flevyblog

Flevy Blog is an online business magazine covering Business Strategies, Business Theories, & Business Stories.
MANAGEMENT & LEADERSHIP STRATEGY, MARKETING, SALES OPERATIONS & SUPPLY CHAIN ORGANIZATION & CHANGE IT/MIS Other

How Retail’s Direct to Consumer Boom May Impact the E-commerce Space

Editor's Note: Take a look at our featured best practice, Buy Now Pay Later (BNPL) Platform - 5 Year Financial Model (Excel workbook). Buy now, pay later (BNPL) is a type of short-term financing that allows consumers to make purchases and pay for them over time, usually with no interest. Buy now, pay later (BNPL) programs have different terms and conditions, but generally, they offer short-term loans with fixed [read more]

* * * *

In a research brief released in 2019, analyst eMarketer detailed how digitally-native direct-to-consumer (D2C) brands were disrupting traditional retail. Apparel, beauty, home furnishings, and consumer packaged goods were called out as niches where this disruption was particularly prevalent, with food & beverage and personal care emerging as promising challengers. Even back then, growth in these sectors was in the double-digit range, as reported by Entrepreneur — though many predicted that D2C was a bubble nearing its breaking point.

How the Coronavirus Redefined D2C

Then the pandemic hit, and everything changed. In just 90 days, notes analyst McKinsey, we saw ecommerce penetration in the U.S. leap forward ten years. In the process, D2C brands, many of which were in the process of looking into brick-and-mortar locations and omnichannel sales, saw growth that could be conservatively referred to as “explosive.”

For instance, Arnaud Plas, founder and CEO of Personalized hair care startup Prose, told Forbes Magazine last year that his business was on track to make $50 million in 2020, more than triple its 2019 revenue.  And Plas’s situation is far from unique. As reported by Retail Dive, even D2C brands that were struggling prior to the pandemic experienced a massive increase in sales.

Traditional retailers were hit much harder.

As reported by Vox in November, malls and department stores face a bleak future post-COVID. As with the D2C boom, this trend wasn’t entirely the result of the pandemic. A growing disparity in wealth between the upper and middle class coupled with a shift to the web as the primary means of brand discovery have portended doom for the sector — the pandemic may simply have been the final nail in the coffin.

That isn’t to say that all retailers are struggling, however. Major brands like Wal-Mart, Best Buy, Levi’s, Nike, and Adidas have all made significant inroads into the D2C space, seamlessly adopting an omnichannel approach both in response to the pandemic and in preparation for its eventual end. Many of them were working on such measures even before the pandemic, having already seen the writing on the wall long before lockdowns and quarantines.

The question that remains is the impact this shift will have on the larger ecommerce space.

Omnichannel Sales, D2C, and the Future of Ecommerce

According to analyst Nielsen, every ecommerce program follows a similar growth curve:

  • Brochureware. Passive presentation of marketing materials and product information. Functionally an online brochure rather than an actual storefront.
  • Single-party selling. A brand establishes a single channel/storefront on which to sell its products, generally direct-to-consumer. Alternatively, the brand might sell on an already established site.
  • Multichannel. A brand maintains multiple digital and physical channels through which it sells its products.
  • Omnichannel. Similar to omnichannel, in that a brand sells across multiple sales channels. Omnichannel stands out because it focuses entirely on the customer experience and ensures that a consumer’s purchase journey can seamlessly span multiple channels.
  • Headless. The final evolution of a business’s ecommerce journey, which sees backend infrastructure decoupled from the frontend. This presents multiple benefits for omnichannel sales, including greater flexibility and enhanced personalization.

In essence, the pandemic has forced multiple businesses and brands to evolve from the first two stages of this growth curve to the final two in an incredibly short amount of time.

Speaking in an interview with Forbes, Marcus Startzel, CEO of ecommerce marketplace management app Whitebox, noted that this has completely changed the face of digital commerce. It has, he said, created “new dynamics and choices across a variety of marketplaces and channels.” Startzel then noted that we’ve reached an “unprecedented” moment in retail history. However, he predicts that, even once the pandemic is over, the renewed focus on the customer experience will remain a constant.

He also believes it likely that brick-and-mortar transactions will further decrease while product access will continue to evolve.

In the short term, this means a significant increase in competition and significantly more opportunities to generate revenue by attracting new customers and breaking into new niches. In the long term, it means that perhaps except for fulfillment by Amazon (FBA) sellers, successful ecommerce businesses will need to adopt a headless, omnichannel approach. It’s the only way to feasibly support the level of personalization, flexibility, and fluidity demanded by consumers.

Speaking of customer demand, data from end-to-end ecommerce provider Scalefast paints a very clear picture of what customers in this new landscape want:

  • 61% of people are willing to share more personal information to enable a better shopping experience.
  • 54% of shoppers expect a personalized discount within the first day of contact with a new brand.
  • 51% of customers believe a personalized, omnichannel experience is crucial.

Navigating the New Ecommerce Landscape

The line between traditional retail and ecommerce has never been more blurred. As we move past COVID-19 into a connected future, that line is likely to vanish altogether. Just as distributed work and distributed learning will give way to hybrid offices and classrooms, so too will the D2C boom create a hybrid future for sales.

Those businesses capable of embracing this future with the right technology and processes will likely see a significant upturn in revenue, competitiveness, and ultimately, value. Those that cannot adapt are likely to trend in the opposite direction, outstripped and outshone by savvier competitors.

13-page Word document
If you're planning to launch an e-commerce business but feeling overwhelmed, don't worry! You're not alone. The good news is that there's a solution for you. You can get a head start on your business by using a professional sample e-commerce business plan and feasibility report. This plan is a [read more]

Do You Want to Implement Business Best Practices?

You can download in-depth presentations on E-commerce and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.

