The new DTC opportunity for CPG companies

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The new DTC opportunity for CPG companies
Along with the many unprecedented changes
brought upon by COVID, we are seeing a shift
in how companies operate and deliver their
products to their customers. There have been
6,378 retail store closures thus far and
Coresight estimates that this number will
continue to rise to 12,000 by the year endwith
a lot of that sales volume migrating
online. Brands that traditionally only sold
through marketplaces and/or retail stores are
finding new opportunity in DTC eCommerceand
those that have always gone DTC are finding
increased demand on their existing DTC
channels. Currently, less than 5 of CPG sales
are represented in the eCommerce space according
to Shopify. On the flip side, DTC movement
accounts for 40 of the sales growth in
the sector. Looking at these numbers, DTC
eCommerce seems like the next frontier for the
CPG companies to master. In fact, in the last 3
years, the eCommerce growth for many
categories has been exponential compared to
other channels. See the chart below. Even before
the effects of the pandemic, CPG companies were
beginning to explore DTC as a way to form closer
customer connections even while leveraging the
likes of Amazon and retail stores as major
channels to increase volume.
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• We believe that the COVID-19-related increase in
  this migration to DTC is becoming table stakes
  for CPG companies that want to grow and stay
  relevant in the new normal. Those companies
  that take the leap to see benefits including
• The ability to collect consumer data Direct
  customer connections allow the collection of
  more, better customer data that then facilitates
  personalization andas a resultcustomer loyalty.
• More effective marketing campaigns With both
  marketing and selling on the same eCommerce
  platform, its easier for businesses to integrate
  their digital marketing strategy.
• More control over brand image and reputation By
  being DTC, businesses do not have to rely on
  retailers or other eCommerce channels to properly
  represent their brand.
• Speed and agility Since going DTC gives the
  brand complete control over both infrastructure
  and everything that lives on it, changes
  in anything from online assortment to user
  order delivery experience to tech stack
  components can be made more quickly and
  efficiently than they ever could with
  retail/eCommerce selling partners.
• One of our clients, Spiceology Inc located in
  Spokane, Washington, recently shifted their
  marketing to match consumer needs in the time of
  a pandemic. Since many restaurants (Spiceology
  Incs main B2B market) were closed due to
  COVID19, they had to focus on a new customer base
  and new channel (DTC)

to drive sales.
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In an interview with Forbes, CEO of Spiceology,
Chip Oversteet said, Messaging to consumers
during the quarantine is challenging, but imagine
messaging to chefs, who are shuttering their
restaurants in record numbers. Practically
overnight, chefs across the country were just
trying to avoid bankruptcy. Theres no way to
know the situation any individual chef is
in, and therefore no way to reach out
appropriately to offer them fresher spices,
a better organized kitchen, or whatever
your value proposition might be. So, we
decided to completely shut down our
outbound marketing and sales efforts focused
on food service and respond only to inbound
requests. At the same time, we had to turn 180
degrees and put all our energy into the consumer
segment. We broke the golden rule of marketing
only change one variable at a time. The company
took many measures to revamp and re-direct their
efforts to everyday customers. Some of the
changes the company made included adding
cooking tutorials, recipes, product reviews,
smaller container sizes with new packing and
even changing the look of their website.
And, of course, implementing the FenixCommerce
Intelligent Delivery Platform to provide
Estimated Delivery Dates on product, cart, and
checkout pages.
Forbes reported that after these efforts, 80 of
the companys sales are now due to consumers with
10 being from wholesales and the other 10 from
chefs. Spiceology took charge and explored new
markets and the hard work (and risk) paid off! We
at FenixCommerce couldnt be more proud to
work with Spiceologyand dozens of other
DTC brandsto help them adapt to the challenges
and opportunities of the pandemic-related new
normal. If you are a DTC brand looking to
leverage the power of accurate estimated
delivery dates to increase
conversion and improve customer order delivery
experience, get in touch today to see how we can
help!