Covid-19 and de-escalation: a booming ecommerce and a direct channel regaining its importance

How to ensure the impact and scalability of your digital business?

The current context has caused important mutations in the digital channel and has created opportunities for brands that are used to other channels such as horeca (hotels, restaurants and cafés) or retail having a direct relationship with the end customer. 

In the midst of de-escalation, consumers are yearning to go out again, but shopping in physical shops still makes us uncomfortable. This has forced digital channels to grow more than ever before and in a much more agile way. In fact, some brands in the retail sector have seen their digital channel increase by 600% compared to the previous year at this same time.

If one thing is clear, it is that ecommerce is here to stay and that at a time of "over-traffic" such as the one we are experiencing, we must lay a solid foundation with which to start working once the pandemic is over. We talked about this in our webinar Ecommerce: your channel, your customers that we organised together with Adobe, where we helped around thirty customers to think about selling through the direct channel.

In this scenario, new ways of communicating with customers emerge that bring us much closer to the relationship we have always wanted to maintain with them. For example, social networks act as a showcase for our products, being an active focus of sales and recommendation of references. They also serve as a point of contact between brands and manufacturers or between local businesses and their customers.

There are new decision criteria and betting on social networks allows us to develop a competitive advantage. According to data from the 'Future Shopper Report 2020', by Wunderman Thompson Commerce, 47% recommend products on social networks and those surveyed bought an average of 3.5 times a month via this channel.

Other shopping criteria that should not be overlooked are:

• Omnichannel: Customers, especially young people, prefer brands with physical shops (56%). 
• Innovation: Increasingly important in the customer experience (+50%).
• Subscriptions: 60% have 1 to 3 active subscriptions.
• Sustainability: Growing concern among the new generations. 46% have already bought from socially responsible brands. 
• Programmatic commerce: Growing trend in Spain due to the penetration of technology. 38% say they have used this purchasing method. 

In short, if you are going to launch your digital channel, either because you only operated in the face-to-face channel or because your online channel did not work as well as you wanted, we have compiled four great lessons to focus on to guarantee the impact and scalability of your digital business:

1. Combine efforts to find your differential value.

The time of digital austerity has made it easier than ever to set up an online sales business, thus saturating the market with players with very similar value propositions. We must strive to make a difference, something that will allow us to scale our business model and give it a longer life.

2. Focus on getting your first customers and validate the viability of your business model. 

Technology is key, but on its own it is of little use: we must understand technology as a means at the service of the customer. The eagerness to get our first customers in the online channel must be accompanied by an investment of at least a third of the budget. Capturing them at the right time will be key to the development of our business. 

3. Optimise your direct channel to take control.

To drive and establish the direct channel, it is essential to work under continuous improvement methodologies and with both a vertical and horizontal vision of the funnel, seeking operational efficiency:

• Having a horizontal view of the funnel will allow us to continuously identify where we need to focus in order to improve conversion rates: do users see our products, do they see them but have no intention of buying them, do they have the intention but do not place an order? The aim is to make the funnel as wide as possible.
• Having a vertical view of the funnel makes it easier for us to attract more and higher quality traffic to our digital channel. 

With both visions, the results of our channel will be exponential and by increasing conversion rates we will be making our marketing investment more efficient. Campaign ROIs will be higher and customer acquisition costs will be lower.

4. Make sure you have second sales to protect margin points.

Any company can sell more, either by attracting new customers or by selling more to existing customers. According to Marketing Directo, retaining a customer is seven times cheaper than acquiring a new customer. In addition, we must bear in mind that our customers are our best loudspeaker. Baymard Institute states that 70% of customers trust the opinions of online customers who act as prescribers.

If we are capable of continuously attracting new customers and generating second and third sales to current ones, we will gain enough oxygen to scale our business by incorporating new products, making the leap to the international market, etc. 

Advantages of the direct channel compared to third parties such as Amazon.

When establishing our sales strategy we must not forget the strong presence of Amazon in the market and take advantage of the competitive advantages that the direct channel offers us. On the one hand, it allows us to have control of our customer data and thus be able to seek efficiency through second sales. On the other hand, it allows us to own our brand, our product and our sales cycles.