Hexagon Consultants has conducted a detailed review of the Home Appliances market, with specific focus on D2C capability.
Our qualitative research combined with key statistics indicates there can be no doubt that the Home Appliances sector has exploded in 2020.
This is largely due to Covid 19, Lockdown, the High Street being closed, and Paul Hollywood and team being back on our screens recently as the “Great British Bake Off” returned!
Cutting out the middleman with D2C
One manufacturer we spoke with recently quoted an uptick of 25 fold in their Direct To Consumer home appliance sales versus the same time last year and much of this was cooking related!
Everyone seems to have rediscovered their passion for cooking, baking and all things culinary over the last 9 months.
Like most of these shifts in behaviour some of this will stick (pardon the pun!).
Given this trend, some of the large appliance companies will be considering their go forward D2C strategy to determine how they can sell directly to consumers. It will be critical over the coming years to own the consumer data and interact with them directly. But crucially allowing the consumer to shop how they want and when they want is an absolute necessity to build loyalty and trust with your Brand.
In this article we’ve provided 5 tips on “how to win” in this important sector.
The statistics associated with this trend speak for themselves:
- 48% of consumers would consider buying Domestic Appliances direct
- 10 years of E-Commerce penetration growth in <3 months with 15-30% lasting penetration
- By the end of the year, a total of 20,620 retail stores will have pulled down their shutters for the final time
- From a survey of 500 manufacturing companies, 72% agree D2C is good news for manufacturers and consumers
- 96% of manufacturers are now selling D2C via their own websites with 80% currently or planning to sell on Facebook / Social Media
Sources: (1) BBH Checked Out Report, Oct 2020. (2) McKinsey, July 2020. (3) Centre for Retail Research, August 2020. (4) & (5) Barclays, 2019
Here are Hexagon Consultants 5 tips to help you win in from a D2C perspective:
Tip #1 – Laser focus on the shopping experience
Aim to have a clear and consistent strategy around who your consumer is and the “consumer journey” that you are looking to create.
The organisations that we see winning in the D2C market are truly obsessive around consumer centricity. Make sure this runs through each and every consumer touchpoint from the online website through to the delivery, installation and potential takeaway of large appliances.
Each and every consumer touchpoint is key and quite often the delivery and installation process is the thing that the consumer remembers when they reflect on their experience!
“The delivery men installed it where I wanted it, got it working and took away my old one and the rubbish” – These simple steps are highly effective in creating those positive consumer relationships.
Tip #2 – It’s all about the data when going Direct to Consumer
One of the key reasons companies look to adopt a D2C model is due to the consumer data. The engagement they can cultivate before, during and after the purchase is unbelievably advantageous.
It strikes me that this home appliance sector, which is somewhat cyclical in nature, should be a dream for all sales and marketing teams as they consider targeting consumers for their next washing machine or other appliances.
Through D2C they should now know that their consumers current machine is 5 years old and when to retarget – critical insight which they would not have known if selling through traditional retail.
In addition, and with data, the consumables in this sector such as dishwasher tablets would be ripe for a “subscription model” if this is done effectively. (Warby Parker is a good example of this – check them out!)
Tip #3 – Consider whether your D2C strategy will be “build or buy”
Creating a strong D2C company does not happen overnight – you have to build that muscle.
We’ve spoken with companies that see D2C brands around them gaining momentum. However, given they’ve traditionally been B2B based and focused on the physical retailers they’re struggling to transform the necessary functions, such as their supply chain.
Companies like Unilever recognised the market threat from smaller D2C companies and in the last 5 years have purchased 29 D2C companies to help build their capability and offering!
Given the size and profitability of some of the manufacturers in the Home Appliances space the acquisition route should be a key consideration in the boardroom.
Tip #4 – Consumer Brand Immersion
Ensure the consumer experience is frictionless and highly transactional where required and equally immersive and promoting brand definition where that is the intent of the website.
Following our review of this market the best transactional websites are easy to navigate, “buyer friendly” and accompany this with product video previews, video conference for advice and guidance, live chat and other important consumer service facilities like “track my order”.
Alternatively, brands like Dyson have decided to create a more immersive, brand experience on their website but still enable “ease of purchase” through a stylish website and accompany this with fantastic consumer support.
Tip #5 – Payment Options
We were surprised to see that many of the home appliance manufacturers are yet to adopt some of the modern payment methods you see on many e-commerce sites.
Given the average order value (AOV) of these baskets, consumers expect some of the latest credit options like Klarna, Laybuy, Clearpay etc at the checkout.
These pay in three or four installment options, which are largely interest free through the provider, are proven to improve conversion rate and AOV.
Remember, even your payment options should link back to the consumer journey you are looking to create.
There you have it – these are our 5 tips to “winning” in the D2C Home Appliances market which is “coming to the boil” (sorry!) and will see more changes as we move into 2021.
We would also be happy to use our proprietary diagnostic tool, Centricity™ to assess where you are on your D2C journey.
Ben Willis is Managing Director of the Retail, People and Organisation practice at Hexagon
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