Luxury brands today want to strengthen their online presence while staying true to the fundamental values specific to this sector. Therefore, they must showcase product design, durable and high-quality materials, and craftsmanship at every touch point. Therefore, the challenge for these brands is to succeed in promoting their products in a virtual or hybrid environment while continuing to provide a premium service to every customer. In this context, direct-to-consumer (D2C) sales strategies. are coming back into fashion and more and more technological tools are available to implement them. Valtech AND Adobepartners in the digital transformation of companies, give their analysis on this trend.
D2C challenges in the digital transformation of luxury brands.
Between the pandemic and the global geopolitical situation, the disruptions of recent years have affected companies across all sectors, with the common thread affecting digital and consumer behavior. In luxury, which traditionally relies on physical points of sale, the changes required by this new situation have been much slower. To gain autonomy while maintaining the quality of customer relations, D2C seems to be a solution for the future.
What are the reasons driving players in the luxury industry to switch to D2C?
- Customers ask: Faced with the concentration of stores in certain cities and the lack of availability of some iconic items at retailers, customers are looking for ways to interact directly with brands.
- D2C allows brands to break free from resellers: so they can keep control over their prices, their stocks and their promotion.
- D2C allows better visibility of customer data: With the right tools, implementing a D2C strategy allows for a unified view of customers and their online and in-store purchase history.
D2C commerce simplifies the purchase, delivery and return of products for customers. Creating the best digital experience goes beyond using a commerce platform: it’s about making product offerings easily accessible to customers, then informing and guiding them in their thinking. The issue of logistics and inventory is equally important in the context of a D2C transition. According to an April 2021 Statista study on D2C e-commerce, about 60% of consumers who shop online in France, the United Kingdom and the United States prefer retailerswho offer free returns. Return policies, often overlooked when developing an e-commerce or D2C model, nevertheless influence the way consumers choose a brand: they should be taken into account more.
4 key steps to a successful D2C strategy.
Step 1: Provide a user-centric digital experience
The way consumers shop online has evolved. Now the door is open to completely new types of online interactions (interactive stores, virtual reality, etc.), and this includes changes in the shopping experiences it is possible to offer. To remain competitive, D2C players must be ready to meet customer demands in several aspects, including: availability, pricing, payments and delivery.
Step two: connect the physical and the digital
Even in the very specific luxury sector, digital is no longer an option. As noted in the report Digital Trends 2022 from Adobe and Econsultancy, 87% of executives surveyed agree that the events of 2020/2021 have made customers favor digital. Therefore the latter has remained in habits despite the reopening of physical points of sale. In the same report, it is noted that now, “consumers want companies to make it easy for them to switch between modes of interaction, remember their preferences across all touchpoints, and deliver great experiences at every stage of their journey“. To avoid friction during the purchase journey, the user experience must imperatively unify physical and virtual channels, especially thanks to data and AI.
Step three: establishing an operational model and e-commerce functionalities
This phase is particularly concerned with last mile logistics and distribution. Customer expectations have evolved and numerous shipping, delivery and in-store pickup options have come to market since COVID. Additionally, new last mile delivery options continue to emerge for deal with ecological and environmental issues of today’s world. Entering D2C requires the inclusion of this aspect as an integral part of the strategy, from an operational and technological point of view.
Step 4: Focus on the quality of customer relationships
To win and retain customers, brands must recognize and understand their ever-changing behaviors: customer demands related to prices, shipping options, transparency on environmental impact, and brand values.
And to get there, Adobe and Econsultancy emphasize: data is essential. In 2022, these are the priority in technology investments for business leaders, ahead of content and the customer journey. Compatible, reliable, usable and accessible data will go beyond D2C strategies to optimize luxury brand customer relationships.
In conclusion, moving to D2C means better margins, more product control, more accurate insights and stronger customer relationships. But the road to get there is long and requires preparation, combining a sound business strategy, an AI-focused e-commerce architecture, and input and support from an experienced digital partner.
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