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The direct-to-consumer (DTC) business model has been around since the 1920s and the first-ever digitally native brand selling a single product emerged in 2007. Since then, due to the increasing online sales and evolving customer expectations, this concept has snowballed.
Now, with the advent of new technologies, DTC brands are integrating more creative brand marketing and branding strategies to enhance customer experiences, cut costs, and automate multiple business processes.
Integrating recent tech solutions equips brands to foster deeper connections with their consumers, increase engagement across various platforms and websites, and receive real-time consumer insights. So, whether you’re just getting started on your startup or already have a well-established brand, these can marginally impact the future of your business.
Curious to learn what these latest trends entail? Keep reading!
Interesting Stats to Note
Before we dive into the technical DTC trends, let’s review some interesting stats that will give you an idea of the current direct-to-consumer landscape:
- During the pandemic, a whopping $10 billion in annual revenue was transferred to at-home exercise solutions from gyms.
- Three-quarters of all internet users (5.35 billion) monthly engage with e-commerce activities, making shopping the fourth most popular online activity.
- In the past 5 years, searches for “influencer marketing” are up by 967% and many influencers are expected to launch their own DTC brands.
- In the UK, the DTC commerce industry saw a growth from 5% to 27% in 2023.
- 53% of professionals believe their company will likely invest in generative AI within 5 years.
- 55% of consumers reported shopping at online stores that created an engaging experience for them.
- 64% of consumers tried remaining environmentally friendly through their daily actions.
- 74% of consumers reported concerns over the increasing costs of everyday products.
10 Direct-To-Consumer Trends That Offer Competitive Edge
The following list highlights all the popular direct-to-consumer trends, from least to most popular, that all e-commerce stores can benefit from.
1. Reverse Logistics
Reverse logistics utilises advanced systems to assist businesses in facilitating a streamlined return process. It includes automation processes for recycling or refurbishment of the returned products, offering real-time updates on the return status for both consumers and brands.
The advent of this technology helps enhance customer experiences and loyalty and reduce operational costs by providing a transparent and hassle-free return experience. Previously, this process would add to the burden of brands following the DTC business model.
In this model, the brand is solely responsible for managing product returns, including the maintenance of customer satisfaction throughout the return process and all the associated costs of returned goods.
- Importance of this trend
Any item that’s returning to your warehouse needs to be handled and tracked appropriately. Having robust reverse logistics can significantly impact cost efficiency, customer satisfaction, sustainability, and customer data collection. The sheer amount of time it takes for businesses to process returns significantly differs from the time it takes them to process or ship out an order, which can lead to bad customer experiences.
A good reverse logistics strategy will not only reduce return times and improve customer satisfaction but also help maintain quality standards. You must implement practices to ensure the returned products are high-quality items that can be resold. If they’re not worthy of staying on your shelves, it’s best to refurbish or recycle them.
- Examples of its applications
Many brands are adopting automation and robots for their returns processes including moving, storing, and sorting to increase speed. Moreover, there’s an increase in the use of predictive analytics and AI, which help eliminate waste, minimise carbon emissions, and quickly resell the returned items.
2. AI & Analytics
More and more direct-to-consumer businesses are taking advantage of the processing capabilities of advanced machine learning algorithms and big data to analyse consumer behaviour at microscopic levels.
The real-time feedback enables brands to tailor their marketing strategies dynamically and estimate future demand with increased accuracy. Moreover, advanced analytics and AI equip DTC brands to efficiently allocate their resources and stay ahead of the changing market trends.
You can utilise several comprehensive tools to offer highly personalised experiences to your customers, which helps drive both sales and engagement. Without AI and advanced analytics, brands require significant processing power to decipher large amounts of customer data.
Campaign optimisation and market trend predictions were prone to errors. Fortunately, you can now address such concerns with advanced analytics and AI.
- Importance of this trend
2024 will see a spike in hyper-personalisation, or AI-driven personalisation, which will leave traditional personalisation techniques behind–especially in the e-commerce landscape. This means that there will be more curated shopping experiences with natural language processing (NLP), machine learning (ML), and AI becoming a more integral part of e-commerce systems.
Integrating such technologies will lead to more personalised marketing content, dynamic pricing, and effective product discovery and recommendation. Consequently, businesses will flourish with greater customer satisfaction and sales conversions.
Moreover, businesses will be better equipped to garner higher conversion rates through targeted campaigns utilising rapidly advancing deep learning algorithms. With accurate predictions regarding customer behaviour and interests, brands will also be able to improve efficiency, cut costs, and optimise their marketing efforts.
