Digitally-native D2C startups have been disrupting markets for years now, cutting out the middleman, establishing loyal customer bases and raking in the profits. Established industry players have taken notice, with companies like Disney, Verizon and Microsoft all launching their very own D2C ventures in recent years.
The shift in focus has been especially notable in the retail industry, which was hit hard by the Corona pandemic. The 2020 shut-downs spurred a surge in digital transformations with businesses leveraging the D2C strategy in new and innovative ways.
Here’s a list of companies that have successfully adapted the D2C model to accelerate growth and meet new customer demands.
10 D2C shift examples
1. Nestle goes D2C with “Freshly” and “Mindful Chef”.
Nestlé has been dabbling with D2C for years now, with notable ventures like Nespresso and Tails.com already in their portfolio. Their new area of interest? D2C meal kit boxes. The move isn’t surprising considering that the global meal kit delivery market exploded during the pandemic and is expected to reach $19,92 B by 2027.
Mindful Chef in the U.K. and Freshly in the U.S. will be added to the Nestlé D2C family, providing valuable industry know-how and benefiting from the corporation’s vast expertise and resources.
The deals will undoubtedly provide the opportunity for Nestlé to evaluate and test how the market works and gain access to a booming industry.
“This is an ideal partnership for both parties as Nestlé continues to transform its portfolio and Mindful Chef accelerates its growth plans.” - Nestlé UK & Ireland CEO, Stefano Agostini
2. Nike aims for one-third total revenue from D2C.
Nike is no stranger to the D2C model and has invested heavily in enhancing its customer experience. Online they’ve made improvements to Nike.com as well as the NikePlus Membership program, which gives users early access to exclusive products and offers free 30-day returns.
Nike’s global D2C strategy has been so successful that in 2019 they stopped working with Amazon. Echoing that move, they dropped their accounts with City Blue, VIM, EbLens, Belk, Dillard’s, Fred Meyer, Bob’s Stores, Boscov’s and Zappos in 2020.
According to eMarketer, D2C sales accounted for 33,1% of Nike’s revenues in 2020, which reflects the company’s goal to get a third of its total revenue from D2C sources.
“I truly believe that NIKE is just scratching the surface of what's possible. With our breadth and depth, no one has the advantage in this space that NIKE has to directly connect with consumers.” - Nike CEO John Donahoe
3. Sonos shifted to D2C in just one quarter.
In March of 2020, Sonos was in trouble. Due to the Covid-19 pandemic, their partner retailers had shut down, and Amazon was prioritising more essential products. The company ended up losing 90% in sales across all its outlets.
Luckily, Sonos had spent the last two years laying the groundwork for a digital transformation with Salesforce Customer 360. Using it as a base, the company developed a brand-new customer experience within just a few months. Purchases from the new D2C webshop included perks like curated Sonos radio content and a six-month Disney+ subscription with certain speakers.
Sales soared the last quarter or 2020, with a 67% YoY increase in D2C business.
“Basically everything that was going to happen in five years happened in about three months for us. What we saw people's willingness to shop online for pretty experiential products, which I would consider Sonos.” - Sonos VP and General Manager, Zach Kramer
4. Kelloggs is focusing on customer experiences.
The company has several test-and-learn initiatives under its belt like Bear Naked, HI! Happy Inside and Joyböl. Each venture will bring with it a plethora of customer data that can help Kelloggs connect with its customers and build even better products in the future.
"For us, D2C is a place to launch and test innovation and to get early reads on the ways in which we can get shopper and consumer insights quicker. We think about it more as a new capability area for building our brand and less as a revenue opportunity.” - Kelloggs Chief Global Digital customer experience officer Julie Bowerman
5. L’Oreal boosts D2C with L’Oreal Tech Hub.
Since its launch in 2012, L’Oréal’s tech incubator lab has created quite a few D2C initiatives, including Color & Co launched in 2019, and Perso which will be available in 2021. Both ventures have been highly anticipated and are sure to provide L’Oreal with valuable customer insights.
Although the tech hub’s initial goal was to explore new technologies like AR and wearables, its focus has changed through the years. Now their goal is to access customer insights gained through interactions with personalised make-up and skin-care products.
"We're shifting from being opportunistic [about technology trends] to understanding the push and pull between user-centrality and technology. Everything we do now is about DTC."
