skip to Main Content

Three Questions Food Companies Need to Ask about Direct-to-Consumer Strategies

More than a year after the COVID-19 pandemic began, the outlook for the future has changed. Vaccines offer hope on the horizon. However, even as we contemplate what the “next normal” will look like in the food sector, it’s important to take a look back on the shifts that have happened. The pandemic spurred enormous changes in the way people think about and buy their food. And some of them are here to stay. As you think about how to move your company forward during this time, you may be thinking about the right direct-to-consumer (D2C) strategies for your business. As you consider the options, here are three questions to determine whether your brand needs a D2C strategy, and how to implement one. 

  1. How have my customer’s expectations changed?
    When so many customers were adhering to stay-at-home orders and safety recommendations, they looked for ways to avoid crowded supermarkets and other food retailers. But even when they visited retailers at varied hours or opted for delivery, nearly nine in 10 shoppers found products out of stock in physical stores, according to research by Blue Acorn iCi.

    As a result, many consumers turned to digital channels to get what they needed. In fact, since the start of the pandemic, food and beverage became the number one category in online sales. Shoppers who couldn’t get what they needed in physical stores turned to digital channels. And three in four of those consumers stick with the first online store they try. So, for retailers who want or need a piece of that online business, having digital shopping options is an important part of meeting expectations. 
  2. What is my customer acquisition cost and lifetime value? 
    During the “survival mode” phase of the pandemic, many food and beverage businesses needed to pivot to new business models, including ecommerce, to survive. Your business may have started offering delivery, shipping, curbside pickup, or other methods of getting products in customers’ hands. Or you may have explored new platforms like Shopify, Amazon, Bento Box, or other new partners or platforms to meet demand for contactless transactions and digital preferences. But which of these new additions should stay with your business as regions open up and the “old” ways of doing things return? 

    The answer lies in how they contribute to your company’s financial health. Review your customer acquisition cost and lifetime value in the context of these new expenses. Customer acquisition cost is all of the costs you incurred acquiring customers divided by the number of customers you gained during the time period being measured. Your customer lifetime value is the projected net profit you expect to earn over the course of that customer relationship. Do your new offerings add significantly to your costs? Do they help you gain or retain customers? If the new offerings offer enough gains to justify the cost, the answer is simple. If not, you may need to make some choices about what to cut.
  3. How can I best build my brand and leverage customer relationships?
    For a D2C strategy to be effective, it needs to be fully integrated into your company’s omnichannel marketing strategy. As you study customers’ needs, wants, and expectations, look for ways to create an integrated strategy that will build your brand or expand your offering. For example, some food companies are striking the balance between prepared foods and groceries, offering delivery of prepared, safely sealed food that only needs to be heated—a response to new demands for convenient, safe food options. Think about how your business can continue to meet emerging needs in the midst of uncertainty and change. 

    Another essential for D2C success is to emphasize how you can strengthen customer relationships. For example, choose partners that allow you to control customer information and interactions. When you lose control of customer data and experience, you put yourself at a disadvantage. When you team up with delivery services, new sales channels, or other partners, ensure that you remain in control of data and communication options. 

As customers increasingly live “digital first” lives, D2C is a growing area of importance for food businesses. This period of change, from pandemic necessities to thoughtful, forward-thinking realities, is a good time to evaluate how a D2C strategy can best work for your company.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

Back To Top