Four steps to Direct to Consumer (D2C) growth

- February 14, 2024 4 MIN READ

In 2024, retailers will continue to face challenges such as rising costs, tightened consumer spending, and shifting consumer behaviours. While many across the economy have been tasked by leadership to ‘do more with less’, that’s not necessarily an option for all businesses. This is especially true in retail, writes Shaun Broughton, Managing Director, APAC at Shopify.

A recent YouGov study found that many Direct to consumer (D2C) businesses are still focused on top-line growth — 46 per cent are investing in product innovation and expansion, 50 per cent are investing in customer loyalty and retention, and close to half intend to pursue new marketing channels this year (46 per cent).

Interestingly, the study showed that D2C retailers are roughly twice as likely as their B2B and B2C counterparts to invest in these growth strategies — and sometimes more than that. The inclination of D2C retailers toward growth-oriented strategies highlights the flexibility and adaptability of the D2C business model, as well as the commitment of D2C retailers to stay ahead in spite of evolving market dynamics.

With that being said, for D2C retailers to implement these growth strategies successfully, they must ensure their businesses are built with strong foundations from the start. Shopify just released over 100 product updates to help retailers strengthen the foundations of commerce. Here are the four foundational areas that we believe D2C retailers must get right to ensure a smooth and sustainable path to growth:

Maximise conversions 

When it comes to maximising conversion, customer experience is everything. So it’s no surprise that refining online customer experiences will be a priority for 80% per centof D2C retailers this year.

A great first step to improving customer experience, and therefore conversions, is to ensure that shoppers can find what they need easily. Given that buyers interact with the search bar in the same way that they’d interact with a human, it’s important that the search bar can do more than just match keywords. Shopify’s AI-powered semantic search feature can help in this regard, accurately interpreting shopper intent to return more relevant results.

Once the desired product has been found, a high-performing checkout is crucial. Ideally, customers should be able to review their order, auto-fill shipping information and make payment on a single page. Minimising friction helps buyers to complete their purchases faster, before they become distracted or change their mind.

Alternatively, retailers can eliminate the checkout process altogether by allowing loyal customers to purchase subscriptions. Adding subscriptions as a purchase option enables retailers to convert customers on a recurring basis, leading to sustained revenue growth and better inventory forecasting. Shopify’s new free Subscriptions app enables retailers to set up and manage subscriptions directly from the Shopify admin dashboard.

Optimise sales channels

Today’s consumers are buying in a multitude of new and diverse ways, compelling retailers to adopt a more flexible and channel-agnostic approach. D2C retailers lead the trend here, and are more than twice as likely to invest in omnichannel strategies compared their B2B and B2C counterparts (46 per cent vs 20.5 per cent). This is a wise move on D2C retailers’ part, as selling across multiple channels can provide them with enormous growth opportunities and cost-saving benefits.

In terms of growth opportunities, an omnichannel strategy allows retailers to tap into a broader customer base by meeting shoppers where they are — whether in-store, online, on mobile, or a combination of all three. Moreover, tracking consumer behaviour over various touchpoints can help retailers to gain valuable insights, and inform future marketing, product, and inventory strategies.

As for cost savings, Shopify retailers can now select a retail store as the fulfilment location for online orders. This means that staff can pick, pack, and ship orders directly from a shop, rather than a warehouse,  significantly reducing fulfilment costs. The ability to ship-from-store also means retailers can offer faster delivery times, meeting the growing expectations of today’s consumers for quick and convenient service.

Ensure efficient operations

Growing retailers face increasing complexity in their businesses as they expand their reach across various sales and marketing channels. To scale efficiently, retailers must leverage tools that simplify workflows and save time. The majority of Australian D2C retailers YouGov surveyed have embraced generative AI to generate high-quality copy for things like product descriptions and email subject lines over the last year — 53 per cent, in fact. Now, with Shopify’s Media Editor, retailers can harness the power of AI to create visually stunning images and professional edits using just a few clicks or keywords — no design skills needed. This includes the ability to erase unwanted pixels and enhance details of low-resolution images (up to 4K).

A sizable number of D2C retailers (67 per cent) are leveraging AI to respond to customer service enquiries too, enhancing customer experience and driving conversions, without the need for human intervention.

Choose tech wisely

Retailers that want to grow need to be able to adapt quickly. The fact that 96 per cent of D2C retailers are deploying tech over the next year is a good sign. However, D2C retailers must be careful about their tech investments, keeping in mind the needs that their business has today, as well the needs it will have in the future.

Full-stack commerce platforms are a good starting point for companies with basic digital commerce needs. However, growing eCommerce retailers often find that blended SaaS commerce platforms provide them with greater scalability and innovation potential without requiring advanced in-house technological expertise. Moreover, digital commerce solutions that offer code-free customisations can mean the difference between making sales and not, as any requirement for advanced technological expertise can cause delays and missed opportunities.

D2C retailers will face a variety of challenges this year, but that’s not to say that they should stop pursuing growth. By laying the foundations now to maximise conversions, diversify across channels, run efficiently, and stay adaptable, retailers can ensure that their expansion is both easily-managed and financially rewarding.

Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on FacebookTwitter, Instagram, and LinkedIn.

Now read this

Australia’s restaurants and retailers expecting more dough than woe in 2024

KBB Sales and Marketing Workshop