CPG brands are focusing on direct-to-consumer (DTC) channels as they build out more robust digital services. When CGT and Wipro polled CPG executives in North America in July 2013, they found that 39% believed direct-to-consumer channels were driving the most digital revenues for their companies.
But whether consumers buy directly from brands or from online retailers is often a question of loyalty vs. logistics. Nearly three-quarters of digital buyers that responded to a July 2013 etailing solutions survey said they would shop on a brand site over an online retailer like Amazon because it offers exclusive products. About two-thirds also said they’d shop brand sites for both refill programs and a better assortment of brand-specific products.
At the same time, about three in five of those surveyed said online retailers are more likely to offer free delivery, better credit card security and a better overall shopping experience. This suggests that consumers impartial to a particular brand are likely to go straight to an online warehouse, reiterating the importance of loyalty marketing among CPG brands.
DTC sales followed a similar trend in the travel industry, which is typically a leader in ecommerce adoption and consumer behaviors. Travel brands, particularly hotels, have dedicated significant resources to selling DTC in the past five years not only because it results in better profit margins, but also because they can nurture loyalty by maintaining consistent connections to their customers throughout the path to purchase.
Indeed, consumers who book directly with hotels are more likely to be loyal brand customers. As an example, 77% of hotel room nights booked on brand.com travel sites between January and May 2013 came from loyalty program members at those hotels, according to TravelClick, a hospitality technology solutions provider. Conversely, 85% of all room nights booked through online travel agencies came from travelers who were not part of the loyalty program for the hotel at which they stayed.