Strategy

Defining the direct-to-consumer value proposition

Sorana Gheorghiade
Sorana Gheorghiade June 11, 2021
Defining the direct-to-consumer value proposition

Consumer goods companies (CPG) are experiencing an unprecedented transformation led by a digitally-anchored shopper whose attention has shifted to the immediacy, convenience, and value of online shopping. There are unlimited growth opportunities across retail, especially in the direct-to-consumer segment of the consumer goods business. 

Launching a direct-to-consumer site or your own online marketplace provides the ability to learn about customers’ needs and preferences and ensures the ability to pivot in an agile manner. Digital commerce also enables subscription models that give consumers a reason to come back again and again and provide a lifetime of loyalty in price transparency, rewards, and empowerment.

An unprecedented set of skills has emerged within CPG, creating opportunities to sell directly to consumers and launch loyalty-based recurring revenue programs that allow them to ease into new domains of strength. CPG brands can give value to their direct-to-consumer business model by establishing a clear direction as to why and what are the steps towards sustainable direct-to-consumer operations. After answering the right questions about your business, covering inter alia your strategy, status quo, scalability, or sustainability, you should be equipped with the information to decide on the next best business approach. 

Simply put, once you’re sure the direct-to-consumer model is a good fit for your CPG brand, take a look at the value proposition and see what are the elements of the formula. Go ahead and map out what current retail partners do on expertise or products and services. Identify and follow some key trends in the consumer goods industry. Look into prices and promotions and then go the extra mile: investigate the competition by analyzing other CPG brands and digitally native brands.  

For example, the story of Stanley Black and Decker uncovers how one of the largest global CPG players identifies key points of improving their buying and selling process with minimum costs. Unilever’s digital marketplace revolutionized supply chain management in Spain. 

This value proposition mapping exercise is important for CPG brands. It helps brands to identify retail and category table stakes, in-market gaps, and opportunities for differentiated direct-to-consumer value propositions. Finally, to truly assess if your business is ready for a successful direct-to-consumer launch, ask yourself:

  • What does success look like, and what are KPIs from launch onward? 
  • What is the size and scalability of the opportunity? 
  • What is the sustainability of the initiative?

While no opportunity is a guaranteed success, assessing direct-to-consumer benefits will help a brand maximize the potential of a new direct-to-consumer model. Download The Road Ahead for CPG to see the questions above answered in detail and explore in-depth all dimensions of the direct-to-consumer value proposition.  

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