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When brands don’t matter to the retail consumer, is it possible to build a great DTC product?

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Even when the DTC industry has expanded so quickly, the great amount of generic brands all over retail seems to be a barrier to develop a unique business
  • Most DTC brands use advertising strategies focused on maximizing their sales performance

  • Also, most businesses in this sector believe content is a great way to go above and beyond of traditional media channels

  • There are a lot of companies in the industry that, once they conquered ecommerce, are looking towards brick-and-mortar

The growth inside the Direct-To-Consumer (DTC) market has been quite remarkable. According to Trade Gecko, around 84 percent of consumer goods companies have seen a rise in sales of this category in the last 18 to 36 months. Retail Dive points out that more than eight in every 10 consumers are thinking about buying to these kind of brands in the near future. Econsultancy even suggests that the growth of the retail market is a direct consequence of this phenomenon.

In no other economic sector has the rise of DTC been so clear as in ecommerce. The majority of marketplaces in the digital world, such as Amazon and eBay, are the perfect tool for brands to reach consumers directly without any intermediary. The categories being most disrupted by the rise of this phenomenon have been, according to eMarketer, apparel, home furnishings and beauty. Even more important, this change isn’t limited to the United States (US) and Europe.

Rise of DTC brands in Latin America and Mexico

Mediacom points out that, people inside the region don’t have the same level of trust towards ecommerce found in the US and Europe. However, it still is a great opportunity for brands to connect with consumers directly. Nutra, on the other hand, says it can be a very profitable way to make profit in certain industries, like health or nutrition. In an interview with Merca 2.0, Seraj Bharwan, Chief Strategy Officer of AcuityAds, confirms this positive trend of growth in Latam:

Brands are going to have to start preparing for the fact that consumers are looking for better choices. They don’t want to have to drive to a physical store and buy everything. There are certain products in which the convenience, price or personalization drive them to buy online. The fact is the consumers need a broader choice. And when people are looking for this, the markets (in Mexico and elsewhere), have to follow so they don’t miss a great opportunity.

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The problem of the marketplaces

Even though there is a great opportunity of growth in DTC, brands that are readying up for this market have a great challenge. Nowadays, the best place to sell these goods is inside Amazon or similar platforms. However, is very well known that said websites use the data of their clients to improve their own private, generic labels. Bharwan recognizes this challenge and says that, to create a great business under said conditions, companies need to work on their real value:

We are talking business at this point. Companies need to figure out what is the value of their brands. We need to pay attention to the great examples of the market. All of them are just not selling a formula or a plain product. They should be creating their own communities, content and resonance so that the audience perceives correctly the added value of their proposals. And, then, they are willing to pay the extra margin your business is charging over their goods.

Personalization and trust in DTC brands

As brands like Hearst Magazines have understood, the best added value any company can give the consumer is through personalization. However, those initiatives require data, a very delicate topic that will, in a few years, be changed beyond recognition. The best bet is to ask the same consumers to give up their information. For that, people must trust the brands with their insights. And there’s just one way to get that relation, according to the CSO of AquityAds:

Marketing, packaging, pricing, all of those things that are natural to brands in advertising must be used to help consumers. Helping, supporting families, societies and communities. Creating goods that benefit the audiences can convince them, pretty quickly, to happily share data of their consumer habits. If the public believes companies can do something about their problems and help them, they will be more than open to talk about it and, in time, solve that necessity.

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