Make it easy: brands can take over D2C pages from Nike
There have been many direct-to-consumer games over the past year, most of them from major consumer goods companies (CPG): Mars, Pepsi, Coca-Cola, Kraft Heinz Co., the list goes on and on. The biggest win of the year, however, came down to the biggest step taken by the greatest player – Nike. As of 2020, Nike announced that a full 35 percent of its sales came from direct sales to consumers. That number is expected to rise to 50 percent over the next five years.
It can look a bit like overnight success. As the cloud-based e-commerce solution Nicolas Stehle, CEO of Scalefast, recently said in a conversation with Karen Webster about On The Agenda, the reality points to something else. Using a variety of strategies and tactics, Nike has been working hard on its highly successful direct-to-consumer press for nearly 15 years. They made the former eBay boss their CEO – Stehle said it would have made you laugh if they had predicted it 20 years ago. Second, he said, they leaned over and did the hard work of developing a direct-to-consumer channel when it would have been a lot easier and still pretty lucrative to sit back and continue selling through Walmart and shoe stores.
“You saw early on that the direct-to-consumer channel is the channel with the greatest added value for the consumer. You have a rewards program, you have certain products, you have unique events. This is where you can really establish the relationship with the brand, ”said Stehle.
And third, Nike built this D2C channel to work with its other channels rather than conflict with them, he said. The products placed on other platforms such as Amazon acted as an entry point that did not compete with Nike’s D2C website.
Every brand cannot be Nike, said Stehle. Some parts of their success are only understandable in the context of what they are selling. For example, a brand like Coca-Cola is unlikely to get 50 percent of its sales through D2C because the product is unwieldy from a shipping point of view and has become used to buying the core product in the grocery store. And Nike, as Nike, also had the funds needed to advance this massive D2C in a planned and phased foray carried out over the course of a decade and a half. That’s a pretty rare ability in particular.
But even if every brand can’t be Nike, they can learn to become more like Nike when it comes to creating D2C – like building the right experience – and then getting it right.
Exclusivity is the spice of the consumer relationship
Consumers, Webster and Stehle, agreed on the feeling of exclusivity that comes with certain retail experiences and the feeling of getting a good or service that only they can have. Luxury brands, he said, do this by creating a very limited set of innovative products that are available for purchase. Brands like Supreme, he said, don’t even use products to create that sense of uniqueness, they just build on branding.
“Supreme sells very standard products. There’s nothing new, ”said Stehle. “I’m a little scared that the fans of this brand will want to kill me for saying that, but it’s true. To do this, they teamed up with other brands to create even cooler versions of their products that no one else could offer, turning them into exclusive content. And that’s now worth $ 2 billion a year – selling Supreme versions of older products. “
The D2C experience offers brands the opportunity to experiment with the concept of exclusivity by creating a specific interactive space for themselves and their customers. It could be specific products, he said, but it could also be events. One example is to grant certain customers time-based access to a certain, closed, exclusive area of the shop that they can share with five of their closest friends with a certain code. Or hosting flash sales with access to specific content that is only available while the flash sales are in progress.
When we think directly of the consumer, we should be more appropriately talking about building a consumer-centric experience – because at its core, D2C is about finding new ways to “put the consumer back at the center of their relationship with the brand” , he said.
Brands that think like Nike are finding ways to turn this consumer-centric channel into an entry point to exclusive and tangible value. That is the great promise of D2C. But brands have to more than keep the promise, he said, they have to keep it too – one bigger order, and that’s where Scalefast comes in.
Doing D2C right
Getting it wrong too quickly is usually the biggest risk in a new business, but getting it right too quickly can be the bigger problem for companies just starting their D2C journeys, according to Stehle. There’s a reason brands are going and staying on Amazon, he said. The logistics that underpin a D2C business done right are incredibly difficult to achieve – and the price tag for getting them wrong is pretty steep.
“You want to be direct – you have the entire project that goes with it. So say you have something unique. You sell it and it is a success then hundreds of thousands of people will flock to your stores. Your website will crash, ”said Stehle.
In fact, he said Webster, customers have successfully crashed eBay, which will generally be an inevitable outcome for companies that follow in the footsteps of D2C first and try to do it all themselves. The reason Scalefast was founded is to help brands solve this problem because, big or small, what they have seen time and time again are brands trying to do D2C sloppy. And, he said, getting it wrong has a real cost – since the whole point of the exercise is to create a consumer experience that is enjoyable and centered on their needs.
“If there is a problem anywhere, you will massively infringe your brand because you will violate the specific connection you make with your consumer.”
NEW PYMNTS DATA: HOLIDAY SHOPPING RETROSPECTIVE STUDY – FEBRUARY 2021
About the study: The Retrospective Study of Shopping On Vacation: Insights into Merchants for 2021 and Beyond, a collaboration between PYMNTS and PayPal, examines consumer shopping practices and preferences during the 2020 holiday season and what these mean for merchants now and for the upcoming holiday seasons. The report is based on a census among 2,070 US consumers.
Branding, D2C, Direct-to-Consumer, E-Commerce, Specials, Marketing, News, Nike, On The Agenda, Pymnts TV, Retail, Scalefast, Video