Designing The World Of Direct-To-Consumer Retail
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The rise of e-commerce has done more than bring convenience to online shoppers. It has also opened the door for brands to take control of the entire consumer experience, from product design and marketing to order placement and delivery.
The shift has liberated companies from expensive middlemen and has given them more autonomy over crafting their overall brand experience.
Far from being an entirely internet and mobile-driven business model, brick-and-mortar spaces are being repurposed to take advantage of direct-to-consumer as a way to engage with shoppers.
Direct-to-consumer retail has allowed smaller companies in cost-prohibitive markets to thrive. In Boston, Backlash Beer Co. opened its first brick-and-mortar brewery last year. The five-year-old brand had previously been contract-brewed at other breweries in Massachusetts. Selling through wholesale and distribution can be costly, and working with a distributor makes it difficult for retailers to build a brand directly with their audience.
Backlash’s brewery, which will occupy a former piano factory in the Roxbury section of Boston, has a dedicated 15-barrel manufacturing space and a taproom where customers can sample and purchase beer on-site. Phase Zero Design served as the architect for the brewery.
The taproom has an added benefit: product testing and expansion. Through a members-only program, fans of Backlash can sample new brews like barrel-aged and sour beers. Because the company is in control of its own production, distribution and marketing, it can grow its capabilities while staying flexible enough to adapt to consumer trends.
Adjacent to the brewhouse, and eventually, connected to the regular taproom, a small retail space offers floor-to-ceiling windows that overlook the production floor, giving fans an bird's-eye view into the brewing process.
Some fast-casual dining has been an early pioneer in adopting direct-to-consumer trends. Panera Bread piloted its Rapid Pick-Up system in 2014, allowing orders to be placed up to five days in advance and picked up at a predetermined time. Customers do not have to wait in line, but instead can pick up their meals from a designated area in the restaurant.
Coffee shop chains like Starbucks and Dunkin’ Donuts offer similar, app-based ordering systems and separate areas where customers can pick up orders. Retailers do not have to rely on an external distributor and can instead offer customers a seamless transition across online and physical experiences.
Direct-to-consumer has also led to retailers rightsizing their stores to prioritize experience over inventory. Brands like Bonobos have popularized the showroom model, smaller brick-and-mortar locations where customers try on clothing before making purchases online.
Indochino, a bespoke maker of men’s suits, operates 15 showrooms in America, with the function of taking measurements and designing a customer's suit from scratch. A few weeks later, the customer returns to try it on and make any last-minute alterations.
The strategy is not just beneficial for smaller companies looking to build customer relations while operating with less overhead. Legacy and well-known brands are investing heavily in direct-to-consumer sales and marketing channels. Nike predicts that it will grow in DTC sales from $6.6B in 2015 to $16B by 2020.
Companies once considered the middlemen for retailers have also embraced DTC to better reach their consumer base. Amazon’s acquisition of Whole Foods earlier this summer gives the e-commerce giant direct access to the grocer’s 450-store network. The company has already expanded into the grocery delivery service with Amazon Fresh.
Whole Foods' pre-existing store backrooms and cold storage gives Amazon immediate infrastructure to expand its own delivery business while offering exclusive deals for its Amazon Prime members.
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