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COVID has turned business-as-usual upside down, nowhere more so than the world of ecommerce. The pace of change has been nothing short of astonishing, for example Unilever’s ecommerce business grew a stunning 61% in 2020 alone. 

An excellent illustration of how things have changed is the way brands sell to their consumers. While it’s too much to say that Covid is driving direct-to-consumer (D2C) developments, lockdown restrictions – at the time of writing still very much a live issue – have undoubtedly acted as a catalyst for change. It’s easy to see why.

Cutting out intermediaries means brands have access to data that helps build brands, cross-sell, upsell and develop subscription models.

The direct-to-consumer ecommerce model gives businesses a great opportunity to collect consumer insights which enable them to deliver authentic brand experiences.

If that list doesn’t encourage you to give D2C worth a closer look, we don’t know what would.

Direct-to-consumer: what’s in it for brands?

The short answer is that it’s a great opportunity to add value as brands fine-tune their offer to deliver what consumers want, when they want it.

D2C enables brands to own the whole purchase journey, with all the benefits that brings.

And of course it puts brands in close contact with their consumers and shows they’re listening.

For example, globally, 58% of consumers now prefer to shop online. Across the five markets included in our July 2021 Zeitgeist research, over a third of internet users had shopped online more in the past year.

Cell phone-based shopping has also risen wave-on-wave in our USA research. In 2021 we saw a 36% increase in the number of Americans doing most of their household or grocery shopping this way, and a 25% increase in those doing at least some of their shopping via their phone. Armed with this knowledge, brands can enhance their direct-to-consumer strategy accordingly.

D2C enables brands to collect more and better consumer data by removing the middleman from their sales funnel.

Used correctly, this data is a goldmine of information that can guide marketing strategy and provide the tools to streamline the buyer journey.

One of the key advantages of these changes is that manufacturers are suddenly free to function far more like tech businesses. They can adopt what IBM calls the “fail fast, learn fast” approach to drive innovation and test approaches at top speed thanks to a constant flow of valuable new first-party data. (It’s worth pointing out that retailers, as well as manufacturers, need to respond to D2C, a topic we’ll explore in a future blog).

And bear in mind it isn’t just hip, young, digitally-native brands who’re leading the charge; huge CPG brands like Kraft Heinz and PepsiCo are also embracing direct-to-consumer marketing with impressive results – more of which later. 

Direct-to-consumer: what’s in it for consumers?

On the other side of the deal, the key thing to remember is that the direct-to- consumer model is by its nature consumer-centric, ready to give them more of what they want.

A key plank of this is how audiences find brands in the first place. D2C has added many more options, with range and flexibility as key benefits of D2C for consumers.

D2C enables consumers to find high-involvement brands in ways that dovetail neatly with their existing online activity.

This delivers an enhanced version of the pure brand experience.

Our research shows that while a third of consumers use search engines to find new brands, 27% do the same through social media ads. In fact since Q2 2020, the role of search engines in brand discovery is down by 7%; and Q3 2020 saw social media ads actually overtake search engines as a channel for brand discovery among Gen Zs.

Another consumer-friendly D2C enabler is image search – something with a broader appeal than you might think. While Gen Z represents the largest group of image-based searchers (32%), older groups aren’t miles behind, with a quarter of Gen X and boomers using this method. In fact in Latin America, older consumers are actually more involved in this trend than their younger counterparts.

Then there’s voice search, with Asian and North American consumers over-indexing for using voice assistants to find information. Right now voice search is primarily a cellphone-based activity, but with smart home product ownership growing in North America this could change. As more devices start to support voice search it’ll become more popular.

Lastly there’s augmented reality and the possibilities it brings to recreate the in-store shopping experience during pandemic closures. Over a fifth of Gen Z and millennials (rising to a quarter in the US) want to see more retailers offering the ability to try on products digitally – as with ASOS’s See My Fit system or L’Oréal offering a live try-on feature on its website and partnering with Facebook to bring virtual makeup to the site.

