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Why are businesses converting to the direct-to-consumer model?

By 18/11/2020No Comments

Are direct-to-consumer methods shaping the way packaging companies think? 

Due to the recent pandemic, many businesses are beginning to follow the direct-to-consumer model. Primarily within the food and beverage industry, companies are selling direct to consumers. 

As buyers shift more online and try to avoid trips to the supermarket during the current crisis, large companies such as PepsiCo, Coca-Cola and even Heinz Kraft are growing direct-to-consumer sales.

We know that the likes of UberEats, Deliveroo and Just Eat already follow this model and deliver food on a MASSIVE scale. But, food wholesalers are now realising, and are beginning to shift their focus to the consumer’s needs. 

Clearly, the pandemic is accelerating the direct-to-consumer (DTC) shift, but perhaps this a change for the better, even after the pandemic settles down. 

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Why are businesses focusing on direct-to-consumer rather than B2B?

As people across the UK listen to the advice of staying indoors and only venturing outside if necessary, restaurants and pubs who usually would be catering to large crowds, have unfortunately had to close their doors. As a result, this has left the wholesalers who supply food to them in a difficult situation. Everyone wants to keep their business active. Yet their source of income has stopped. 

However, even though visits to restaurants have grounded to a halt, now more than ever, the demand for food across the country is at an all-time high. Supermarket delivery slots are usually booked up. Shelves may be cleaned out. Plus, some items in stores are unavailable. The niche for wholesalers has become apparent. 

Examples of businesses who follow the direct-to-consumer model

Several UK wholesalers are pivoting to selling direct-to-consumer, opening up consumer-facing online shops and Facebook pages and offering delivery to customers’ homes.

Gibu Thomas – PepsiCo’s Senior Vice president and Head Of E-commerce – said PepsiCo is investing in DTC “in these uncertain times”, as a result of customer habits going online. Many users are using e-commerce channels to purchase food and beverage products, so the shopping experience needs to reflect this. 

Today, companies need to master e-commerce, logistics, and returning goods while providing quick, contactless delivery. If they fail to do so, companies risk damaging their reputation. But, if a company does it well, and they can build brands, grow margins and sell on a site filled with their products.

One example of a UK based company which is developing its DTC model is Fairfax Meadow. The meat wholesaler has set up a separate microsite, dedicated to selling to customers. The website is tailored to a seamless user experience with a straightforward and easy to navigate interface. Furthermore, with the introduction of additional features, including Facebook Messenger online chat, customers can easily find relevant information. 

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A direct-to-consumer example you never thought would happen…

Furthermore, food retailer Morrisons has recently teamed up with Amazon to ensure customers can do their shopping through the internet giant’s website (Source). The article states, “customers can now shop from the ‘Morrisons on Amazon’ store with thousands of grocery products to choose from”. Again, another example of focusing on direct selling to the people who matter the most. 

However, delivery isn’t always as easy with all products. Imagine ice cream. Delivery doesn’t seem to go hand in hand with this melting substance. But that hasn’t stopped Ben & Jerry’s. The ice cream giant is letting customers scoop up ice cream pots and other products (apparel, sundae bowls and ice cream scoops). A perfect example of meeting the demands and making the necessary move from physical to digital. 

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What does DTC mean for the future of packaging design? 

One of the most significant differences between a regular shopping experience and buying from a wholesaler is the packaging. 

Think about it. If you are a consumer wanting to purchase from a wholesaler, you wouldn’t be pleased if a large pallet landed at your door. Shops and warehouses would happily accept pallets and bulky packaging. However, as we have discussed before, customer-facing packaging is a whole new ball game. 

High quality and attractive packaging is expected these days, with consumers having high expectations from standards set by large brands such as Apple. If you deliver flimsy or impractical parcels, customers will be deterred from repeat purchases.

Therefore, insufficient packaging can be costly for manufacturers. If a product is damaged, this could result in you refunding the consumer or discounting the product to sell it. But, fundamentally, damaged packaging often deters customers from buying from you again, leading to a loss in sales. Your Packaging is your silent salesman; therefore, you need to value it. 

So, what are the next steps?

As a consequence of the user buying directly from a business – there is a direct connection to you if the packaging arrives unprofessionally. Wholesalers need to find the right balance between attractiveness and practicality. E-commerce packaging is becoming a big concern for businesses. But this shift to direct-to-consumer has only enhanced the importance of e-commerce packaging. 

Overall, e-commerce packaging designs matters. From start to finish, brands must create a positive experience to retain customer loyalty. Packaging design is the final product the consumer receives and therefore caps off their encounter with your brand. Consequently, you need to carefully consider your packaging design needs.