Top Interesting Digital Initiatives from brands to drive direct to customer engagement
By Gopi Vikranth, Nandini Mathan and Itika Yadav
Over the last two years, the world has changed; no surprises. Digital became the preferred channel of how consumers interact with brands and Covid-19 has elevated that.
With e-commerce sales in the U.S. reaching $870 billion in 2021 (14.2% increase over 2020 and 50.5% increase over 2019), this has propelled more brands to expand direct 1:1 consumer relationships at a rapid pace. While most played catch up, some brands ran experiments that could move the needle — a few of which are likely to stay around.
This article is a detailed version of the “Top ten Digital Experiments” article published in March 2022, giving detailed insights across all the trends.
Shopify is arming the e-commerce rebels beyond Amazon
2021 saw a lot of DTC and digital brands launching on Shopify as the total number of merchants increased to more than 2M. The platform serves as a powerhouse for some big brands like — Heinz, Allbirds, Gymshark, Kylie Cosmetics and Staples Canada.
Chicago Bulls and French Connection are some prominent names that moved to Shopify during the pandemic.
The company nearly tripled their revenue, more than doubled their gross merchant value ($175.4B vs. $61.1B in 2019) and, the Shopify team and number of merchants using Shopify doubled in 2021 as compared to 2019 levels.
Retailers continue to accelerate their DTC and 1:1 customer relationship efforts
Pandemic accelerated DTC as a preferred channel for many brands to establish 1:1 direct relationship with customers. While Nike and Under Armor were early movers, many brands accelerated their DTC efforts 2021 onwards.
- Adidas announced its plan to get 50% of its sales from DTC by 2025, up from 30% in 2019 and 40% in 2020. The retailer expects the strategy to drive more than 80% of the company’s net sales growth over the next four years
- Nestle expects to nearly double its e-commerce sales to 25% of its group total by 2025 from 13% in 2020, by stepping up marketing and technological investments. The company would use the investment to generate 400 million first-party data points up from 205, that will feed into an analytics system to predict out-of-stocks and where sales can be boosted
More grocery chains are stepping up to have last mile delivery parity with Amazon
The demand for online groceries has skyrocketed during the last two years, and retailers are looking to secure loyalty among millions of newly active online shoppers by launching membership programs.
- Walmart+ has ~32M members and is the company’s answer to Amazon Prime. The subscription service costs $98 a year, includes features like fuel discounts, scan & go option for faster shopping in stores through the Walmart app, unlimited free delivery, free six months of Spotify Premium, free next-day and two-day shipping of groceries and other merchandise from Walmart stores. And this isn’t the first time, Walmart is taking on Amazon — in the past too it has launched free one day shipping to compete with Prime
- Kroger debuted Kroger Boost in November 2021, which offers no-fee delivery service and also doubles the number of fuel points members earn for every dollar they spend on groceries
- Albertson’s launched its subscription service FreshPass in August 2021, offering unlimited free grocery delivery for $99 a year
- Publix Super Markets no-fee club membership program called Club Publix and 7-Eleven’s 7NOW Gold Pass subscription delivery service launched in 2022, featured waived delivery fee and other benefits
More QSR brands are trying to build recurring revenue through subscription programs
The F&B industry has seen more players launching subscription programs recently, to acquire customers beyond their enthusiastic cohorts.
