How direct-to-consumer brands can benefit from the changing trends in consumer behaviour

September 6, 2020 4:51 PM

The pandemic has brought about a significant behavioral shift among consumers towards online shopping and D2C brands

Tier-2 and Tier 3 consumers, many of whom will transact online for the first time, will place a high value on online reviews, word-of-mouth and feedback from customers who have shopped online beforeTier-2 and Tier 3 consumers, many of whom will transact online for the first time, will place a high value on online reviews, word-of-mouth and feedback from customers who have shopped online before

By Chaitanya Ramalingegowda

The pandemic has brought about a significant behavioral shift among consumers towards online shopping and D2C brands. According to Capgemini’s consumer sentiment research published in April 2020, the Indian consumers’ appetite for online shopping was projected to increase from 46 per cent to 64 per cent over the next six to nine months. With the new normal occasioning a lifestyle ripe with opportunities for e-commerce, D2C brands have unique advantages in their arsenal.

I have observed some trends that are bolstering consumer confidence in the D2C segment in India. The common thread that ties all of these observations together is the need to keep the customer at the center of every marketing and business strategy to capitalize on this growth trend.

Understanding the new online customer

A recent report by Unicommerce showed an encouraging rise in e-commerce adoption in June 2020 compared to the pre-lockdown period. The interesting aspect of the report was its claim that tier-3 town adoption of online shopping grew most rapidly, at 55%, faster than the metros. As more shoppers take to online platforms for their buying needs, the nature of these shoppers is likely to see a significant shift.

Tier-2 and -3 consumers, many of whom will transact online for the first time, will place a high value on online reviews, word-of-mouth and feedback from customers who have shopped online before. Given this trend, D2C brands will have the benefit of tracking and analysing new consumer behavior and aligning processes to meet these unique demands. Brands will need to adapt quickly to address distinguished behavioral patterns of first-time and loyal online consumers and cater to these needs in a highly customized manner.

Optimizing cost of product innovation

The distinguished attitudes and behaviors of different segments of consumers is likely to drive up customer acquisition costs, unless a smart business strategy is employed by brands. The key will be to create avenues for cost optimization both at the marketing and operational front.

The biggest advantage of a D2C brand is its ability to collect customer feedback real-time and feed it into the product development loop without losing the essence, and yet doing it efficiently. An agile way of working and aligning product offerings to suit customer demands will not only improve business performance but also aid positive customer sentiment online, thereby reducing CAC.

The merits of backward integration

As quality and value are likely to witness deeper scrutiny by consumers that indulge in extensive research, ensuring high standards of quality and innovation on the manufacturing front will become absolutely imperative. The wider adoption of e-commerce will call for standardized practices, safe and secure processes, best-in-class quality and high levels of operational efficiency.

A D2C brand that has backward-integrated its operations and owns manufacturing capabilities in-house will be able to manage this subtle but pivotal aspect of winning over the new online shopper. We’ve been able to create products with the help of state-of-the-art machinery and invested in Capex, due to the fundamental belief that quality control is one of the most influential factors in creating customer loyalty.

Enhancing experience through personal touchpoints

The rise of online retail effectively addresses aspects such as functionality, cost efficiency and informative content. However, shopping also encompasses elements of personal experiences and touch points that can have therapeutic implications. Online brands must also consider ways to create virtual and personalised touch points to offer a wholesome retail experience.

A D2C model allows for such personalization, as brands have access to information about consumer likes and dislikes. A deep understanding of customer psyche can also help identify latent opportunities. For instance, we set up a customer experience team at the very beginning of our journey, as we felt it was important for customers to have someone to talk to after the purchase has been made. The personal touch points post-sale not only helps in addressing queries and feedback but also helps us understand what buyers truly care about. Moreover, it also acts as a sounding board and a confidence booster for online shopping.

Content as a value proposition

The digital consumer considers a few factors that drive the tenets of value for her/him. Quality and cost are important, but so is convenience and safety. One of the most important pillars, however, is availability of content that helps them make an informed purchase decision.

The digital consumer typically conducts extensive research, compares various brands on reviews, price, credibility and other parameters and then places the order. A 2019 study by Conversity stated that almost 79% of consumers relied on online reviews to make their purchase decisions. In addition to reviews, educational content that helps with use cases and scientific knowledge are highly appreciated by consumers, especially if they are presented in byte-sized, easy-to-consume entertaining formats. Building an online community through rich content can help brands win not only one-time users but also staunch brand loyalists.

There’s a $750 billion business opportunity in Indian retail, which is expected to grow into a $1 trillion market by 2025, as per a BCG report. The ever-growing penetration of more than half a billion smartphones augurs well for the rise of local D2C brands that have sprung up across the country today.

It’s inspiring to see so many digital start-ups successfully build their brands, gain valuable mindshare, and raise venture capital to fuel growth in the last couple of years. The D2C market is ripe for disruption and brands that adapt quickly, understand consumer sentiment correctly and capitalize on semi-urban and rural Indian consumers are sure to create ripples in the post-pandemic world.

The author is director and co-founder, Wakefit.co

Read Also: Why identifying and guarding against reputational risks is key for businesses

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