For even more best practices available on Flevy, have a look at our top 100 lists:

These best practices are of the same as those leveraged by top-tier management consulting firms, like McKinsey, BCG, Bain, and Accenture. Improve the growth and efficiency of your organization by utilizing these best practice frameworks, templates, and tools. Most were developed by seasoned executives and consultants with over 20+ years of experience.

Readers of This Article Are Interested in These Resources


Excel workbook
Model Options: This template is a detailed and user-friendly financial model that considers an e-commerce business's specifics. By Taking into account key assumptions such as traffic from different sources, conversion rates, the average purchase value for different product categories, and the [read more]


 
Excel workbook
 
 
Excel workbook

About Christopher Moore

Christopher Moore is the Chief Marketing Officer at Quiet Light, specializing in helping clients sell their internet-based businesses. Additionally, he founded Gadabout Media LLC to inspire, educate, and unite others by creating visually stunning content for clients.


Complimentary Business Training Guides


Many companies develop robust strategies, but struggle with operationalizing their strategies into implementable steps. This presentation from flevy introduces 12 powerful business frameworks spanning both Strategy Development and Strategy Execution. [Learn more]

  This 48-page whitepaper, authored by consultancy Envisioning, provides the frameworks, tools, and insights needed to manage serious Change—under the backdrop of the business lifecycle. These lifecycle stages are each marked by distinct attributes, challenges, and behaviors. [Learn more]

We've developed a very comprehensive collection of Strategy & Transformation PowerPoint templates for you to use in your own business presentations, spanning topics from Growth Strategy to Brand Development to Innovation to Customer Experience to Strategic Management. [Learn more]

  We have compiled a collection of 10 Lean Six Sigma templates (Excel) and Operational Excellence guides (PowerPoint) by a multitude of LSS experts. These tools cover topics including 8 Disciplines (8D), 5 Why's, 7 Wastes, Value Stream Mapping (VSM), and DMAIC. [Learn more]
Recent Articles by Corporate Function

  

  

  

  

  

The Flevy Business Blog (https://flevy.com/blog) is a leading source of information on business strategies, business theories, and business stories. Most of our articles are authored by management consultants and industry executives with over 20 years of experience.

Flevy (https://flevy.com) is the marketplace for business best practices, such as management frameworks, presentation templates, and financial models. Our best practice documents are of the same caliber as those produced by top-tier consulting firms (like McKinsey, Bain, Accenture, BCG, and Deloitte) and used by Fortune 100 organizations. Learn more about Flevy here.
  


OUR CORE OFFERINGS
Flevy Marketplace: Top 100
· Strategy & Transformation
· Digital Transformation
· Operational Excellence
· Organization & Change
· Financial Models
· Consulting Frameworks
· PowerPoint Templates
FlevyPro (Subscription Service)
KPI Library
Streams (Functional Bundles)
Flevy Executive Learning (FEL)
PowerPoint Services

FREE Resources

About Flevy
Management Topics
Marcus (AI-Powered Consultant)
Partner Program
LinkedIn Influencer Marketing
FAQ / Terms / Privacy / Blog
Contact Us: support@flevy.com



CONNECT WITH US!
       
TOP 100 TRENDING TOPICS
Acquisition Strategy
Agile
Analytics
Artificial Intelligence
Balanced Scorecard
Best Practices
Big Data
Breakout Strategy
Business Continuity Planning
Business Plan Financial Model
Business Transformation
CMMI
COBIT
Change Management
Cloud
Communications Strategy
Company Financial Model
Competitive Advantage
Competitive Analysis
Consulting Frameworks
Continuous Improvement
Core Competencies
Corporate Culture
Cost Reduction Assessment
Customer Experience

BROWSE BY FUNCTION
Strategy, Transformation, & Innovation
Digital Transformation
Operational Excellence and LSS
Organization, Change, & HR
Management Consulting

Customer Journey
Customer Service
Cyber Security
Data Privacy
Decision Making
Digital Marketing Strategy
Digital Transformation
Digital Transformation Strategy
Due Diligence
ESG
Employee Engagement
Employee Training
Enterprise Architecture
Growth Strategy
HR Strategy
Hiring
Hoshin Kanri
ISO 27001
ITIL
Information Technology
Innovation Management
Integrated Financial Model
Kaizen
Kanban
Key Performance Indicators

ADDITIONAL RESOURCES
Business Strategy Frameworks
Case Studies
Consulting Training Guides
COVID-19 Trend Data
Digital Transformation
Financial Advising Services (FAS)

Knowledge Management
Leadership
Lean
Lean Manufacturing
Logistics
M&A (Mergers & Acquisitions)
Manufacturing
Market Research
Marketing Plan Development
Maturity Model
McKinsey PowerPoint
McKinsey Templates
Operational Excellence
Organizational Change
Organizational Design
Performance Management
Post-merger Integration
Pricing Strategy
Process Improvement
Process Maps
Procurement Strategy
Product Launch Strategy
Product Strategy
Project Management
Quality Management


Free Resources
KPI Library
Lean Management
Lean Six Sigma Training Guides
Marcus Insights
Operational Excellence

Real Estate
Remote Work
Restructuring
Risk Management
Robotic Process Automation
SWOT
SaaS
Sales
Scrum
Service Design
Six Sigma Project
Social Media Strategy
Strategic Planning
Strategic Thinking
Strategy Development
Supply Chain Analysis
Sustainability
Target Operating Model
Team Management
Total Productive Maintenance
Value Chain Analysis
Value Creation
Value Stream Mapping
Visual Workplace
Workplace Safety


Product Strategy
Small Business Owner
Startup Resources
Strategic Planning
Strategic Planning Process
Value Innovation Strategy


© 2012-2024 Copyright. Flevy LLC. All Rights Reserved.