Top mistakes to avoid in D2C ecommerce

Covid-19 has altered the way consumers purchase and interact with brands, a phenomenon witnessed across product and service categories. Ever since the pandemic hit, there has been an explosion in new users getting online to meet their shopping requirements.

This is evidenced in the fact that 97 percent of pin-codes in India ordered at least one item online during FY20, and close to 100 percent of pin codes have seen ecommerce adoption.

Amidst the pandemic, brands and startups accelerated the shift to Direct to Consumer (D2C) ecommerce to harness the opportunity of reaching consumers directly and faster, and cater to them more efficiently. It is the most low-barrier market entry strategy for startups.

Today, harnessing the D2C ecommerce potential is a business imperative across products and service categories. Companies can no longer afford to consider D2C ecommerce as a “nice to have” strategy. The paradigm shift to the digital economy, avoiding the D2C ecommerce platform will tantamount to self-sabotage in the long-term.

By 2034, India is predicted to surpass the United States to become the second largest ecommerce market globally. The growing internet and smartphone penetration, coupled with largest population in the younger age groups, will continue to be the key driving factors. The various policy reforms such as the new draft ecommerce policy, consumer protection (ecommerce) rule 2020, and the national retail policy are a testament of government’s intent to boost the ecommerce sector.

Additionally, initiatives such as Startup India, Digital India, Skill India, Innovation Fund, and BharatNet (to grow rural broadband penetration) have further propelled the growth of the Indian ecommerce industry.

While the statistics prove the D2C ecommerce boom, it has also left many organisations baffled by the way they needed to embrace and fast-track the digital transformation and ecommerce capabilities.

There are several success stories of brands and entrepreneurs who managed the transition from traditional to D2C ecommerce platforms successfully and ensured profitable growth.

In contradiction, we also witnessed brands and startups perish as a result of failing to adapt and understand the ‘new normal’ of online shopping and ecommerce platforms.

However, in a flurry of harnessing the D2C ecommerce opportunity, brands have ignored the fundamentals of engaging, enhancing, and enabling the consumer experience for a successful implementation of the D2C strategy.

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Here are few insights on the mistakes to avoid while building and scaling-up D2C ecommerce strategies:

Weak back-end logistic mechanism

Jumping on to the bandwagon of the D2C ecommerce platforms to drive sales, lead generation and conversions, without strengthening the back-end logistics to ensure timely and satisfactory order fulfillment is detrimental to long-term survival in the ecommerce space.

Today, consumers use myriad of channels to shop online. Building robust omni-channel capabilities to integrate supply sides, inventory management and developing a strong Customer Relationship Management (CRM) system should be the foremost priority.

Narrow approach of sales and lead-generation mindset

Earning brand loyalty in the online space requires consistent and concerted engagement, building trust, specifically since consumers have immediate access to plethora of competitor brands at one click.

Today, the biggest roadblock in growing a D2C brand is the short-sightedness of sales conversion, therefore, failing to allow the gestation period in creating brand awareness, building and rewarding loyal customers, investing in influencer marketing, and creating D2C specific engaging content.

For long-term business growth, startups must avoid being penny wise and pound foolish and focus on not just one-time customer acquisition but cultivating the relationship.

Ignoring security and data protection concerns

Online shopping and transactions require consumers to furnish personal data. Increasingly, information security is top-most criteria for consumers. While several emerging technologies and software solutions have enabled ecommerce businesses to safeguard customer information, most startups ignore this aspect and do not invest in bolstering the security mechanism for encrypting all data, protecting from external hacks and providing security updates.

Building a standalone D2C platforms

Diversifying channel strategy with a combination of own ecommerce website, marketplace, aggregators to be present across all consumer touch points is imperative. Relying only on a single own ecommerce website is not enough.

Further, ensuring an agile D2C model is critical to adapt and realign strategies depending on the maturity curve of your brand on the ecommerce platforms.

Failing to leverage data

One of the biggest benefit D2C ecommerce offers is direct access to consumer data in terms of demographics, trends, preferences, and purchase patterns. While there is growing acceptability of data being the new oil of the digital economy, very few startups are actually leveraging the data insights to re-assess and improve business and D2C marketing strategies.

Startups must learn to extract and harness the value of the data to upsell, cross sell, enhance customer service and retention, forecast demand and align supply chain.

Risking reputation damage

Any issues in order fulfillment is detrimental to the consumer experience impacting brand loyalty and trust in the long run. The consequences of reputation damage resulting from negative social media sentiment will be far reaching cutting across geographies, demographics and consumer segments.

Invest in robust and updated CRM mechanism for customer feedback, order status and acknowledgment, smooth return, and refund policy and process. Build a positive social media footprint to add credibility, user reviews, media, owned social media platforms.

Not strengthening the MarTech capabilities

Organisations need to look at building people capabilities to enable confluence of technology and marketing. Startups generally invest in on-boarding a technology expert, data-scientist to lead the organisation’s ecommerce initiatives.

It is critical to hire a domain ecommerce/ MarTech expert to help your organisation in strategy, planning, and execution of D2C ecommerce plans.