E-Commerce Trends E-Commerce Sellers’ D2C(Direct-To-Consumer) Utilization Strategy_Part 2

Successful Practices of E-commerce D2C For the last few years, the D2C model has risen as a strong strategy that allows brands to directly connect to customers by bypassing traditional retail channels. This model helps brands to effectively control prices and branding and also strengthen relationships with customers through personalized experience. Let’s look into successful practices of D2C brands in terms of D2C success strategies, such as building online channels, utilizing customer data, social media marketing, omni channel strategy, etc., which are mentioned in Part 1. Warby Parker: “Innovation” of Eyewear Market Brand Overview: Warby Parker innovated the traditional eyeglasses industry by selecting the D2C model. The brand, which was founded in 2021, omitted a retail process in the middle and provided high-quality and stylish eyeglasses to customers at prices lower than those provided by existing retailers. The current business is quite sizeable. According to the earnings release of 2Q 2024, the net revenue reached $188,200,000 with 2,390,000 active customers and $302 of Average Revenue Per Customer.

*Active Customer: A customer who has purchased a product at least once in the last 12 months.
*Average Revenue Per Customer (ARPC): An amount that divides accumulated net revenue for the previous 12 months by the number of current active customers.

Establishing a Powerful Online Channel: The biggest success factor of Warby Parker is a “Home Try-On” program that delivers 5 eyeglasses to customers and allows them to wear those before making a final purchase on the online website. It is not an exaggeration to say that this strategy completely broke down the barrier which made customers hesitate when buying glasses online. It is a business model that suits the term “Innovation.”

Data Usage for Personalization: Warby Parker recommends eyeglasses frames based on customer data of face shape, purchase history, search history, etc. The personalization improves shopping experience and impact on high conversion rate.

Attract and Retain Customers: Warby Parker gathered numerous customers in a short period of time by offering affordable and stylish options and try-on chances that can dramatically reduce purchase risks. Thanks to its original customer services and consistent quality of products, Warby Parker stably retains its customers so far.

Social Media and Influencer Marketing: Just as a brand started from an online channel, it communicates with customers through social media and operates a fan community while exhibiting content created by customers. Also, it has constantly raised brand awareness by cooperating with influencers who can relate to target customers.

Omni Channel Strategy: Warby Parker began online but it also runs brick-and-mortar stores, showcasing the real omni channel strategies. Customers of Warby Parker can shop online and wear five glasses at home before buying it and also can have diverse shopping experiences by shopping offline. Bonobos: A Successful Omni Channel Strategy of On/Offline Store – New Definition of Men’s Clothing Brand Overview: Bonobos, an online men’s clothing brand established in 2007, is famous for “a Better fit pants.” It garnered positive feedback by adopting the concept of “find a Better fit” to online sales and expanded the concept to overall men’s wear. In particular, the “Guideshop”, a combined model of on/offline stores, gained attention. Bonobos has changed hands a few times since its founding. Since its launch in 2007, it has witnessed continuous growth and was acquired by Walmart in June 2017. After that, it was bought again by WHP Global, the managing company of the apparel retailer Express, in April 2023. At the time of acquirement, the Bonobos’ sales of 2022 were valued at around $200 million and recorded double-digit sales growth.

Establishing a Powerful Online Channel: Bonobos originated as an online brand. Through a user-friendly website and purchase process, it offers customers a convenient shopping experience, particularly diverse product details and fit guides. Customers can check various options for each product online as if they are in a showcase store.

Data Usage for Personalization: Bonobos provides customized recommendations based on customers’ body shape, preferences, purchase history, etc. This data-based approach assists customers to find the best products for them and the accumulated data enables Bonobos to offers more sophisticated personalized products and services to customers.

Attract and Retain Customers: At the early stage, it attracted customers with outstanding fits and quality of products and has improved its products on the basis of customer data and feedback. It also has expanded categories of products to become a total men’s wear brand from a brand selling only pants. It has enlarged the scope of customized services for new and existing customers.

Social Media and Influencer Marketing: Bonobos shares new collections and styling tips on social media as other men’s clothing brands. It coordinates with influencers targeting men’s lifestyles. The distinguishing factor of the content of Bonobos on social media is that posts created by clothing design staff appear quite frequently on the social media platform. In many cases, other companies hire an agency to manage social media platforms, which results in each social media channel looking alike. However it is impressive that Bonobos proactively and directly communicates with customers.

Omni Channel Strategy: The biggest success factor for Bonobos is the Omni Channel Strategy.
It materializes the omni channel strategy through a unique offline experience of “Guideshop.” Customers can wear clothes in a place like a showroom and can order online, which incorporates physical space and digital experience successfully.