L'Oreal Global VP, Guive Balooch
6. Coca-Cola brings back its D2C “Insider’s Club”.
One of Coca-Cola’s more interesting D2C initiatives is the Insider’s Club, which works like a wine club for non-alcoholic drinks. For a fee, subscribers get a monthly delivery of never-before-seen beverages plus some additional surprise goodies to make the experience more thrilling.
The concept was so popular that it had sold out all 1000 memberships within three hours, and there was a waitlist of 8000 people two days after its launch.
Although the project was cancelled due to the pandemic, Coca-Cola has now brought it back, and it’s better than ever. New boxes are rumoured to include special virtual experiences like working out with an NFL player or cooking with a celebrity chef.
"We're absolutely thrilled to see how quickly the spots went, which shows just how passionate consumers are about our brands and innovations. It proves there is an opportunity to scale the concept and allow more people to participate." - Coca Cola, Digital Experiences Manager, Alex Powell
7. Levi’s boosts D2C with new apps, services and company values.
Levi’s has been working on its D2C strategy for over five years now, testing several initiatives to learn more about what customers crave. One such venture is the Levi’s Tailor Shop, where shoppers can buy, personalise and repurpose anything from t-shirts to jeans to tote bags.
At the end of 2020, they launched Levi’s SecondHand, a buy-back program that enables customers to buy or trade-in used jeans and jackets in return for gift cards. This initiative is sure to attract many environmentally-minded millennials and Gen Zers while helping Levi’s offset its carbon footprint.
The brand is also piloting a customer loyalty app called Red Tab Member Program. The program offers free shipping with no minimum spend, personalised item suggestions, access to limited collaborations and curated content.
8. Pepsico launched PantryShop.com and Snacks.com.
With consumers increasingly turning to online channels to make their purchases in 2020, Pepsico launched two new D2C initiatives, PantryShop.com and Snacks.com.
PantryShop.com enables users to purchase bundles of Pepsico products based on curated categories like Rise & Shine, Protein, Snacking, Workout & Recovery and Family Favorites. Different bundles are priced at $29,95 or $49,95 and contain products like SunChips, Quaker Oats, Gatorade and Tropicana. Free shipping is standard, and purchases are mobile optimised to provide a seamless and convenient customer experience. Snacks.com is a similar concept, offering over 100 Frito-Lay products including chips, crackers, nuts and dips.
Both ventures were taken from concept to execution is less than 30 days by leveraging Pepsico assets like know-how, inventory, customer insights and technology. Now that’s how you turn challenges into opportunities!
9. Kraft Heinz launched “Heinz to Home” in three weeks.
In April 2020, Kraft Heinz launched Heinz to Home in the UK to cater to customers that preferred to shop online due to the pandemic. The initiative started by delivering basic products like baked beans and tomato soup, but quickly expanded based on customer demand. Newer bundles included meals and snacks for kids, and in June, a special offering enabled families to display their father’s name on the package (for Father’s Day).
It took three weeks to launch the service, and the key learnings were quickly leveraged to start the initiative in new countries.
“We saw this was very interesting. Australia went on and copied the platform. In two weeks, they had their own D2C platform. We are doing the same in Italy now. That is the scale you can get by leveraging best practices.” - Kraft, International Zone President, Rafa Oliveira
10. Gillette is taking back its market share.
In 2010, Gillette enjoyed a 70% share of the U.S. razor market, since then, the arrival of D2C startups like Harry’s and Dollar Shave Club has caused those shares to plummet.
To take back some of its market share, Gillette has started its own D2C subscription service complete with free shipping and loyalty rewards (every fourth order is free!). Starter kits include blades of your choosing, a handle and a travel case and you can customize your delivery schedule. The website contains exclusive content on shaving, styling, expert advice and even “manscaping”.
Why should you invest in D2C?
Making the D2C model part of your overall strategy can give you the flexibility you need to pivot fast if required.
With over 55% of shoppers showing a preference for buying directly from the brand rather than a generic middleman, going D2C is a no-brainer. Even when ventures fail, the learnings gathered are often invaluable for future-proofing and developing new products and services.
Bottom line: D2C gives corporations greater control over customer data, experiences and messaging, resulting in greater control over the outcomes.
Would you like to explore D2C options for your company at low risk? We can help you validate it with real customers before investing heavily.
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