Evolution of D2C Business in South America
The growing popularity of the internet has led to a surge in e-commerce. The growing use of D2C channels has been influenced by the retail industry’s development.
Brands and companies are now establishing their presence online and using lucrative platforms like D2C to establish connections with their customers. There is also an increasing trend in customers directly buying from brands and websites. Customers buying directly from brands is becoming more popular, and the e-commerce sector is growing, therefore the D2C industry in South America is projected to increase in the next few years. The rise of digital commerce and innovation and evolution of direct to a customer e-commerce strategy. can offer lead in the future market. Being one of the largest growing retail markets in the world, let’s understand the evolution of D2C trends.
What is D2C?
The traditional e-commerce retail model involves middlemen and intermediaries that help companies deliver their items to clients.
The retail landscape is constantly evolving. The boom in the digital e-commerce platform has changed the way of consumer shopping patterns. The pace of adoption and invocations in the digital commerce space is constantly increasing putting brands in a position to take advantage of the newly emerging opportunities.
Living in a digital era, an increasing number of brands are establishing their presence online. The Covid-19 pandemic reinforced the fact and asserted the need to be present online. With exponential growth in the number of people getting online to meet demands for different online digital strategies. Brands need a direct-to-consumer digital strategy to shed this disruption and lead the market in the future.
The adoption of D2C will increase customer relations with the brand and set the brand apart. Adapting a direct-to-customer strategy provides owners with valuable information and customer data that helps understand patterns and provides valuable insight. This information paves way for innovation and can produce outcomes that are data-driven. D2C’s customer-centric approach serves long-term benefits to the brand.
Online shopping saw a rapid growth in the Covid-19 pandemics with the increase in buyers switching to online modes of shopping. Several businesses established their presence online to keep sales going even during the lockdown. Businesses used D2C to stay in the game and maintain customers during times of crisis.
D2C evolution in South America
The pandemic has prompted brands to reevaluate their path to customers. Direct to the customer is one such route. It combines smart logistics and technology to meet the growing needs of customers.
The South American direct consumer market is anticipated to increase in the future years, thanks to faster retail expansion and higher internet penetration. Increased internet usage has resulted in the rise of social media and e-commerce platforms, resulting in increased online sales. A rise in retail growth has resulted in an increase in D2C growth as a result of the adjustment. In comparison to typical channels, D2C channels have a lot of room for expansion. The traditional e-commerce retail model involves middlemen and intermediaries that help companies deliver their items to clients. This made companies rely on logistics platforms and brokers to increase sales. With the D2C channel brands and companies are now approaching customers directly in understanding the product. This is expected to drive huge growth for the South American D2C channel.
Evolution driven by Growth in e-commerce
The Covid-19 pandemic has disrupted the retail economy. The Latin American market witnessed changes in consumer buying patterns. Customer visits to stores have rapidly decreased. The e-commerce space experienced migration towards their platforms. The rapid shift in consumer behavior patterns combined with this change in the overall dynamics and more shoppers buying everyday essentials online from direct to customer online channels are evolving in the South American market.
The pandemic has had a profound effect on the South American retail industry. The mandatory home quarantine and lockdown forced many retailers to close their stores and switch to online platforms.
The South American e-commerce development was relatively slower than the other regions. The reasons for this lag include a large number of unbanked population, a weak postal system, customer distrust, and various other reasons. The Covid-19 pandemic led the way for digital platforms to grow in South America. Companies invested in smoother website experience and added direct-to-customer channel (D2C) operations to keep up with the change in the marketplace. The side effect of stay at home in South America has led to the popularity of D2C in the retail ecosystem and is expected to witness growth in the coming years.
Evolution driven by Social Media and Influencer Marketing
Many people have turned to social media platforms such as Instagram, Facebook, and WhatsApp to promote interaction throughout the shopping process. D2C brands largely count on online media to build loyal customers. They establish a trustworthy and productive relationship with customers. These efforts have helped Latin America achieve the strongest growth of all regions, with products sold online increased by 60% in 2020. Euromonitor predicts that Latin America will become a regional growth story in 2021, with an increase in e-commerce merchandise sales of 16%.
South America is home to around 340M internet users with an internet penetration of 78.8% as of March 2021. Social media usage witnessed a drastic increase in the past couple of years. With this exponential growth in social media, it became a platform for brand discovery and trust-building paving the way for D2C.
Influencer marketing is also one of the tools in hand that has been successfully implemented which has increased direct to the customer. The increased social media usage has changed the way businesses operate. Brands looking for expansion in the South American market can use social media as leverage to directly connect to their customers. Understanding the unique trends and patterns in the South American influencers is an important reason for driving D2C growth in the area. Accompanied by the rapid growth of e-commerce in the region, brands worked with influencers to showcase products to their followers driving D2C channels. Reports show that 64% of purchases are driven by influencers in Latin America. Social media platforms drive brand awareness, customer connection and drive sales. For digital-first D2C brands, social media leads the way. The South American geographic area is driven by increasing access to the internet and emerging as one of the fastest-growing economies in the world. This has paved the way to create a market for e-commerce, influencer penetration, and trust in brands. The increase in user engagement and e-commerce is because of the pandemic. Brands are now using Diecret to customers to increase and connect with their user base. With D2C channels there is more engagement with the customers.
All these changes in the retail dynamics have impacted the growth of e-commerce and in turn D2C in South America.
D2C places customer-centric innovation at the core of business operations, thereby providing long-term advantages for brands. Adopting a D2C strategy now will ensure that the brand maintains control over customer data and experience. Keeping only puts the future of your brand at risk. operating direct-to-consumer allows a sort of freedom that doesn’t exist for a traditional channel. This can offer a variety of approaches to engage and provide more value to larger and diverse consumers. The growth in the D2C market in South America provides tons of opportunities for retail business in South America. The D2C market in South America is evolving and is expected to grow over the years.
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