By: Berlin Packaging Specialist
Date: October 28, 2019
While some of the steps to a purchase decision may be different, the consideration set for direct-to-consumer products is the same, i.e. for high involvement categories such as nutritional supplements, consumers actively seek out information and alternatives. While we in the consumer goods business may need to draw hard distinctions between retail and direct channels, shoppers don’t.
For some time now this has come to mean that retail and direct brands that may never sit next to one another on a physical shelf are still part of a ‘virtual shelf set’ on consumers’ internet browser tabs, the implication being that all functional substitutes are in competition regardless of their primary distribution channel.
Most direct-to-consumer transactions are larger, with some sources indicating that the average transaction is $250. As an example, compare the experiential quality of opening up $250 worth of supplements with $250 worth of product from Apple. Apple’s unboxing experience is almost ceremonial… An experience that is an end unto itself that builds the brand. In fact, there are entire websites that focus on product ‘unboxings’. If you take a moment to search YouTube for ‘iPhone unboxing’ you will get 353,000 videos that someone actually cared enough to film, and in the case of one video, 1.3 million people cared enough to watch.
Realize that any robust competitive strategy must assume that the competition is not static. Firms that have formerly sold only through the retail channel are impinging on the direct market. For example, L’Oreal launched the nicely packaged Innēov brand direct-to-consumer with an auto-replenish plan. This product competes against DTC brands and this is a nose under the tent from a company that apparently believes there’s untapped potential in that channel.
Finally, remember that encouraging trial is only one function of the consumer goods package. The other more important function is that of promoting rebuy. Rebuy is the DTC brand’s ticket to success. It’s also the ultimate expression of loyalty, and loyalty is driven by experiential factors. Positive visual, tactile and functional package qualities accrue to the brand and discourage comparison. Back to the Apple analogy, Mac laptops and iPhones sell at higher prices and earn Apple superior margins despite the availability of substitutes with better technical stats and lower prices.
Remember the 353,000 iPhone unboxing videos? There are 5,190 ‘Android unboxing’ videos.