Nicolas Bruylants, co-founder and CEO of CNNB Solutions, discusses how brands in MENA can benefit from direct-to-consumer (DTC) online sales.
Pushed by the pandemic, people are changing the way they buy, when they buy and how they buy. Brands need to adapt and be flexible to meet the changing needs. The digital transformation has to happen faster than ever, while the reality for businesses is that it’s not always so straightforward to accomplish.
Research by Visa suggests that the Middle East e-commerce market will grow from around $26.9 billion in 2018 to $48.6 billion in 2022. Meanwhile, Bain & Company studies indicate that MENA e-commerce accounts for only around 1.9 percent of total retail sales. Compared to more developed and mature e-commerce markets like the UK, where over 15 percent of all retail is conducted online, 20 percent in the US or close to 50 percent in China, there is a long way for the region to go when it comes to e-commerce.
But, it’s not always easy for businesses to work out how they can successfully sell online. Firstly, there is the issue of whether to choose the marketplace route, the direct-to-consumer route or both. Second, there is the issue of expertise and knowledge. E-commerce is still at an early stage in the region and talent is scarce. Without an expert’s advice, how do you make those choices of which technology to deploy, how to handle warehousing and logistics, what payment methods to use? Once live, there is the challenge of marketing, scaling, running and optimising sales and operations, all while providing dedicated customer support. It’s an uphill battle that many brands in the MENA region are facing.
As marketplaces, such as noon and Amazon, vie for market supremacy across the region, there is another route for brands to reach their customers.
What is DTC (direct to consumer retail) e-commerce?
Direct-To-Consumer e-commerce, or DTC e-commerce, is the online marketing and sale of products directly from a brand to new and existing customers without any intermediary channels such as marketplaces, middlemen/distributors or third-party retailers.
Five advantages of a DTC e-commerce model
Brands own the customer relationship, including controlling the experience and presentation of the brand to distinguish/differentiate from competition
Own valuable customer data – including behaviour, preferences, wish lists, purchase history and patterns, concerns and reviews, and demand for new products/innovations
Ability to nurture brand loyalty and optimise customer life time value
Control market expansion on your own terms
Increase margins
Barriers to adopting a DTC model
Adding the different layers of the DTC strategy can be daunting. Hiring e-commerce experts, adding technology/infrastructure, organising warehousing, packaging, fulfilment, logistics, payments, fraud protection, returns, and tax compliance, can all be significant hurdles to overcome.
Businesses are aware of the opportunity for the direct-to-consumer (DTC) channel, but for different reasons they often opt for the easier routes. Consumer brands have grown accustomed to selling through facilitators, like retailers, online marketplaces, and various distributors, but through these, their opportunity to build direct consumer relationships and gain knowledge through the e-commerce journey is limited. Although this is convenient, companies pay for the privilege via either a fixed dollar amount or a percentage of each sale.
With a DTC approach, businesses retain more revenue from each sale and have complete control over customer experience, from customer acquisition efforts like display ads, all the way through to the checkout process and post-purchase relationships.
Getting closer to the customer
Selling direct-to-consumer includes numerous benefits for brands, including the ability to learn about their customers as well as the ability to communicate with them directly to increase the customer lifetime value. Armed with data and insights, brands can strive to make the customer experience as seamless as possible, reducing friction and delivering a stronger brand narrative that connects with the needs of the consumer and strengthens loyalty. This awareness of the customer and their experience is critical in bringing repeat orders. Research shows that those who purchase again from a brand spend two thirds more than first time buyers.
Within the DTC model, businesses have control and ownership of customer data, which is crucial to every brand. Having this data means brands know their personal info, their purchase history, preferences, wish lists, customer support inquiries, concerns, reviews and ratings, and credit card information. Having a deep picture of their consumers in this way allows brands to excel at delighting their customers, to pivot and adapt to changing tastes, understand the demand for new products, enter and scale to new markets, increase conversion rates, retarget and ultimately, increase profitability.
Leveraging the DTC opportunity with a DTC Enabler
A DTC enabler is a business that manages DTC processes on behalf of a company or brand. By working with a DTC enabler, brands can reap the benefits of getting closer to their customers and enhancing their online experience, while getting the expertise of professionals, a ready infrastructure and a faster time to market. DTC enablers identify the best strategy for brands to transform their online retail channels and provide practical solutions to maximise sales and improve customer experiences. By working with many brands simultaneously, the DTC enabler is able to pass on economies of scale to brands and reduce the overall time and cost of executing their own DTC channels.
A DTC e-commerce enabler can provide services such as:
Managed warehousing solutions
Distribution, stock planning and inventory management
Order management
Management of logistics and shipping
Global fulfilment and support
Coordination to ensure shipping meets security protocols and tax compliance
Management of payment solutions
Customer returns, chargebacks and support
Web development and management
Brand marketing support and optimization
Key takeaways
The attractiveness of direct-to-consumer is becoming increasingly apparent to brands, who want to protect and enhance the marketing and sales approach to their consumers through their own channels. DTC offers an intelligent option for businesses, but consumers also appreciate engaging with personalized content, enjoying a premium experience while shopping and a deeper understanding and focus on customer service.
