The rise in popularity of Direct to Consumer (D2C) sales is accelerating and brands seek to recover from COVID-19. And smart companies are hitching a ride on this fast-moving sales strategy to maximize their presence and connect directly to consumers.
Appealing widely to the millennial consumer, selling D2C isn’t a new concept, think of the mail order catalogues of your youth. D2C sales are the modern version of that, but with a wider reach and, today, a more personal touch. And having a more personal approach is precisely what consumers are looking for.
D2C Trends are Accelerating
When everyone went into lockdown, grocery store visits were reserved for essential use only. Consumers, looking for a little comfort, bought out the shelves of popcorn, cereal, chips and chocolate, creating a shortage in grocery stores across the country.
And that’s when problem-solving D2C companies went into overdrive.
Offering a variety of items, essential and non, companies who were already making this trend a part of their purchase plan, began experiencing more profits. And those who hadn’t? They began making preparations.
A timeline comparison graph is a handy tool to help businesses see how conversation around a topic has expanded. Here ‘D2C’ is second only to ‘Post COVID-19.’ The conversation peaked in the end of March, when most states began their quarantine and when D2C brands were more in demand. Towards April, we see a little decrease and then D2C conversation comes back forcefully in mid- to end-April:
Now that ‘shelter in place’ has been lifted in most areas, the conversation is dwindling a bit. However, there is no reason to expect that D2C strategy is going away anytime soon.
D2C is Here to Stay
Research shows that the habits consumers made during this time, are habits that are likely to continue well past re-opening. And customers who found the ease and comfort of buying directly from brands will likely continue to do so.
This has companies like PepsiCo reinventing themselves, at least in part.
Launching two new websites in less than 30 days, this soda giant has stepped firmly into the ‘direct to consumer’ playing field. And Twitter blew up about it:
Though new to D2C, with a net revenue of $67.2 billion reported last year by PepsiCo , and nearly $2 billion from ecommerce, this giant is well acquainted with adapting and succeeding.
And they just made trips to the grocery store lighter and quicker, so consumers are overjoyed at this prospect.
PepsiCo Generates Passion
When we use social listening to view PepsiCo, the story scope (sentiment wheel) is positive, with top words expressed of Love, Right and Snack prominently mentioned:
Additionally, PepsiCo is engaging customers in online conversation, whetting their appetites and keeping their finger on the pulse of what consumers crave:
And, most importantly, Pepsi is showing they care by giving back to their communities. This resonates with consumers, which in the long run only encourages continued brand loyalty.
Social analytics shows how consumers are feeling about direct to consumer brands delivering. Our word cloud below demonstrates consumer emotion. And since consumers habitually make purchase choices emotionally over logic, this is telling indeed:
Consumers want D2C companies in their lives now more than ever, and it’s not just for their munchies…
D2C Is Not Just for Food
Put your feet up and turn on your tv, Disney is bringing Hamilton to streaming a year early on July 3rd.
Bypassing theater releases, as no one is going out (and who knows when they will), Disney+ is hitting consumers where they live. They are a bedtime story on how to rock your D2C strategy and have a happy ending.
No doubt, cutting out theaters will hurt Disney+ bottom line, after all during this pandemic their second quarterly profit fell 90% as they shuttered their parks, canceled cruises and shut the doors on their retail stores.
Disney Battles Back with D2C
However, recognizing that brand loyalty would carry them through the storm, they have chosen to help their fans get through their struggles in the form of comfort and accessibility.
And it is paying off in brand passion and loyalty. The Brand Passion Index (BPI) shows the amount of chatter generated by consumers indicated by the size of the bubble, while the placement shows the passion and sentiment. Here, it’s floating off the chart.
Disney’s not alone, there are many brands who recognized the power of direct to consumer sales prior to the pandemic, including some targeting a consumer of a different breed.
Chewy Brings Treats for Furry Friends Stuck Inside
Chewy brought groceries and treats to pet owners everywhere. With foot traffic down 46% at PetSmart and 55% at Petco, the pandemic left the door wide open for D2C brands to capture more consumers seeking out pampering for Fido.
And Chewy was there welcoming them.
Their demand grew so large, they hired 10,000 more employees to meet consumer’s needs. And increasing sales isn’t the only thing going up, so is Chewy’s stock. With share prices up 52%, this animal loving company is showing how D2C is done.
And consumers are expressing their love as shown in our word cloud! One notable positive mention is about founder of Chewy, Ryan Cohen.
And we can see which social media outlets consumers are showing their love on, using social listening.
Twitter is winning overwhelmingly, with Tumblr in sweet second.
Chewy is utilizing every tool they have. Below they are using UGC (user generated content) on Instagram to engage their audience, bringing humor and connecting to consumers directly.
Whether it’s PepsiCo, Disney+ or Chewy, all three of these D2C companies are flexing their muscles and ensuring consumers come back again and again.
Some of the consumers habitually returning to these companies are the 22-38 year old demographic that makes up $600 billion in spending a year. They are the ‘it’ crowd of purchasing power – The Millennials.
Millennials Offer Eager Market
Millennials are driving the change in the economy. And what they want is streamlined purchase experiences, maximum convenience, and an authentic brand experience. If you are a D2C company offering all of this, good news, you are on the right path. And if not, it’s time to change up your game-plan.
“Millennials will make up nearly three-quarters of the workforce by 2025 and are rapidly redefining consumer patterns. Investor awareness and study of millennial consumer behavior and preferences is an essential factor to projecting business earnings and setting valuations,” said David Bain, managing director, senior research analyst at Roth Capital Partners.
Paying attention to where the wallets of millennials shop is vital to staying on top.
Below, using our market analysis tool, the bar graph shows us top articles filtered for millennial interest. Not surprisingly, D2C food sales are number one.
Millennials are already driving the trends, and D2C is the vehicle they have hitched their wagon to, setting in motion an increased interest in consumer and product relationship. And the growth in conversation for this is seen below in the summary metrics.
Net sentiment is high with over 5,979,759 posts about D2C companies. And mentions are totaling 6,614,226.
This conversation will undoubtedly continue to grow even further if the trend continues as predicted. And assuming Millennials continue to favor this type of spending, which we have no reason to expect to change. But either way, your brand can stay on top of the trends however they shake out with consumer and market intelligence on your side! Reach out for a demo and we can show you how!
