Is Direct-to-Consumer the Future?

By Gerald Poncet, Senior Director, Industry Strategy Group, Oracle.

Disruption is both rapid and profound across the consumer goods industry, often resulting in dramatic and sudden changes in consumer shopping habits. The uncertainty, speed, and frequency of unpredictable events, such as the COVID-19 pandemic, are prompting brands to re-assess their operating environment, reduce costs, and increase agility in response to market requirements.

Connecting with Consumers Directly, Digitally, is More Important Than Ever

With the constantly evolving, technology-driven world of digital commerce, consumers are more mobile, have unprecedented power, and control information in the palm of their hands—leading to ever-increasing expectations. Shopping behavior is adapting, as shoppers discover new opportunities for finding what they want at a price they’re willing to pay, delivered to them at the time and place of their choosing. Consumers now expect new and better experiences—through recognition, personalization, and innovation—at every moment in the purchase cycle. Mass manufacturing and push marketing no longer suffice. The ability to seamlessly connect the digital and physical worlds to deliver personalized experiences define the companies that thrive with today’s consumer.

Re-inventing Traditional Models, Offering Multiple Paths to Purchase

New entrants are introducing outside-in thinking and entirely new ways to serve. Survival depends on the ability to rapidly adapt and think outside the box—as disrupters have done all along. Increasingly, products are being offered as a service through subscription models, with just-in-time delivery, informed by and optimized with sophisticated analytics and machine learning. Doing the same thing in a new way is no longer seen as true innovation.

“As a result of the COVID-19 pandemic, brands of all kinds are looking to shore up their own DTC [direct-to-consumer] efforts as more consumers seek authentic and engaging brand relationships in increasingly digital spaces.” – Forrester

Brands must now sell what today’s increasingly connected consumers can more easily find—not by running to a store and gazing at a shelf but from the convenience of their personal devices, used anywhere at any hour. The direct-to-consumer model is becoming an important alternative to traditional retail channels, providing companies with an opportunity to rewrite the playbook on how to engage customers and consumers. Direct-to-consumer, high-end home products, or companies shilling disposable products, are examples of businesses seeing a boom as consumers seek out alternatives to fill their needs and manufacturers navigate this new unpredictable reality.

Recent Trends in Direct-to-Consumer

• 80% of consumers plan to make purchases from DTC brands by 2023 (Retail Dive)
• 4 in 10 global online consumers said they were already using online shopping subscriptions, and a further 36% said they were willing to do so in the next two years (Nielsen)
• 11% annual forecasted growth rate of DTC in the 2018-22 period (Barclays)
• 77% of manufacturers plan to invest in DTC during 2020 (Barclays)
• The global fresh and packaged food meal kit service market, which was worth an estimated $2.5B in 2017, is forecasted to grow to almost $8B by 2024 (Statista)

Direct-to-Consumer in the Cloud

Cloud adoption, coupled with advanced technologies such as artificial intelligence (AI), machine learning, blockchain, and digital assistants, can help brands by enabling fast, intuitive, self-service. Likewise, the Internet of Things (IoT) and big data are producing valuable insights for those with the power to interpret and act on them. Transitioning from legacy systems—that in many cases are well past their functional life—requires that brands look for models that not only improve their current situation, but are future-proof to keep up with ever-changing demands.

Next Step

Brands need to quickly transition from a product-centric focus and pivot to a consumer-centric focus. They need to put the consumer at the very core of every business decision and process, which will enable them to better anticipate expectations and needs, both now and in the future—fostering lasting trust and loyalty. 

Oracle provides a complete line of applications specifically designed to create frictionless, omnichannel engagement, combining planning and merchandising with supply chain capabilities.  For more information on how you can stand out from the competition—delivering rewarding experiences to consumers and modernizing the front and back office, visit Oracle CX for Retail and Consumer Goods.