something D2C brands can avoid thanks to their diversified product portfolio. Private label brands unlock huge potential to not just garner customer data in terms of customer preferences, behaviors and patterns but also have complete control of their brand. This brand control allows private label brands to fabricate a long-standing D2C e-commerce line of attack that is intelligent and shapes every operation from research and development to potential market growth and expansion. If there’s a lesson from 2020 for entrepreneurs, it’s that the less a business is dependent on intermediaries or other arms, the healthier its performance can be.
Also, D2C e-commerce can improve communication with consumers by way of optimized customer service initiating better brand positioning and customer interaction.
In the current competitive landscape, a robust, distinctive statement will make all the difference. Along with a durable private label product and plan in place, D2C e-commerce can help your brand’s growth trajectory and drive swift expansion. It also lessens operational costs, permitting your business to save on resources.
Tips For Those Getting Started
Let’s take a look at some strategies for businesses looking to enter the private label D2C e-commerce ecosystem:
1. Create a seamless consumer experience. Since there are no middlemen in this strategy, you will have to re-engineer your current business practices and structures and make sure your workforce is up-skilled to adapt to the new ways of functioning. From redesigning your logistics to modifying your customer acquisition processes, customers will now engage directly with you, not via middlemen, so you will need to keep that in mind as you plan the transition.
2. Use data to offer personalized consumer experiences. If you understand consumers’ behavior and viewing patterns, you can then compartmentalize those patterns to offer highly personalized consumer experiences. To do this, you will want to leverage the data footprints your consumers leave behind across various touchpoints. This can be done using a D2C platform.
3. Choose which channels you want to be the focal point. You have a ton of channels that serve as customer touchpoints. When transitioning to a D2C strategy, you need to choose your most viable channel that will allow you to connect with your customers directly and will make the engagement experience seamless. From searching for a product to paying for it to receiving it, the process has to be effortless for your consumers.
Concluding Thoughts
D2C e-commerce allows you to go beyond the limitations of conventional retail outlets. With a precise fulfillment and delivery approach ready, your brand can get through to customers across the globe.
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