- Panera Bread’s Unlimited Coffee Subscription Program, offers a $9 monthly subscription offering unlimited coffee and tea purchases for its MyPanera loyalty members. Panera initially piloted the program at 150 restaurants for more than three months and saw ~ 25% increase in new MyPanera members asking for the deal. It also saw frequency of visit jump by more than 200% after signing up compared to before and food attachments for subscribers grew by 70%
- In 2021, On the Border Mexican Grill & Cantina launched its Queso Club Subscription program at just $1 per year. The yearly membership comes with the purchase of a bowl of Queso at sign-up and is part of the free Borders Rewards Program. Members get free Signature Queso with every order, once a day, for the next 365 days
- In 2022, Taco Bell debuted its Taco Lover’s Pass, a subscription plan nationwide, after running it for pilot in 2021 at some locations in Arizona. Available on the Taco Bell app, the Taco Lover’s Pass allows customers to redeem one of seven tacos a day for 30 consecutive days at participating U.S. locations, all for the price of $10 (can vary depending on the customer’s location)
- Sweetgreen launched its subscription pilot, Sweetpass in January 2022, offering a daily discount of one $3 credit per purchase per day for a monthly $10 payment. The pass was available for purchase through mid-January and valid for 30 days
Meeting the customer at their preferred location through BOPIS is becoming a key differentiator
Pandemic has seen retailers embracing Buy Online, Pick Up Somewhere trend at breakneck speed to meet customers where they are. BOPIS strategy connects online and in-person retail experiences — supporting a stronger omnichannel customer journey and enables retailers to meet evolving customer demands.
Sephora, Target, New Balance, Best Buy, Ulta Beauty, Walgreens and many more have launched BOPIS and we expect that this trend is likely here to stay.
- Sephora and New Balance launched Reserve Online, Pick Up in Store option for their customers and Sephora even introduced BOPIS option in April 2021 to bridge the online and in-store retail experience
- Albertsons installed an automated pickup kiosk at a Jewel-Osco store in Chicago in January 2021. The kiosks hold products in two temperature zones — regular and deep freeze. Shoppers designate a two-hour pickup window when ordering and then scan a code at the machine when they arrive to receive their groceries
- Target, is testing innovations by piloting a Buy Online, Return To Store, Coffee While You Wait feature. The company will begin testing the option for guests in select markets to add a Starbucks order or make a return within Target’s free, contactless curbside service through the Target app. Target will also expand its “backup item” functionality in even more categories to allow guests to pick up everything on their lists. The company’s digital business more than doubled during the last two years, Order Pickup, Drive Up and Same-Day Delivery with Shipt accounted for more than half of those sales
Brands are experimenting with AR and VR to offer immersive experiences
Not just luxury brands but furniture giants like Ikea and Wayfair have leveraged the power of AR and VR to cater to the new age customer.
- Burberry collaborated with ELLE Digital Japan in 2021, to create an interactive virtual replica of its flagship Ginza store, allowing customers to navigate around and purchase items from Spring/Summer 2021 collection by selecting digital icons
- Gucci designed its first digital-only sneakers “The Gucci Virtual 25” for people to try on using AR in 2021, that can be purchased through company’s mobile app. Buying them within the Gucci app unlocks an in-game downloadable version of the trainers that can be worn by users avatars on the virtual reality social platform VRChat and online game Roblox
- Snapchat added more virtual try-on and AR shopping features allowing shoppers to try on clothing, glasses, purses and bracelets virtually in 2021. Farfetch and Prada were early movers to leverage Snapchat’s new features
- Farfetch used the apparel try-on tool with a few jackets from Virgil Abloh’s Off-White collection
- Prada used the tool that detects hand gestures, allowing people to see how various Prada purses would look on them by using a “swiping” hand gesture to change the colors
Brands launched their first digital collectibles (NFTs)
2021 has seen Gucci, Givenchy, Nike, Burberry and many more launch their NFTs, to engage a newer generation of customers. And with NFT market expected to grow to ~$240B market by 2030 and digital collectibles from luxury brands making up 8% of the space by that time — this represents interesting potential for brands.
- Prada teamed up with Adidas to release its first NFT that will feature user-generated and creator-owned art
- Virtual sneaker brand RTFKT Studios’s (now acquired by Nike) created 600 pairs of virtual sneakers that were sold for ~$3.1M
- For its fall 2021 collection, Gucci partnered with the art auction house Christie’s on an NFT video called “Aria,” which sold for $25,000. In May 2021, a digital replica of Gucci’s Dionysus bag was sold on Roblox’s platform for around $4,115, making it more expensive than the physical bag itself
- The Coca-Cola Company launched an NFT auction for International Friendship Day
- Taco Bell created a series of NFT gifs to raise funds for a scholarship program, selling them in under 30 minutes
As NFTs continue to garner mainstream attention, more brands will jump in and start to experiment with releasing digital collectibles. For brands, this is an opportunity to generate additional revenues and engage with a core fan base by creating exclusive experiences.
