Serving consumers direct for the first time: the power of great experience design

The face of e-commerce has changed - more people are shopping online for goods; fewer people are able to, or want to, go to stores.

Those that can go in-store are having very different shopping experiences with many of the things about the design of the experience removed or altered. For example:

• 20% of people expect to transact more online after lockdown ends
• 119% increase in first-time purchases placed through e-commerce sites belonging to traditional chain stores
• 26% increase in global sales on Amazon in Q1 2020

The race to serve customers first

In response to shifting customer behaviour and disruption to normal distribution channels, brands are thinking about their route to market.

For many, this means waking up to the power of selling direct to customers online. This includes large established wholesale brands, especially in FMCG and healthcare, that previously relied on retailer distribution channels.

• Online sales now account for 40% of the growth in FMCG sales

With distribution lines cut and more people staying at home, necessity was the mother of invention.

This movement to serve consumers direct has been great to see – adaptable and innovative offerings from some of the world’s biggest brands freshens the market. New players selling direct gives consumers more choice and will make traditional players take note and up their game. In theory, meaning better online experiences for everyone.   

The costs and benefits of selling direct to customers

Serving customers direct has obvious benefits such as higher profit margin, speed to market, full control over branding, and direct access to customers and their data.

But, for a direct route to market to succeed you need to crack the end-to-end customer experience, which is only made possible by great experience design.

Succeeding with this could help build customer loyalty in a way that wasn’t possible through retailers or resellers.

You only need to look at the waves created by the Dollar Shave Club to understand the power of direct customer experience and loyalty. Dollar Shave Club was so successful with a direct strategy, in a traditionally retail-led sector, that P&G were forced to launch Gillette online in an attempt to recover market share. This resulted in Dollar Shave Club later being acquired by Unilever for $1 billion.

However, whilst creating, owning and controlling the customer experience is a golden opportunity for many FMCG brands experience design needs to be championed for you to come out on top.

This is because moving from B2B2C to B2C is a big experiential leap. Customers have high expectations of what good experiences look like.

Your customers have had access to well-designed applications and websites for over a decade. Here, two-day fulfilment of online orders is the norm as is an intuitive experience and slick user interfaces.

New players offering poorly designed experiences not rooted in the principles of great experience design will not be looked upon kindly. Here, ‘good’ is not ‘good enough’. To succeed, you need to embody user-centricity, meet unmet needs, tap into new social phenomena and craft unique offerings. 

Moreover, as a brand you may find yourself in competition with your retail partner. Take Heinz who have recently launched selling direct to customers online: Heinz need to have a better, more customer-centric purchase journey, as well as a stronger customer proposition, than Tesco for would-be purchasers to stick around.

For those organisations who haven’t previously had to consider experience design and end-to-end customer journey’s competing against established retailers will be a steep learning curve.

In short, yes, it’s possible and potentially lucrative to serve customers direct while cutting out the middle person in your supply chain.

However, the risks are huge if you underestimate the importance of great experience design in your new go-to-market product and distribution strategy.

New and emerging direct to customer experiences

With this in mind, we reviewed the direct to customer experience of some brands who have recently taken the leap.

Kraft

Kraft have released Heinz To Home, launched in April in response to Covid-19. Heinz to home aggregates the most loved Heinz products into bundles at a discount price.

Heinz To Home has a clear value proposition which features on the homepage. This is framed as helping customers in difficult times, when there’s a lack of availability and reduced access in-store. 

Heinz to Home offers free delivery to NHS workers and includes recipes that use the products that are being sold. Since launch, Heinz have evolved the proposition beyond the initial pandemic response, to include baby bundles and father’s day gift packages, leveraging their iconic family-orientated brand.

Heinz to Home launched with a straightforward user experience: products are clearly visible and easy to understand, they are priced simply to avoid unnecessary choice and complexity. There is no need for users to register upfront and customers can express checkout.

Heinz have also put a lot behind marketing the service on their social media handles in the UK.

Pepsi Co

Pepsi Co are investing in D2C with quick-response launches of two new consumer websites: snacks.com where customers can buy over 100 Frito-Lays (Walkers, if you’re from the UK) snacks; and pantryshop.com offering bundles of brands such as Quakers, Doritos and Tropicana in grouped categories such as “Rise & Shine” breakfast bundle or “Workout & Recovery” energy bundle.

The pantryshop bundles have been curated around customer’s specific needs during the pandemic, considering people working, exercising and schooling from home.

This is the first time Pepsi Co have offered a value proposition based on customer need rather than company brand, this will offer insight into alternatives to how their products can be displayed in store.

Pepsi Co have also removed potential barriers to customers shifting to online for their basic groceries by offering free delivery over $15.

The user experience, however, is likely to setback Pepsi Co’s direct strategy. On snacks.com, the journey starts with a discreet ‘Get started’ button which leads to a mandatory zip code entry before product selection can start.