Nicolas Bruylants, co-founder and CEO of CNNB Solutions, discusses how brands in MENA can benefit from direct-to-consumer (DTC) online sales.
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by Staff Writer
More of this topic
The direct-to-consumer opportunity for brands in MENA
As marketplaces such as noon and Amazon vie for market supremacy across the region, there is another route for brands to reach their customers
Nicolas Bruylants, co-founder and CEO of CNNB Solutions, discusses how brands in MENA can benefit from direct-to-consumer (DTC) online sales.
Pushed by the pandemic, people are changing the way they buy, when they buy and how they buy. Brands need to adapt and be flexible to meet the changing needs. The digital transformation has to happen faster than ever, while the reality for businesses is that it’s not always so straightforward to accomplish.
Research by Visa suggests that the Middle East e-commerce market will grow from around $26.9 billion in 2018 to $48.6 billion in 2022. Meanwhile, Bain & Company studies indicate that MENA e-commerce accounts for only around 1.9 percent of total retail sales. Compared to more developed and mature e-commerce markets like the UK, where over 15 percent of all retail is conducted online, 20 percent in the US or close to 50 percent in China, there is a long way for the region to go when it comes to e-commerce.
But, it’s not always easy for businesses to work out how they can successfully sell online. Firstly, there is the issue of whether to choose the marketplace route, the direct-to-consumer route or both. Second, there is the issue of expertise and knowledge. E-commerce is still at an early stage in the region and talent is scarce. Without an expert’s advice, how do you make those choices of which technology to deploy, how to handle warehousing and logistics, what payment methods to use? Once live, there is the challenge of marketing, scaling, running and optimising sales and operations, all while providing dedicated customer support. It’s an uphill battle that many brands in the MENA region are facing.
As marketplaces, such as noon and Amazon, vie for market supremacy across the region, there is another route for brands to reach their customers.
What is DTC (direct to consumer retail) e-commerce?
Direct-To-Consumer e-commerce, or DTC e-commerce, is the online marketing and sale of products directly from a brand to new and existing customers without any intermediary channels such as marketplaces, middlemen/distributors or third-party retailers.
Five advantages of a DTC e-commerce model
Barriers to adopting a DTC model
Adding the different layers of the DTC strategy can be daunting. Hiring e-commerce experts, adding technology/infrastructure, organising warehousing, packaging, fulfilment, logistics, payments, fraud protection, returns, and tax compliance, can all be significant hurdles to overcome.
Businesses are aware of the opportunity for the direct-to-consumer (DTC) channel, but for different reasons they often opt for the easier routes. Consumer brands have grown accustomed to selling through facilitators, like retailers, online marketplaces, and various distributors, but through these, their opportunity to build direct consumer relationships and gain knowledge through the e-commerce journey is limited. Although this is convenient, companies pay for the privilege via either a fixed dollar amount or a percentage of each sale.
With a DTC approach, businesses retain more revenue from each sale and have complete control over customer experience, from customer acquisition efforts like display ads, all the way through to the checkout process and post-purchase relationships.
Getting closer to the customer
Selling direct-to-consumer includes numerous benefits for brands, including the ability to learn about their customers as well as the ability to communicate with them directly to increase the customer lifetime value. Armed with data and insights, brands can strive to make the customer experience as seamless as possible, reducing friction and delivering a stronger brand narrative that connects with the needs of the consumer and strengthens loyalty. This awareness of the customer and their experience is critical in bringing repeat orders. Research shows that those who purchase again from a brand spend two thirds more than first time buyers.
Within the DTC model, businesses have control and ownership of customer data, which is crucial to every brand. Having this data means brands know their personal info, their purchase history, preferences, wish lists, customer support inquiries, concerns, reviews and ratings, and credit card information. Having a deep picture of their consumers in this way allows brands to excel at delighting their customers, to pivot and adapt to changing tastes, understand the demand for new products, enter and scale to new markets, increase conversion rates, retarget and ultimately, increase profitability.
Leveraging the DTC opportunity with a DTC Enabler
A DTC enabler is a business that manages DTC processes on behalf of a company or brand. By working with a DTC enabler, brands can reap the benefits of getting closer to their customers and enhancing their online experience, while getting the expertise of professionals, a ready infrastructure and a faster time to market. DTC enablers identify the best strategy for brands to transform their online retail channels and provide practical solutions to maximise sales and improve customer experiences. By working with many brands simultaneously, the DTC enabler is able to pass on economies of scale to brands and reduce the overall time and cost of executing their own DTC channels.
A DTC e-commerce enabler can provide services such as:
Key takeaways
The attractiveness of direct-to-consumer is becoming increasingly apparent to brands, who want to protect and enhance the marketing and sales approach to their consumers through their own channels. DTC offers an intelligent option for businesses, but consumers also appreciate engaging with personalized content, enjoying a premium experience while shopping and a deeper understanding and focus on customer service.
Nicolas Bruylants, co-founder and CEO of CNNB Solutions, discusses how brands in MENA can benefit from direct-to-consumer (DTC) online sales.
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