The benefits offered by the direct-to-consumer (DTC) model make it very attractive and lucrative for both ‘well-established’ as well as upcoming retailers operating in the Asia-Pacific (APAC) region, especially amidst the current COVID-19 scenario, says GlobalData, a leading data and analytics company.
Vijay Bhupathiraju, Retail Analyst at GlobalData, says: “Retailers in the APAC region that have traditionally sold their merchandise through other outlets such as department stores, partner retailers or marketplaces are now switching their focus to the DTC model. The goal of this shift is to improve their product margins and have greater control over their brand image and consumers’ shopping experience.”
The early successes of retailers such as Indian mattress retailer SleepyCat, Singapore’s gamers chairs brand Secret Labs, Thailand’s online fast fashion women’s wear brand Pomelo Fashion have demonstrated the trend in the region.
The COVID-19 induced nationwide lockdowns have forced consumers to alter their shopping habits due to longer periods at home. With physical stores being closed, customers are focusing more on the online channels, which have been growing in recent years due to the younger tech-savvy population who are becoming the core consumers.
Mr Bhupathiraju continues: “Consumers are apprehensive about products in a traditional supply chain model that pass through several touch points increasing the risk of contracting the virus. This could be greatly reduced in a DTC model. The latest spike in the number of infections in countries such as India and Bangladesh will further drive the demand for DTC offerings.”
DTC players rely solely on company operated stores, websites and mobile apps, thereby, completely avoid any third party in their value chain. This enables them to have a greater control over their products and services.
Bhupathiraju concludes: “A pivot to data-driven DTC relationships can empower small independent brands in the APAC region to seize the ‘new normal’ as an opportunity to capitalize on these evolving consumer habits.
“DTC offers brands an opportunity to negate the intermediary retailer, thereby cutting costs and diverting valuable finance towards innovation. In addition, it is vital that brands use DTC not just as an alternative means of product distribution, but as a unique opportunity to understand and personalize the customer experience, at scale.”