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Yotpo, the provider of integrated commerce marketing solutions, recently released The State of D2C Marketing in 2019, a report based on survey data from hundreds of marketing professionals in the D2C space. Interested in what’s going on in the world of D2C, Loyalty360 recently spoke with Raj Nijjer, Vice President of Marketing for Yotpo. He provided insight into this report and provided a helpful overview of today’s D2C market.
The research was executed to serve Yotpo’s customers, who, as Nijjer indicated, have many questions about the state of D2C. Yotpo has seen that brands are continuing to search for information on industry benchmarks and best practices, and the report set out to provide brand marketers with this information—particularly D2C brands that are interested in how others are focusing their marketing efforts and spend.
“As ubiquitous as D2C is—it’s been around for a long time—the new generation of D2C is nascent and still forming,” Nijjer said. “We see two types of D2C businesses. One is the Untuckits and Glossiers of the world that are the new generation, employing new marketing stacks, and then communicating and building relationships with their consumers directly through platforms like Instagram, Facebook, SnapChat, and other channels like email marketing.” These are the new breed of D2C businesses that are familiar to digital natives.
The other type of D2C business is also recognizable. Nijjer continued, “The previous generation of D2C are more channel-based legacy companies, like Patagonia, Steve Madden. They have huge brand recognition and if you think about their valuations, they’re in the billions of dollars. Even if they have a 20-30 percent channel that’s a revenue channel that’s D2C, that’s sizable.”
Yotpo provides similar services to each type of D2C business. Nijjer said, “Both types of constituents are looking to figure out ‘what are other people doing that are like me, running a D2C business as a whole, or through a D2C channel within an omnichannel company?’” Each type wanted to know what others in the space were doing, and so Yotpo researched and released The State of D2C Marketing in 2019.
Before performing the research, Nijjer hypothesized that using Amazon was going to be a focus for many of the brands consulted. He suspected that brands would be concerned with where in the company lifecycle they should take their business to Amazon.
The hypothesis, it turns out, was incorrect. The State of D2C Marketing in 2019 found that Amazon is not a major spend for D2C companies. “A lot of companies are taking different strategies when it comes to how they sell on Amazon. You use Amazon to grow, but it’s not the most profitable channel for you,” said Nijjer. More than a few D2C companies decline to use Amazon altogether.
So, what are they using? “We segmented the results by revenue size,” he said, “and companies with smaller revenue, which was up to a few million, were largely using Instagram and Facebook for growth. As you get into the midsize, they start to depend heavily on Google. When you get up to the bigger companies that have large budgets, they’re spending all over the place.”
According to Nijjer, the report also revealed that differently sized companies use (and plan to use) user-generated content (UGC) and loyalty. UGC, beyond its obvious customer-service and data functions, also provides brands with a way to better understand the buyer journey. In addition, companies are frequently featuring UGC in Instagram ads and email campaigns. This use of UGC makes their marketing efforts appear authentic.
Nijjer noted that many young brands in the D2C space have put more resources into acquisition than retention, but as they mature they seek to find more of a balance. When asked how this might change in coming years, he replied that smaller brands “still have tremendous upsides from their topline growth, so I think as long as the retention is a monetization tool that helps them drive topline growth, then they’ll continue to invest in it. But I still see, for smaller brands, more investment in acquisition.”
Clearly, both acquisition and retention are important drivers of profitability. Which one brands want to emphasize will be up to them. In either case, Yotpo’s report, which can be downloaded here, seems to contain a wealth of useful knowledge.
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