D2C trend is all set to take the centre stage in Europe

“87% of retail brands in the U.K. and the U.S. have said they plan to launch a D2C channel at some point in the future, while 23% said they will do so within the next 12 months, according to research by Brightpearl.”

One of the worst affected regions due to the COVID-19 pandemic is the European Union. 

The pandemic has pushed brands to reassess their routes to customers. Direct to Consumer is one such route. It blends smart logistics and technology to cater to the ever-growing demands of the customer. 

What is a D2C brand? 

D2C Brands are companies that produce and sell their products in direct digital marketing channels as opposed to selling through an online marketplace or retailer. They seek to engage with their loyal customers directly through their website and social media.

Some Example of D2C brands in Europe are here:

Different terms used for D2C Brands

• Direct Brands
• Digital Native brands
• Vertical Brands
• Micro Brands
• E-commerce or influencer brands

Sectors in Europe that are actively engaged in D2C:

• Hobbies/Lifestyle
• Apparel
• Fashion
• Food
• FMCG
• Healthcare
• Sports and Fitness
• Pet Products 

D2C brands have been off to a flying start in countries like the US.  But, how is it catching up in Europe? Let’s dive right in!

What are the recent D2C trends in the European Union?

D2C Trends In Europe: “Viewed from a pan-European perspective we see that brands selling direct and marketplaces factor more highly in the consumer’s expectations and experience than do traditional retailers. While retailers remain highly significant in their own markets, we see that pan-European brands rival the in-country giants for impact and performance – we see this trend continuing.” – Ian Jindal, Editor-in-Chief Internet Retailing, European E-commerce Report, 2018. 

For the last three years, D2C brands have been mushrooming in European countries. 

Trend #1: Rising D2C brands in Europe due to more store closures

Even before the COVID-19 pandemic started, there were rising store closures across Europe. The new wave of digitally-native E-commerce companies was making life tough for big label stores.  There was a drastic fall in consumers visiting the top commercial streets in major European cities. 

The total store closures in the UK alone was 2692 and store openings were just 1569 according to Pwc UK. The consumers’ evolving preferences for in-home leisure like eating, drinking and entertainment at home spurred this growth. 

As small and mid-scale enterprises dominate the UK, the transition towards D2C business model has been quick. 

Trend #2: D2C brands partnering with influencers 

D2C brands are relying heavily on social media to increase adoption. They are attempting to build a long-lasting and profitable relationship with consumers through social influencers. 

A UK-based firm named Gymshark used social media influencers with a strong brand positioning.  The firm, with a team of brand ambassador athletes, reached customers across Europe without the need for any wholesale distribution channels. 

Some D2C brands only rely on word of mouth. A spectacle brand named Cubitts has completely avoided influencer marketing and relies only on word of mouth. 

Trend #3: D2C Brands building communities 

Social media is the biggest asset for D2C brands to acquire new customers. A savvy social media presence that can build emotional relationships with customers can go a long way in competing against legacy players in the industry. It might sound simple, but it is a challenging task to create such a presence. 

How to Overcome the Supply Chain Challenges in Direct-to-Consumer Selling

Customers want to know what is happening behind the curtains. Hence, D2C brands are building online and offline communities to reach new audiences. 

A London streetwear brand named Alma de Ace is creating compelling social content through interviews with models and videos demonstrating production in factories.

A Sleepwear brand named Despond and Demsey organizes Sunday souk events to enable customers to participate in life-drawing, print-making etc. Beyond engaging existing customers it addresses customers who can’t afford their products. 

Trend #4: The proportion of D2C Customers trying new products are higher compared to a regular online population 

The adoption of D2C by European countries is quicker and higher compared to the US. D2C customers in the UK always set themselves apart from an average online UK shopper. 

78% of heavy D2C purchasers are  early adopters of new products compared to 27% of the UK online population. – IAB UK Report, Born Online, 2019. 

Not just that, D2C customers turn out to be great brand advocates. 

74% of heavy D2C purchasers influence others to buy new offerings compared to 29% of the UK online population. IAB UK Report, Born Online, 2019. 

Trend #5: Increasing digital transformation of D2C brands 

Top brands in various industries have started to leverage Artificial Intelligence (AI) and data science to target new demographics. Levi Strauss & Co in Europe has launched an AI bot that works as a virtual stylist to help shoppers find jeans that suits them. Their digital transformation has yielded quick results in reaching Gen Z customers. 

Levis sales fell across entire Europe as the lockdown began. Though their entire European revenues dropped 68%, their online D2C sales grew by 35%. 

H & M, beyond just leveraging AI, has opened 130 new digitally-focused omni-channel stores. Also, they have closed 170 old stores. The use of D2C has enabled them to increase their online sales by 36%. 

Why Retail Brands are Gunning for Direct-to-Consumer Sales During COVID-19

The vast potential of D2C brands are yet to be discovered 

The true potential of a D2C business model hasn’t yet been explored in Europe. Many e-commerce experts are talking about the lockdown loyalty effect. Consumers will remember brands that have helped them go through these dark days. Hence, brands that use the D2C model with limited investments wisely can engage their audience effectively in the future. 

In Europe, delivery cost and time are the major factors that determine D2C success. Logistics delivery optimization software from Locus can add immense value to brands stepping into the D2C world. Even existing D2C brands can attain a competitive advantage in the market through reduced delivery costs and higher on-time deliveries. 

Try it now!

References of D2C Trends In Europe Blog:

1. https://www.iabuk.com/news-article/new-iab-uk-report-identifies-50-uks-leading-direct-consumer-brands
2. https://www.salsify.com/uk-blog/5-european-brands-owning-d2c 
3. https://www.voguebusiness.com/companies/british-direct-to-consumer-brands-fashion-bfc 
4. https://www.wundermanthompsoncommerce.com/nl/wat-wij-denken/download/?file_url=/media/filer_public/63/75/63757c17-f456-40bd-b971-14057e94a40d/wtc-paper-marketplaces-2020-final.pdf 
5. https://www.e-marketing.fr/Thematique/retail-1095/Breves/Tribune-mort-modele-Boucicaut-341400.htm 
6. https://www.emarketer.com/content/germany-ecommerce-2019 
7. https://uk.liveareacx.com/blog/direct-to-consumer-brands-unstoppable-startups/ 
8. https://pattern.com/mena/blog/should-you-sell-via-d2c-or-marketplaces-in-europe/ 
9. https://www.retail-week.com/tech/amazon-versus-the-eu-what-are-the-implications-for-retail/7036206.article 
10. https://www.retailinsiders.nl/docs/77f3cdc4-38b2-4dd2-8938-cb4293cc8c19.pdf 
11. https://www.pwc.co.uk/press-room/press-releases/British-high-streets-weather-the-most-testing-retail-and-leisure-climate-in-five-years.html
12. https://sctimes.io/news/article/7/6568 
13. https://www.forbes.com/sites/callyrussell/2019/08/29/could-2020-be-a-graveyard-for-dtc-brands/?sh=3d8aefdf6dd0 
14. https://www.ecdc.europa.eu/en/geographical-distribution-2019-ncov-cases#:~:text=Europe%3A%20405%20044%20deaths%3B%20the,and%20Russia%20(39%20527). 

Related Blogs of D2C Model:

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