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13. december 2021
5 Minutes
Wolfgang Posch, Arineo Kollege aus dem SAP Commerce Bereich.

A Passion for D2C Commerce

The hype surrounding the direct-to-consumer (D2C) business model is not only shaking up the consumer goods segment. Several B2B businesses have also already been caught up in this. And when you listen to our colleague Wolfgang Posch talk about his passion for D2C business models and successful customer journeys, you can't help but want to know more.

D2C commerce inspires you. Why is this?

Customer experience is right up my alley. I am fascinated by the willingness and efforts of companies to provide their customers with the best possible experience when interacting with their brands, products, and services. Happy customers talk about their experiences, advocate for the brand, and remain loyal to it. What I particularly like about it is that at the end of the day, it’s always about people, and not so much about sales or margins. The person is at the center. No marketing budget in this world can outweigh a satisfied customer.

This basically applies to all business models – whether B2B, B2C, or B2B2C. In D2C, a special form of B2C business, it is also necessary for manufacturers themselves to address the needs and positive interactions with end consumers. Up to now – and this will continue to be the case in many places – wholesalers and retailers have been the link between manufacturers and end consumers. For manufacturers, the D2C business is all about finding out whether and how their end customers benefit from their products. Data streams that capture these parameters have rarely, if ever, been established, and pre-purchase customer behavior has visibly shifted to the internet.

This question fascinates me: how can I use online technologies in such a way that they inspire people, make them happy, and offer them real added value? Life is too short for bad encounters. Positive interactions, whether between two people or a person and a company, move something in us. And if the customer journey is good, sales and margins follow automatically.

How can I succeed with a D2C business model?

Well, that is indeed the $1 million question. And unfortunately, there is no universally valid answer. It always depends on the company and its environment. What goods does it sell? Which customers should be reached? In which market does it operate? In general, however, a few basic facts can be stated:

  • Direct-to-consumer is a massive upheaval for many businesses. It requires new processes – and most still succeed. Most importantly, to strive for new goals, you need to let go of old assumptions and processes – and that is more difficult. That’s why one thing has proven particularly valuable: starting with a limited pilot project in a defined market in order to gain experience there and test the concept. Keyword: low TCOs (total cost of ownership). In addition to the technological aspects, there are also many business issues to consider: do I have all the skills in-house? Do I need to (re)train? Outsource? Is my current production capacity enough? These challenges often crystallize over the course of a project – which is why I’m a fan of iterative and agile approaches.
  • The more data there is and the better it is analyzed and understood, the better the customer journey will be. Specifically, this means that, if possible, data needs to be collected at all touchpoints to truly understand the customers’ needs. And not only for products, but also, for example, in terms of the choice of payment method, product recommendations, or individual configuration options. This is where artificial intelligence can help you find the needle in the haystack. There are already some very user-friendly solutions on the market for this, which can even be used without extensive knowledge. That sounds expensive. But in the end, it’s not only the customers who benefit but also the company: fewer returns, higher purchase frequency – it pays off!
  • When choosing a solution, particular attention should be paid to scalability, availability, and the shortest possible implementation time. It may well be that the pilot project is successful and wants to take root. Growth must then be secured. It is also particularly important that the tool integrates seamlessly into the existing IT landscape – otherwise, comprehensive data analysis will not be possible. On the other hand, the different solutions on the market don’t differ much in terms of usability nowadays, so I would give this aspect a bit less significance. In the end, users should be trained anyway, so that they can use the full scope of the solution.

Could you share some best practices with us?

Sure, with pleasure! D2C commerce offers an excellent ‘playground’ for just trying new things. Innovation often wins! For example, you can still score well in contextual commerce today – that is, offering a purchase option at every touchpoint. Social media is particularly well suited for this. Conversational commerce also has great potential: offering an extremely low-threshold purchasing process with Messenger services or WhatsApp integration is worthwhile for many a business.

In general, it is advisable to focus more on the individual target groups within one’s own customer landscape – to bring them in their own channels and interact with them. Technically, this means having a central backend and multiple, independent frontends for each target group. One example may be an outdoor online store that wants to include Nordic walking, as well as mountaineering and extreme climbing. However, each target group has very different needs and demands on their equipment. Keywords: menus and product filters. This has to be mapped in a complicated way in the backend product configuration to meet the clients’ needs on the front end. It is simpler, for example, to serve the extreme climbers with their own portal, with the appropriate product selection at the storefront, and use influencers to meet them there on their customer journey. Silos to the outside, full integration on the inside, as it were.

Companies that want to examine and perhaps make the move to D2C soon will find a market that is still relatively free: there are still only a few well-known consumer goods manufacturers that have already penetrated the market. There are now very good solutions that can be perfectly integrated into the existing IT infrastructure of established companies.

Thank you for the interview, Wolfgang.