The DTC trend is booming, and traditional brands such as Pepsi and Nike are transforming

According to McKinsey & Company data, during the epidemic, as many as 75% of consumers in the US market changed their shopping habits, and 83% of consumers planned to maintain or increase their online purchases. In addition, the growth rate of e-commerce penetration in the US market is comparable to the development level in the past 10 years.

As a result, direct-to-consumer DTC brands have been accepted by more and more consumers. Diffusion ’s 2021 DTC Purchase Intention Index confirms the fact that DTC is penetrating consumer consciousness.

The study shows that 43% of US consumers are aware of DTC brands, 69% of consumers have purchased at least one DTC brand product in 2020, and consumers’ willingness to purchase DTC brand products is rising:

l   79 % of consumers familiar with DTC brands say they plan to increase their purchases of DTC brand products in 2021;

l   52 % of consumers say that 20% or more of the goods they purchase in 2021 will be from DTC brands.

In such an environment, many traditional offline brands have chosen to turn to direct-to-consumer DTC online businesses.

Traditional retail brands such as PepsiCo have realized the importance of launching direct sales channels for customers. The company recently launched two independent websites, PantryShop.com and Snacks.com, for customers to order various food and beverage brands under PepsiCo.

According to Progressive Grocer, PepsiCo's move is to adapt to people's new consumption habits during the epidemic and as a way to enhance the company's e-commerce channels.

In addition to the food and beverage brand Pepsi, clothing and footwear brand Nike has also incorporated DTC into the company's marketing and sales plans; infant product manufacturer Evenflo has also launched a new DTC brand specifically for its smart car seats; L'Oreal, Coach and Procter & Gamble are also trying to incorporate DTC into the company's development strategy.

It is worth noting that compared with the development model of traditional brands, DTC brands have the following advantages:

l   DTC can achieve 100% control over its operating data , thus giving brands full ownership of their relationships with customers, helping brands observe customer behaviors and preferences, and creating data-based personalized consumer experiences for consumers;

l   DTC sales can help establish direct contact between sellers and consumers . After learning customer information, sellers can directly contact customers through social platforms, emails and direct mails.

l   DTC can help sellers reduce their reliance on third-party platforms, save contract negotiation time, and reduce order fulfillment restrictions, thereby converting the saved energy into better customer service ;

l   DTC allows brands to have more diverse marketing options , such as providing customers with free shipping services, giving small gifts, conducting subscription-based sales, conducting limited-time flash sales, providing personalized customer service or premium services, etc.

The outbreak of the epidemic has prompted traditional brands to seek change in the midst of crisis and find new development models. It is also this crisis that has given traditional brands new vitality and vigor, driving them to move forward further.

Next, DTC brands may face new challenges such as low customer loyalty, but precisely because of this, they are working hard to establish new long-term business development models. Let us wait and see!

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