Today, convenience and customer experience are allies for a business. They are equally essential for developing better service and fostering customer loyalty. Building direct customer relationships can deliver personalized and meaningful experiences, setting you apart from the competition.

Tailored experiences impact a person’s buying intent, since 80% consumers are more likely to recommend and make repeat purchases from a brand that offers personalized interactions. Staying on top of customer preferences has proved beneficial for businesses, causing them to shift from  multichannel distribution to Direct-to-Customer (D2C). While the D2C concept has been around for some time, it’s rapidly transforming industries—from food to consumer goods. So, what’s causing this shift?

What’s driving businesses toward the D2C model?

Selling products through third-party platforms like Amazon, Myntra, Nykaa and others can limit a brand's access to valuable customer data. Also, the fees charged by these intermediaries can reduce the brand's profit margins. By transitioning to a D2C model, brands can eliminate these intermediaries, retain a larger portion of their revenues, and get greater control over pricing and promotional strategies. This shift also helps brands reinvest the savings into product enhancements, which can increase the chances of converting potential customers.

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In India, the D2C sector is projected to grow at an impressive CAGR of 34.5% from 2022 to 2027. KPMG forecasts that India’s D2C market will surpass $60 billion by 2027.

Why are customers opting for D2C brands?

Research shows that customers are 40% more likely to spend more when they feel the shopping experience is personalized. This shift has led to a rise in D2C brands, which merge the best of online and offline experiences to create authentic relationships and deliver personalized offerings. Additionally, D2C brands also offer:

• Lower Prices: D2C brands offer more competitive pricing by cutting out the middlemen, providing customers greater value for their money.
• Authenticity: Customers who purchase directly from the brand can rely on the product's authenticity, creating a sense of transparency.
• Ease of Access to High-Quality Products: D2C brands deliver top-quality products straight from the source, solving availability issues and giving customers more control over their purchases.
• Discounts & Offers: D2C brands frequently provide high discounts and exclusive offers through their websites, thanks to the efficiency of online shopping and technological advancements.

Consumers increasingly choosing to shop directly from brands that align with their taste preferences and fit within their budget. Statista reports that 53% of consumers choose direct shopping for better pricing. Another major factor in D2C growth is young consumers, especially millennials and Gen Z, who prefer D2C brands for better shopping experiences and values like sustainability.

Understanding customer relationships in D2C brand’s success

Customer relationships are a key factor in the growth of D2C brands, enabling them to manage the customer touchpoint—from discovery to purchase. Forming direct connections help brands gain full control over customer interactions, particularly during the post-purchase journey.

However, D2C brands face challenges in building strong customer relationships. Limited face-to-face interactions hamper personal connections, and restrain maintaining consistency across digital channels. In some cases, data privacy concerns and regulations may limit personalization efforts.

These challenges extend beyond customer relationships and affect various operational aspects. Let's explore these hurdles before learning how to build a successful D2C business

Top strategic challenges faced by D2C brands

#1 Customer acquisition cost

Acquiring new customers is a major challenge for any business, often requiring significant investment in building brand awareness. Lowering acquisition costs is not just about spending less; it's about spending smarter. D2C brands can acquire new customers sustainably by refining targeting strategies, optimizing advertising, enhancing customer experiences, and leveraging referral programs.

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While D2C brands save around 15% on wholesaler costs and up to 40% on retailer margins, they often face higher marketing and advertising expenses.

#2 Scalability and operations

The D2C model offers great growth potential but scalability could quickly become a challenge when it concerns managing fulfilment and customer support together. Therefore, automating these processes is essential for seamless operations and better customer experience.

According to a survey, over 44% of D2C brands in India identified logistics as the major operational hiccup. The issue can even lead to stockouts, backorders, and customer dissatisfaction. This requires flexibility and adaptability in their supply chain and logistics strategies. A smart D2C business must be prepared to both scale up and scale down its operations to match fluctuating consumer demand.

#3 Technology integration

To ensure success, it's crucial to manage every sales channel effectively, as inconsistencies in sales data can cause inaccurate reporting, inventory mishaps, and lost opportunities. Investing in smart technology solutions can streamline operations and improve decision-making.

D2C businesses need technological advancements that are compatible and capable of handling operational demands. This becomes particularly challenging when using multiple software tools and platforms. Maintaining and updating these systems can also be expensive and time-consuming.

#4 Omnichannel presence

Consumers are omnipresent, and so should the brands.  A study by Salesforce found that 75% of consumers expect consistent experiences across all channels. Brands can lose opportunities and lack competitive advantage by not being actively present on popular channels. On the other hand, maintaining a consistent approach to brand experience across channels can be challenging. D2C businesses must ensure their messaging, pricing, and customer service are aligned.

D2C brands might consider multi-channel integration to become omnipresent and optimize operations, for an improved customer experience.

#5 Brand awareness and differentiation

The D2C market is saturated and poses a challenge for brands in creating product differentiation, impacting the complete growth trajectory. D2C businesses must leverage a strong online presence, distinctive value propositions, and strategic marketing efforts.

A study reveals customers prefer to buy from brands they feel connected to, with 76% choosing them over competitors, and 57% willing to spend more on these brands. To succeed in a competitive market, businesses must build strong customer relationships and differentiate themselves.

How does Eshopbox help tackle D2C challenges?

Eshopbox is your comprehensive 3PL logistics partner that brings together everything required to enhance your ecommerce distribution and drive growth. Here’s how Eshopbox addresses these challenges:

1. Delivers scalable fulfillment solutions with automated order processing, matching demand fluctuations and minimizing stockouts
2. Offers an integrated tech stack for real-time inventory management across multiple sales channels, streamlining operations
3. Reduces operational costs, improves shipping efficiency, and manages logistics and tech infrastructure for D2C brands.
4. Streamlines returns with tailored reports and timely processing. Access centralized information and detailed analytics for a seamless return experience and efficient exception management.
5. Ensures a consistent omnichannel experience, maintaining a uniform brand presence across all platforms with multi-channel integration
6. Supports brand differentiation through customized packaging, loyalty programs, and data-driven marketing insights

Key takeaways

• The D2C model allows direct customer relationships, enabling personalized experiences
• Customer loyalty is crucial for D2C success, driving repeat purchases and organic growth
• Major challenges for D2C brands include scalability, customer acquisition costs, and omnichannel presence
• Efficient logistics and technology integration are essential for D2C operations
• Brand differentiation and awareness are key in a competitive D2C marketplace
• Third-party logistics partners like Eshopbox can help address many D2C challenge

The D2C landscape demands a strategic approach centered on cultivating profound customer relationships and delivering unparalleled experiences. Leveraging digital tools, such as social media retargeting, to optimize the customer journey is essential. As the industry evolves, operational excellence, including efficient logistics and fulfillment, will differentiate market leaders and ensure long-term success.

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