- Examples of its applications
Many brands are using AI-powered video marketing to create interactive, shoppable videos integrated into social media or websites. These videos provide a streamlined shopping experience and a new way for brands to engage with their customers.
Another great example of this trend is AI-powered returns solutions. It improves customer satisfaction, reduces administrative burdens, prevents fraud, and automates the entire returns process. Moreover, this solution can marginally lower associated costs of returns as well as return rates.
AI-driven chatbots are also revolutionising the customer support and sales processes in the e-commerce landscape. They offer effective and quick services, such as purchase assistance and handling inquiries.
3. Chatbots
Powered by machine learning and AI, advanced chatbot technology is taking over the DTC consumer experience. Instead of investing in a significant amount of resources and manpower for brand communication across various platforms, DTC brands are now investing in chatbots, which also cover repetitive inquiries and customer support.
Chatbots are able to enhance the overall customer experience, reduce wait times, and handle various customer inquiries in real time with the help of language learning models (LLMs). You can also program these chatbots to maintain a consistent brand voice across various platforms and communication channels and provide personalised product recommendations to your customers based on their interactions or previous purchase patterns.
Chatbots are an exceptional way to facilitate transactions, leading to increased brand loyalty and streamlined customer journeys.
- Importance of this trend
Chatbots can significantly cut back time and money otherwise spent on customer inquiries handled by human agents each day. They’re able to resolve issues quickly, personalise your customer’s journey, and provide quick, accurate responses to their queries.
Consequently, they are some of the significant areas driving sales and revenue through guided buying processes, cross-selling, upselling, and product suggestions. Many business owners have reported an increase in repeat purchases, average order value, and conversion rates after implementing chatbot technology.
- Examples of its applications
Sephora uses a chatbot on Facebook Messenger to help its customers get tutorials and tips, book appointments, and even find products. Its chatbot utilises a mix of quizzes, videos, and images to create an enjoyable experience for the customers.
Domino’s also uses chatbots on its app and website to allow customers to learn about ongoing coupons and deals, place an order, and track their delivery. This chatbot’s use of emojis and natural language offers a convenient and friendly environment for the customers.
Lastly, you’ll find that H&M also uses a chatbot on Kik to help its customers shop online, get recommendations, and discover the latest styles. It incorporates collections, ratings, and questions to create a social and personalised experience.
4. Blockchain
There have been growing concerns among consumers over data security during online transactions, the lack of supply chain transparency, and the existence of counterfeit products. For this reason, many startups are adopting blockchain solutions.
The decentralised ledgers offer verifiable proof of authenticity for products and ensure that your customers receive original items. Moreover, blockchain technology is immutable and transparent, leading to traceable supply chains and allowing insights for customers regarding ethical practices and product origins.
Your customers can also enjoy greater confidence when buying through your platform due to the security and data protection measures instilled in the blockchain technology. They’ll rest assured that their products and digital information are secured and stored using the best practices.
- Importance of this trend
Blockchain not only enhances data encryption and transactions but also helps verify the flow of products at each supply chain stage. The process becomes more streamlined and it helps maintain customer trust and satisfaction.
You can also use blockchain technology for inventory management and reduce waste with real-time data on product supply and demand. Overall, many businesses are incorporating this technology to enjoy higher customer engagement with trust, simplification, transparency, and access added to the entire business process.
- Examples of its applications
Brands are utilising blockchain’s Distributed Ledger Technology (DLT) to enhance the security of customer data and other similar online database systems. Additionally, its incorporation into shipping processes helps reduce shipping costs with quicker receipts, cargo data visibility, and real-time tracking. Moreover, unlike traditional transfers, those backed by blockchain only take a couple of minutes, even when you’re moving money between countries.
5. Social Commerce
Converting social media followers into paying customers, online advertising, and building organic engagement are all complicated processes with even higher costs. Social commerce innovations are moulding the landscape by taking to social media platforms for integrated shopping experiences.
You can reach your customers in environments where they’re spending a significant chunk of their time online by integrating brand marketing strategies, such as influencer collaborations, in-app checkout processes, and shoppable posts.
Doing so will enable your business to leverage community-driven endorsements and the power of social media. It also reduces the friction in the buying journey for your consumers. As a result, you’ll see increased sales conversions and authentic engagements from your target audience.