Global Brand’s Challenge to D2C The global sportswear brand Nike ambitiously began D2C strategies in 2017.
These strategies aim to lessen its dependency on its wholesale partners and boost profitability by focusing on direct sales through its own channels. Let’s look at the motivation for adopting D2C strategies, its success at the early stage, the recent challenges it has faced, and how it has mitigated those. Nike: Struggle for D2C – A New Challenge for a Sportswear Giant What Motivated the Introduction of the D2C Model
The motivation for altering its model to D2C is as below:

Increase Profit Margin: By bypassing traditional wholesale partners, Nike tried to secure higher profit margins in sales.
Strengthen Brand Control of Customer Experience: Through direct interaction with customers, Nike hopes to control better how it expresses the brand and how it handles customer experience.
Utilize data: By utilizing the data acquired through direct sales, it concentrated on more personalized marketing and products.


Early Success of D2C
Sales Growth: Nike observed a significant growth in D2C sales, particularly during the COVID-19 pandemic. The digital sales until 2021 accounted for more than 40% of the sales, demonstrating successful expansion.

Improved Customer Experience: With the D2C model, Nike was able to provide a more customized shopping experience through data-based personalized recommendations and customer participation.
Stronger Brand Control: Nike could hold better control over the brand image and interaction with customers, providing consistent brand experience.


How to Challenge and Adjust D2C
Despite the success of the early days of adoption, Nike faced several challenges and had to adjust a few strategies.

Stagnated Sales and Profits: Although the sales of the D2C model grew, Nike saw stalled or decreased sales, which meant that the business profits of the D2C model were not fully realized in the short term. ^[5][6]
Operational Difficulties: Due to issues of supply chain management and inventory, it struggled to efficiently meet customers’ demands. Also, high costs of transferring to the D2C model put pressure on profitability.
Market Trend: Factors like fierce e-commerce competition, changes in customer behavior, and particularly transfer to offline stores after the pandemic impacted Nike’s D2C performance. As Nike’s exposure in a traditional retail environment declined, products of competitors were more exposed in the market. ^[5][6]
Price Sensitivity: An increase in customers’ price sensitivity collided with Nike’s premium D2C price strategy. As consumers were getting more sensitive to price, Nike underwent hardships in sales growth.^[5]
Reduced Wholesale Network: Access to Nike products in offline stores was limited because of the reduced relationships with wholesale partners. Due to this, customers who wanted to shop offline couldn’t get Nike products, resulting in a decrease in sales profits. ^[5][6]


Recent Adjustment
To counter these challenges, Nike is implementing several strategic adjustments.

Re-Adjust Relationships with Retail Partners: Nike reassessed relationships with major wholesale partners and struck the balance between its efforts for D2C and strategic partnership, securing wide distribution of products.
Integrate Digital and Physical Environment: Nike integrated digital and physical retail experience to satisfy consumers’ needs and focus on realizing smooth omni channel.


Despite Nike’s early success of the transition to D2C, it showcased limitations of growth due to some challenges such as worsened price competition, imbalance between distribution channels, etc. Unlike Warby Parker and Bonobos’s customized strategies centering around customer experience which led them to stand out in the market, Nike experienced difficulties in integrating online and offline due to a lack of connection with existing offline stores.

These examples indicate that providing customized services, data-based decision-making, and building a flexible organizational culture are essential to successfully carry out the D2C model.

The D2C model is a new business paradigm that redefines the relationship between brands and consumers, going beyond a simple change in sales channels. Consumers these days don’t stop at simply buying products. They want to express themselves by communicating with brands and sharing their values. The D2C model plays a key role in encouraging consumers’ participation and establishing close relationships to increase consumers’ loyalty. Through this, companies can aim for consistent growth. To make the D2C model succeed, it would be indispensable to forge a story of a brand, offer a data-based customized experience, implement omni channel strategies, conduct effective marketing campaigns, etc. Brands that master the D2C model could have a competitive edge in the intensely competitive e-commerce market.

# References [1] Warby Parker https://www.warbyparker.com
[2] BONOBOS https://bonobos.com
[3] Warby Parker Announces Second Quarter 2024 Results, Business Wire
https://www.businesswire.com/news/home/20240808783097/en/Warby-Parker-Announces-Second-Quarter-2024-Results
[4] Walmart is selling Bonobos at a fraction of what it paid for the menswear brand, yahoo tech
https://www.yahoo.com/tech/walmart-selling-bonobos-fraction-paid-095000399.html
[5] Why Nike’s DTC pivot didn’t pan out, Modern Retail
https://www.modernretail.co/operations/why-nikes-dtc-pivot-didnt-pan-out/
[6] Nike addresses flaws in DTC strategy as Q3 revenues come in flat, Retail Dive
https://www.retaildive.com/news/nike-pivots-dtc-wholesale-strategy-flat-sales-earnings/711102/

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