The Direct-To-Consumer Challenge: Converting One-Time Buyers Into Repeat Customers

The digital-first shift means there are more options for smaller, direct-to-consumer brands, to find first-time customers from around the country or even the world. But CEO Brian Bogosian tells Karen Webster that the rubber meets the road when it comes time to convert those first-time buyers into loyal, repeat customers. Here’s how some really creative D2C brands are using new tech to do that.

Despite the many obituaries that have been written about brick-and-mortar stores over the past several months, physical retail isn’t dead — nor is it permanently shuffling off the stage.

Physical retail is going to go on, although not in the form that the world previously knew it, CEO Brian Bogosian told Karen Webster in an interview.

For instance, Bogosian said he believes that parts of physical retail are going to die — and take retailers with long, storied histories down with them.

“Those that aren’t financially structured in a way to allow them to strategically acclimate to the environment and acclimate to the changing market aren’t going to survive because I think that some of these changes that have evolved are permanent,” he said.

Even in a world where a COVID-19 vaccine is readily available, Bogosian said he doesn’t see consumers flocking back to their previous shopping habits. He said he thinks few will see crowding “elbow to elbow” into shops and department stores as their go-to shopping experience.

The new digital consumers might have started transacting online out of need — but they are increasingly staying online out of choice. Bogosian said they’re finding online experiences smoother, more convenient and increasingly better-curated than shopping in physical stores.

He thinks the world will get an interesting preview of the shape of retail to come with the holiday shopping season, which was set to kick off with the Oct. 13-14 Amazon Prime Day. Market watchers will see what retailers who want to get to a next-level digital relationship with their customers will have to do to keep pace in a rapidly and permanently reset environment.

“We should all be interested to see what happens at Christmas this year,” Bogosian said. “I think people are not going to be storming the department stores in their cities.”

Instead, he said he expects shoppers will be “taking a little more time to think about [gifts], buying them online, having them delivered to the house. And I just think merchants and retailers that provide a unique experience and unique products that are on the cutting edge for online merchants will be the ones whose consumer relationships will continue to thrive.”

Capitalizing On Direct To Consumer

While much has been written about the great direct-to-consumer (D2C) boom over the past several months, Webster wondered if that rising tide is really lifting all boats. For example, she noted that Nike has seen D2C sales swell to become a third of its business over the past half-year or so.

But Webster said the shoe giant had the tremendous advantage of already being Nike at the start of that big D2C push. Everyone already knew its name, and the company has a well-designed and well-defined digital presence. She wondered if smaller, lesser-known brands could adopt Nike’s “Just Do It” attitude about leaping into D2C.

Bogosian conceded that mega-players like Nike carry some unique strengths when it comes to capturing D2C business. But he said that what all brands making such a move have in common is that they’re cutting out a middleman that consumers are increasingly less interested in interacting with. Moreover, as the new digital landscape opens up, brands are getting access to a rapidly proliferating collection of sales channels where firms can directly reach customers.

For instance, Bogosian said he recently bought a cashmere sweater that’s perfect for outdoor dining on cool San Francisco nights — purchasing it not from a local store, but from a Scottish small business he’d never heard of but whose wares he saw on Instagram.

“I see a multitude of products like that,” Bogosian said. “So, I think [D2C sellers] are looking to various channels. And it’s interesting how social media has provided a platform for these companies to exhibit their wares and sell products online very easily. As a customer, you kind of click ‘shop’ as you scroll.”

That exploding proliferation of touch points, he said, is both an opportunity and a challenge for merchants. There are more opportunities to catch a customer’s eye and bring the person in for that first purchase, but there are also more distractions online.

That forces firms to really think hard about how they can bring that same customer back for a second, third or fourth buy going forward, Bogosian said.

“I think it’s going to be up to them to make sure they have a strategy for how they keep that relationship through my email address and communicating with me on new products that they release,” he said. “I think it’s going to be important to maintain these customer relationships that have been established on a first-time purchase to ensure that the communications are there.”

Becoming A Customer’s Trusted Shopping Agent

Bogosian said that what digital channels uniquely offer retailers is a chance to create an ongoing commerce relationship with a customer.

Emails that feel like they come from a person — not a bot blasting out a mass mailing — and that include suggestions for future purchases actually influenced by a customer’s past purchases make sense. So do efforts to act as a customer’s shopping agent, cutting out the clutter and putting the person on the fastest possible path to the unique set of goods that they’re actually going to want.

Some Venerable Retailers Won’t Make It

Bogosian said new-school, digital-first retailers are doing this, while old-school department stores aren’t. He said that’s not because traditional retailers don’t want to, but because they’re often so weighed down by debt that they can’t afford to invest in trying to do things differently.

Instead, many traditional retailers are forced to weather the storm by continual cutting, finding ways to do more with less. But Bogosian said he believes that will ultimately be fatal for most of them because they’re doubling down on a shopping experience that consumers have evolved past.

In those cases, he said, “capitalism will work.” Businesses are going to disappear and be replaced by firms that have adapted to the next normal — technology-moderated, people-based relationships with consumers that let them choose their own shopping adventures across as many shopping channels as they need.

“I think that those kinds of relationships are going to change the way people shop,” Bogosian said. “The relationships will go far beyond that initial sale and into how to extend the customer lifetime value — how to provide more services and how to provide a more and more intimate experience wherever they encounter their consumer.”