- Importance of this trend
Social media offers various platforms for brands to build a direct sales channel, increase customer engagement, and tell their brand’s stories. Its importance has long been recognised by brands. It’s now even more important than ever to build a strong brand foundation through various social media platforms instead of heavily relying on paid ads.
Some effective social media strategies include:
- Social commerce
- Interactive and responsive content
- Engagement through direct messaging
- Leveraging AI on social media
- User-generated content (UGC)
Implementing these often leads to increased brand visibility, direct sales, and enhanced customer engagement.
- Examples of its applications
Shoppable paid ads and organic posts, storefronts on social media platforms, branded influencer content, live shopping, shop feed/tabs, user-generated content, and user wish/shopping lists are all examples of social commerce.
All well-established and new DTC e-commerce stores take advantage of TikTok, Facebook, Pinterest, and Instagram to increase engagement and conversion rates. Some brands with a strong social presence and efficient social commerce strategies to follow include:
- ZOX
- Kylie Cosmetics
- CALPAK
- Snug
- Rothy’s
- Glamnetic
- CLUSE
- JUNO & Co.
- Milk Bar
- 100% PURE
Want to create an e-commerce store but don’t know which platform to choose? Take a look at our all-encompassing guide to make a final decision.
6. Automation Systems
DTC brands remove the middlemen and cater to their target audience directly. This means that with the rising consumerism, you’ll be liable for all the time-consuming inventory management, handling of customer inquiries, and order processing. It goes without saying that this places additional burdens on businesses. The solution? Automation systems that streamline operations from end to end.
Integrating advanced automated platforms will enable you to automate customer support through chatbots, instantly process omnichannel orders, and receive real-time inventory updates. Furthermore, you can significantly enhance customer experiences, optimise supply chain processes, offer timely responses to customer inquiries, and reduce operational bottlenecks.
- Importance of this trend
Not only do automation systems eliminate all the busy work but they also help streamline and track customers’ journey throughout the buying cycle. Moreover, you can automate complicated processes, such as customer relationship management, inventory management, customer segmentation, and order processing to focus your resources and efforts toward more important business operations.
Reduced operating costs, increased performance, availability, reliability, and higher productivity are all benefits you can enjoy from adopting automation for your e-commerce store.
- Examples of its applications
Many brands are utilising advertising automation, specifically for retargeting ads. The software used for this syncs catalogues across multiple channels, sets up custom events on social media platforms, and runs a track of ads relevant to the targeted audiences.
You can also utilise automated emails to reach out to customers who have abandoned their emails. This feature can easily be applied on e-commerce platforms, such as Shopify. The automated emails can help you regain lost sales and increase conversions by a significant margin.
7. Smart Personalisation
DTC brands often find it difficult to retain customers in an oversaturated market, maintain product recommendation accuracy, and provide personalised customer interactions. Smart personalisation uses AI and advanced algorithms to address these and similar issues with consumer preference and behaviour analysis.
Adopting this data-driven approach will allow your DTC brand to design user interfaces that adapt to individual consumer needs, create personalised marketing campaigns, and offer tailored product recommendations.
Consequently, your consumers will enjoy a more engaging and relevant shopping experience, leading to higher conversion and loyalty rates for your business.
- Importance of this trend
Personalised shopping is more than just a trend: it’s a long-term, smart decision that helps businesses connect with their customers and make more sales. On the other hand, the customers also enjoy their shopping experiences, which are made more fun and easier with customised recommendations and interactions. This is also great for businesses as it retains customers for a long time.
According to research, 91% of online shoppers enjoy shopping at stores that efficiently suggest the right products. This means that if you follow the best personalisation techniques, you’ll likely attract repeat visits and purchases.
Who doesn’t like it when an online store proves they know them on a personal level? A survey found that about 76% of all customers like it when businesses deliver items that are just for them–and if you get it wrong, they might go elsewhere.
- Examples of its applications
If you’ve been to some of the more popular Nike stores, you’ll find that the brand allows its customers to design their own clothes and shoes. You’ll also find special features for store members, such as expert help and quick item selection.
Sephora is also using smart personalisations that allow its customers to virtually try on the available beauty products and book appointments. They also give better suggestions each time a customer comes back as they keep track of the things they’ve bought and tried.
8. Sustainability
Consumer-centric businesses are facing stricter regulations due to the following reasons:
- Ethical concerns surrounding product sourcing
- High carbon emissions from transportation
- The environmental impact of excessive packaging
Innovations surrounding sustainability are offering solutions such as supply chain transparency that prioritises sustainable and ethical sourcing, delivery route optimisation, and circular packaging materials.