Branded virtual gaming experiences
As consumers have become more fascinated with virtual worlds, Nike, Balenciaga, Hyundai, Vans and alike have started collaborating with games like Roblox, Fortnite and Minecraft, to engage these customers.
Platforms like Roblox and Fortnite act as a key testing ground for consumer receptiveness to marketing in the metaverse. Beyond creating branded digital worlds or items, brands are also showing up in these environments (metaverse) through digital advertising.
- Fortnite and Balenciaga collaborated in 2021, to release limited edition run of real-world items including hats, t-shirts and sweatshirts to be worn in Fortnite. The duo also launched a limited-edition collection of physical apparel, that players can purchase at Balenciaga stores or at the retailer’s website
- Hyundai Motor launched its first metaverse space — “Hyundai Mobility Adventure” on Roblox in October 2021. It contains five themed parks, showcasing the company’s future mobility products and enables users to meet and communicate with one another and experience Hyundai Motor’s mobility offerings in the form of “avatars”, digital characters representing the participating players
- Nike teamed up with Roblox to create a virtual world called Nikeland, wherein users will be able to dress up their avatars in Nike-branded sneakers and apparel. The company eventually plans to integrate in-play moments that emulate global sporting events
Influencer marketing has gained share across brands
The global influencer market is predicted to reach $16.4B in 2022, as brands look at it as a powerful way to reach out to GenZ and Millennials.
With 46% of marketing professionals planning to increase their influencer marketing investments in 2022, brands are aggressively investing in influencer marketing. In fact, more than 56% of marketers who invest in influencer marketing work with micro-influencers.
- Dior with Buttermilk Agency launched its “Love Your Skin Without Compromise” in 2021. They onboarded a combination of micro and macro influencers to produce 1886 pieces of unique branded content that could be used across Dior’s social channels. The campaign achieved a 96% positive brand sentiment
- Virtual influencers like Rozy in Korea and Li Miquela with over 3 million followers on Instagram are gaining popularity among the younger cohort of customers too. Companies are becoming more active in rolling out virtual influencers to attract younger generations familiar with AI technology and virtual personalities such as Siri
The rise of social and live commerce: The $492B global social commerce industry is expected to grow three times as fast as traditional ecommerce to $1.2T by 2025. And this growth is predicted to be driven primarily by Gen Z and Millennial social media users, accounting for 62% of global social commerce spend by 2025.
Live-commerce-initiated sales could account for as much as 10% to 20% of all e-commerce by 2026. The last two years has seen brands globally leveraging social commerce to reach a wider audience and offer a frictionless buying experience.
- Japanese brand Shiseido Travel Retail hosted its first-ever VIP event in Hainan in 2021, offering an immersive showcase for Shiseido’s luxury Future Solution LX Legendary Enmei line. The campaign was extended digitally through a livestream by Li, which generated 12M impressions
- Beauty brand Glow Recipe joined TikTok’s shopping program in April 2021 and now 90% of the traffic it generates are first-time buyers. The brand’s sales surged 600% after it was featured in a TikTok video by an influencer with over 7M followers
The increasing consumer affinity with these platforms is driving companies like Instagram and Facebook to bring out new features that help brands and consumers interact more seamlessly. Facebook launched a range of new shopping and discovery tools, including Shops on WhatsApp, and Shop listings in Facebook Marketplace, as well as a new visual product search option on Instagram which looks very familiar in 2021.
With the rise of digital experiences and shifting consumer expectations, the future will see brands meeting consumers where they are, and in the manner they want to interact with the brands. The digital world has become the great equalizer of brand experience and it is crucial for brands to reconsider the way they approach consumers.