The key point is that many forms of tech support D2C, making it quicker, easier, and more convenient for consumers to buy straight from a brand.

Who’s selling direct-to-consumer?

We’ve seen an 8% growth in online grocery shopping worldwide since Q1 2020. Right now 38% of monthly grocery shoppers buy goods online – impressive but there’s still plenty of room for virtual channels to grow.

In the U.S., D2C food box services like Blue Apron are increasingly popular, with a 19% boost since the end of 2020. Food box users in the US are much more likely to say they enjoy entertaining guests at home and often need help organizing things, which means services can stand out by ticking these extra boxes.

Hello Fresh, for example, has a blog on things like nailing the perfect garden party and alfresco dining, while London-based coffee company Grind is championing sustainability. Now the world’s opened up, subscription services need to remember why consumers took to them in the first place, with buyers craving convenience and the opportunity to enrich their lifestyles.

Heinz recently launched its first D2C website, created in less than three weeks by ecommerce agency Good Growth. The result, Heinz to Home, provides deliveries of core products like tinned food or table sauces to locked-down customers, with free shipping to emergency workers, helping 70% of Heinz’s brands increase household penetration in the US.

Finally there’s PepsiCo, whose site enables users to order tailored bundles of PepsiCo products with specific categories like ‘workout recovery’ or ‘snacking’ to align with consumer behavior in lockdown.

How to go D2C 

1. Look at the right data.

Businesses need deep consumer insight to curate their brand experience from innovation to delivery. 

GWI conducts a global survey every quarter that’s fully opt-in and with a panel of consumers representing over 2 billion people (the largest in the world) to give marketers a true representation of their target audience. Using a single source of granular, high-quality data like this makes it easier to join the dots and paint a harmonized picture of your target consumer.

2. Know your target consumers.

Your D2C value proposition needs to be compellingly different, ideally in a way that complements your existing channels. Modern data sources allow you to get under the skin of consumers, looking beyond traditional demographic data to understand:

  • Behaviors and actions
  • Motivations
  • Attitudes

When you know both what your target consumers are doing and why they’re doing it, you can talk to them – and sell to them – without the need of intermediaries.

3. Map their purchase journeys.

There’s no single ‘right way’ to create a consumer journey map. Instead you have to find the approach that works for your business.

A great journey map makes use of data to determine the needs, questions and requirements of your consumers when interacting with your brand, and what marketing touchpoints are the most crucial to them.

When you’ve identified what these touchpoints are, you can maximize their impact and guide consumers straight through the sales funnel.

4. Evolve your brand message.

Having an effective message is absolutely crucial to D2C brands. Use your journey maps to find your niche as a brand, and identify a message that will ring true with your target audience. The likes of Dollar Shave Club found sharp humor really engages their consumers; what’s the angle that will engage yours?

5. Tailor the user experience.

Personalization is absolutely key right now.

The beauty of D2C marketing is its flexibility and open communication with customers.

Listening to them pays off, so look for granular data that’s come from the consumers themselves to see how best to offer them the kind of deals, rewards, personalization, and service they want.

6. Measure the right metrics.

It’s easy to fall into the trap of looking at the same metrics year after year. But when your marketing strategy is constantly changing, you need the flexibility to revisit the metrics you track. According to BigCommerce, D2C ecommerce KPIs should focus on:

  • Purchases
  • Repeat purchases
  • Average order value
  • Lifetime value of revenue

The bottom line on the D2C model is there are opportunities for brands of every size, provided they use data and insights from consumers themselves to steer their D2C strategy and offer a truly authentic brand relationship.

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Written by

Sandy is Head of Consumer Products at GWI. Sandy has long experience in global marketing strategy and especially in the use of consumer data to inform better business decisions. His career spans a number of roles consulting with world’s biggest consumer goods companies on strategic projects from segmentation and loyalty to new market development and ecommerce optimization.

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