Your DTC brand can cater to customers’ growing demand for responsible consumption while addressing their ethical and environmental concerns by integrating such sustainable practices. Consequently, you’ll enjoy enhanced trust and brand reputation among environmentally-conscious consumers.
- Importance of this trend
Consumers are increasingly preferring brands that prioritise environmental responsibility. Their raised consciousness of environmental impact proves a strong preference for sustainable products. You must adopt green practices and sustainable practices and even include such messaging in your marketing and sales campaigns to attract this specific target audience.
According to research, 78% of consumers place significance on sustainability, with 63% already taking steps to become more sustainable by modifying their lifestyle. Millennials are the most conscious among all generations, with 67% adopting sustainable buying habits.
- Examples of its applications
More and more brands are now adopting sustainability through various practices. These include implementing transparent supply chains, ethical practices for material sourcing, and eco-friendly packaging techniques. In addition to aligning with consumer values, these also help in building and maintaining brand trust and loyalty.
Sustainability in the DTC sector is more than a passing trend, it’s a fundamental shift that all brands must incorporate into their practices to meet their customer’s expectations in the long run and showcase corporate responsibility.
9. Omnichannel Experiences
Modern retail consists of numerous avenues, which can often lead to a poor post-purchase experience, inconsistent brand messaging across platforms, and fragmented customer touchpoints. You can integrate various interaction points to deliver omnichannel customer experiences. This can include creating a cohesive platform or ecosystem for various in-store and online interaction points.
A unified approach will ensure that no matter which channel they choose to interact with your brand, they’ll receive a consistent brand experience. Additionally, it will enable seamless transitions between online browsing, in-store purchases, and post-purchase services.
As a result, your direct-to-consumer brand will be better able to gather comprehensive data to refine your strategies, reduce buying process friction, and enhance customer loyalty.
- Importance of this trend
An omnichannel approach to direct-to-consumer e-commerce helps create personal and unique experiences for individual customers. Since the DTC model heavily relies on showing a deep understanding of your customer’s pain points and creating customer-centric experiences, this approach will prove highly advantageous.
It offers a better view of the customer journey by putting everything inside a single system that’s not only visible but also trackable. You can then gather insights to take granular actions to enhance aspects of your business as required.
- Examples of its applications
Makeup brand Sephora utilises several channels, including social media platforms, a mobile app, an online website, and retail locations to ensure its inventory is widely available to all customers on various platforms.
Similarly, Amazon uses its Kindle store, Alexa home assistants, social media ads, a mobile app, and its online website to create an omnichannel customer experience. Some other brands utilising omnichannel experiences include:
- Target
- Benefit Cosmetics
- IKEA
- Barnes & Noble
- Apple
10. Subscription-Based Business
Since there are no intermediaries in a DTC business model, many face challenges surrounding inventory management, consumer trust, and increasing customer acquisition costs. Such issues are being resolved with a variety of solutions and innovations in subscription-based models. This model involves a purchase from consumers with recurring deliveries or access to services or products.
This method includes enabling tailored offerings based on preferences and generating predictable revenue streams by utilising market and customer data. Additionally, this model maintains consistent customer engagement, enhances brand loyalty, and reduces inventory waste.
- Importance of this trend
Subscription-based models offer consumers personalised experiences, value, and convenience. They are the most hassle-free way of regularly receiving services or products, eliminating the need for repeat purchases. This model is best for consumers who want to indulge in personal interests, such as hobbies, beauty products, or gourmet food, and purchase essential items.
For business, the subscription-based model offers a predictable and stable revenue stream. They enable brands to create cross-selling and upselling opportunities, collect valuable data for product customisation, and build long-term customer relationships. Having a direct connection with your customers through this model will allow you to have more control over the product quality and brand experience.
- Examples of its applications
BarkBox is a subscription-based business for pet owners that delivers a monthly assortment of toys and dog treats. It simplifies the process for the purchase of monthly pet supplies. Another great example of a business utilising this model is the Dollar Shave Club, which offers grooming products and razors through its subscription service.
Concluding Thoughts
The direct-to-consumer e-commerce trends highlighted in our list barely scratch the surface of all the various trends and popular strategies you must keep an eye on. We recommend doing thorough research on all aspects of your business and processes before formulating your plans and tactics. If you’re new to DTC e-commerce, it’s best to partner with experts in the field who can streamline this process for you, leaving you with ample time for your store’s core operations. So, what are you waiting for? Schedule a call with one of our experts now!
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