Customers put together their own snack packs one item at a time. But with no search, no suggestions and no offers or advantages, it’s time-consuming for a user to navigate through the large choice on offer.

In addition, product information is illegible on desktop. Moreover, core elements of the purchasing experience are paired back to basics with the checkout feeling a lot like a B2B experience. 

The snacks.com experience works in a functional sense, but without an experiential “outside-in” approach, and with little understanding of their new target audience, it seems Pepsi Co have tagged on customer touch points as an afterthought rather than aiming to provide a great user experience as their mandate.

By launching with a customer experience that is difficult to use, not only are Pepsi Co unlikely to succeed in their direct to consumer online channel, they may be inadvertently causing costly brand damage.

What’s holding these direct to customer experiences back?

Selling direct to customers is a lucrative avenue for manufacturing and distribution brands to explore, however, there are barriers to doing this well.

Tied in

Some brands are contractually obliged to sell direct to retailers for a given time period.

These contracts are worth a lot of money to the brands in question. This limits their ability to get started on selling direct to customers, meaning others can continue to push ahead with creating great experiences that serve customers direct. This means FMCGs are left further and further behind.

Campaign-led

Current experiences on the market, such as Nestle and Kraft, run the risk of being short term solutions to delivering on marketing strategies that improve favourability during a difficult time, or realise seasonal demand.

For them to truly succeed, they need to focus on establishing sustainable long-term user experience.

Whilst launching products fast may be a tactic used by brands to test and learn in a fluid market, the potential opportunity is much bigger.

Treating your direct to customer strategy as an extension of your campaign marketing strategy limits its return.

As a result, you may find they lose out to competition who commit to offering great experiences direct driven by user-need and not marketing strategy.

Customer insight

As a new direct to consumer provider you need to adapt and evolve your insights to get a clear picture of who your new customers are.

Today, retailers are closer to direct customers and will hold the customer data on purchasing behaviour. 

As a new entrant serving customers directly you need to understand your customer segments, consider the purchase journey for each and design to optimise conversion.

Likewise, with new direct customer experiences having been launched quickly, the amount of customer insight used to design the experience is likely to be low. Making the overall front-end user experience for users poor.

Customer order lifecycle

For global FMCG brands to shift to serving customers directly, they will need to be prepared and equipped to manage and guarantee the whole experience of a customer order cycle.

There is more to serving customers directly than developing a marketing strategy to create awareness and guiding a customer through a purchase.

Purchases include fulfilment and delivery, customer service and support and crucially, to future success, customer retention. 

Nailing this end-to-end experience is a large investment for low-margin FMCG products. Many disruptive start-ups have entered the market with a subscription-box model to make the business case work.

Large traditional players will need to commit fully if they are to enter the D2C space and make a return on investment.

Remember, any digital experience is only as good as its weakest point.

Customer centricity and experience design

A lack of customer centricity is symptomatic of organisations in the B2B or D2B space where interactions with customers have been more functional.

Traditional organisations need to understand that customer centricity isn’t something they can tag on to a product or business.

Customer centricity is something which starts deep within the organisation, encompassing all touch-points. 

Large FMCG companies need to learn from the agile innovation culture of the digitally native entrants that pose the greatest threat.

Whether they respond through acquisition, as was case with Unilever and Dollar Shave Club, or by investing in ring-fenced design and innovation labs like GSK, large legacy organisations cannot ignore the importance of deep customer-centricity and great experience design across the business. 

Where to start with designing better direct to consumer experiences? These three simple pointers are the key to succeeding with direct to consumer propositions:

Be more customer centred than your competition

Focus on understanding your customers and delivering better on some unmet needs than your competition, this will help you create better experiences. 

Make your products sticky 

Make it easy, consider offering subscription models to your products, unique offerings that people just cannot get in-store or online with other retailers, or significant price reductions to encourage repeat purchasing.

Tap into permanent social changes

Covid-19 has made consumers think harder about where and what they buy.

Can your direct to consumer offering feature more locally sourced products than your competitors, or can how you design you proposition articulate how you back manufacturers and support sustainable businesses?

Commit to going direct to consumer

With traditional channels to purchase in-store disrupted and more people being served online, FMCG brands need to wake up to the power they have to build direct customer relationships through great experience design.

The change in consumer behaviour is already in motion and cannot be reversed.

Manufacturer brands need to capitalise on the current opportunity or risk losing face to new digital-savvy entrants, or existing players doubling down on great digital experience.

P&G and Amazon have already successfully acquired challengers which helped meet new needs whilst creating new revenue streams. Having, acquired Wholefoods in 2017 Amazon Fresh became Amazon’s fastest-growing category with year on year growth of 14% to the 16 March 2020.

Success in creating exceptional direct to consumer offerings will be enjoyed by brands that are set up to put their customer’s needs at the heart of how they design their offerings.

The bottom line is that great experience design must be your guiding principle throughout the design and delivery of your direct customer strategy.