D2C Brands Need Traceability more. Here is why
Direct to Customer (D2C) is a booming sector across the globe. However, it also comes with tremendous competition. As per McKinsey & Company, D2C businesses require management changes to concentrate, and enhancing the user experience is one of the most critical factors contributing to success. While e-commerce accounts for just a tiny fraction of retail sales, it’s expanding rapidly. In 2019 the total worldwide eCommerce sales totaled $3.53 trillion[1].
(Total addressable direct-to-consumer (D2C) market in India from 2015 to 2025)
Consumer experience isn’t solely related to the brand in the current era. Instead, it now encompasses environmental concerns addressed through the company, the equity in the supply chain, and transparency in the relationship between producers and brands. This is why D2C brands require traceability to ensure customer loyalty and differentiate their brand over traditional companies. As more companies join D2C vessels and the competition gets more intense, brands must find innovative ways of distinguishing themselves to make a mark. The significant benefit of D2C is that it can influence and attract its consumers’ attention. The choice is more accessible when companies can directly engage with their customers.
D2C market supply chain challenges
Let’s look at a few of the significant challenges D2C brands could face yet ultimately provide competitive advantages to businesses if they’re addressed with diligence.
● Low minimum order quantity (MOQ):
D2C businesses generally begin with small-sized sales to check the market and see how they react to their customers. This is the challenge of making small quantities of products quickly. New companies require low manufacturing capabilities in MOQ, and it’s challenging to find factories that can accommodate this. Although some factories were initially open to the idea, they are increasing freight on board (FOB) costs for smaller quantities (25-100 units). If you do not meet the MOQ quickly, the product could cost 20% or more[2].
● Sustainability
It’s getting more difficult to pinpoint where raw materials and other products originate for all sectors. Subcontractors in countries of production do not have a lot of visibility to the general public. There are numerous accreditations and certifications currently but sustainability still remains a problem. It’s our responsibility to the planet to work in organizations that contribute to the environment they’re taking from and help consumers become more conscious of each component of our supply chain.
● Keeping acquisition costs at a minimum
As media spending and traffic to websites increase, keeping the cost of customer acquisition (CAC) in check isn’t easy for many companies. The rising cost of acquiring new customers (CAC) suggests that we’re nearing saturation, and many companies are likely to realize that social media will not suffice.
● Hiring people with the right skills
Companies are looking to recruit larger teams, but not everyone can afford it. Experienced data analysts can be expensive sources, and for small and mid-sized businesses or start-ups, it’s not simple to recruit and retain them.
Benefits of using traceability in D2C markets
There are numerous benefits of adopting traceability solutions, let’s take a look at some of the most common benefits that are relevant to all industries.
● Brand Awareness
To cope with the digital age, building brand awareness is essential to boost expansion and increase consumer trust, loyalty, and engagement. When your products are traceable right to their raw materials, it makes your company stand out, making it more trustworthy.
● Competitive Advantage
Traditional marketing methods to reach customers are old and unproductive to achieve the necessary advantage for boosting the growth of a brand. Using traceability will give brands transparency, provide customers with what they are looking for, and increase consumer trust.
● Safety
The need to take proactive measures regarding food security isn’t a matter of choice in this day and age. The new digital technology allows each consumer to make fraud or shady claims. Strict rules and procedures to ensure the authenticity of food and safety are essential to protect and enhance the brand’s reputation. With the implementation of traceability solutions, customers have the power to know what they are buying and who to trust when it comes to their purchases.
● Digitization
Traceability software monitors the product starting from the place of the raw materials, production methods, and other stages of the supply chain to the final destination. This keeps a track record of the history of the product, making it a trustable buy for the consumer, which in turn boosts company value.
Conclusion
It’s simple. If you do not have a system to monitor items, it will be difficult to recall a defective or damaged product. This is why using traceability is vital for items with a short lifespan and outdated ones. On the other hand, it is possible to think you don’t need traceability of your products since you don’t offer perishable items. But, having traceability systems for products will assist you in improving productivity and quality control. In addition, you’ll have real-time insight into the areas where your production may be causing issues, for example, production bottlenecks. Additionally, in a D2C market, quality and an uninterrupted supply chain are crucial. Implementing traceability can help you establish a faultless supply chain, thus boosting your production and quality.
SourceTrace's software solutions have been deployed across 37 countries and 4 continents already. We are on a mission to make agriculture and food systems more sustainable. Get in touch and we will extend our expertise and commitment to you.
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