The consumer packaged goods (CPG) industry was badly affected by the pandemic, much like several other industries. Organizations in this industry therefore relied on retail or e-commerce market places to sell inventory and enhance sales. CPG companies foraying into the D2C model created a new competitor segment for the retailers.
The D2C model has now become a lifeline for consumers who were completely relying on the brick-and-mortar retail stores for their daily requirements of products and services.
According to eMarketer, the direct-to-consumer ecommerce sales in the US grew by 45.5% in 2020, generating $111.54 billion and making up to 14% of the total retail ecommerce sales. On the other hand, in Europe, McKinsey has indicated that the overall digital adoption jumped from 81% to 95% during the COVID-19 crisis. The D2C model is predicted to further grow aggressively worldwide.
Key sectors and players that contributed to ecommerce growth across the globe were
These trends highlight the growing consumer willingness to buy directly from brands, provided the customer experience stands out or at least matches the experience delivered by their retail and ecommerce partners.
There are several reasons why D2C is appealing to consumers. Consumers believe that dealing with the manufacturer will make returns or processing warranty claims easier. A section of consumers also perceive that they will get better customer service or think that direct-to-consumer deliveries are faster and better with quality oversight on packaging and transit. The main perceived benefit for consumers is value, wherein D2C is believed to offer better purchase price.
Why a CPG company decides to go D2C
With a thriving ecommerce industry and social media presence, there has been volatility in consumer loyalty. The tectonic shift in loyalty is forcing many legacy brands to launch their own D2C channels in order to win back consumers, by delivering multi-layered and multi-faceted value
D2C in the CPG industry has become a necessity for the survival of the brand and is no more just a ‘good to have’ model. It is important that FMCG and non-FMCG companies partner with the right IT & ITeS service provider. A good partner can ensure delivery of value to the consumer during his/her lifecycle of experiencing the product and the allied services. D2C is not just a standalone concept but an intricately woven chain of services and capabilities that include UI/UX, omni-channel customer experience, inventory management, trust & safety, order management, logistics, digital payments, product information management, analytics and reputation management. The ability to unify these services, technologies and capabilities will clearly define the next-gen CPG company that would dominate the brand wars of the near post-COVID future.
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Richa Misra
Richa Misra is a Practice Solutions & GTM Lead for Retail, Consumer Goods, Telecom and Media at Wipro. She has over 20 years of experience in the BPM industry in the areas of training, quality, complaince, service delivery, business development, presales and practice. She has dabbled in multiple industries including BFSI, Retail, Consumer goods, Publishing and has managed global programs, consulting-driven engagements and aligned solutions to business outcomes.
Integrating the consumer point of view and how their experience impacts sales, positively or negatively has become essential to retailing today. The effective use of physical space is essential for a retailer’s success. Till recently, store layouts were often designed only keeping the convenience of the store keeper (and not the consumer) in mind with a focus on business efficiency and space management. This led to a direct impact on sales and margins; resulting in business losses eventually leading to even store closures.
