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The advent of videostreaming and ecommerce has shed light on the huge success businessescan enjoy with a direct-to-consumer (D2C) model. But how arebusinesses using D2C to cut out the middleman? This article discussesthe issue with reference to Apple (NASDAQ: AAPL) , Nike Inc(NYSE: NKE) , Shopify (NASDAQ: SHOP) and QYOUMedia (TSXV: QYOU) (OTCQB: QYOUF) .
QYOUMedia (TSXV: QYOU) (OTCQB: QYOUF) operates as a media company.The business produces and distributes content created by social mediainfluencers, artists and digital content creators on televisionnetworks, satellite television, over-the-top media and mobileplatforms.
On theback of the successful launch of its fifth Indian TV channel through its Q India brand, QYOUMedia has released its first D2C app. Q Play is free to downloadon the Google Play Store for smart TVs or smartphones.
QYOUMedia has rapidly built its audience by focusing on collaborationwith India’s coolest and most popular social media stars. Theseinfluencers have huge followings and a bank of pre-existing content,allowing Q brand channels to quickly build high-quality programmingwith a massive audience.
CEO and Co-Founder Curt Marvis, commented:
“In less than 2years we have grown the audience for Q India branded content fromsingle digit millions weekly to over 125 million today. This is amajor accomplishment that is driving much of our product developmentin 2022 and beyond.”
“We call it our “loudspeaker” and we fullyintend to use it to deepen our engagement directly with our followers.This also increases our ability to deliver the right kinds of content,brand offerings and ultimately deliver what they want while ultimatelymonetizing our audience as effectively as possible.”
With the company havingrecently reported record revenues of CA$6.9m, an increase of 163%, and the launch ofseveral channels targeting young Indians, QYOU Media’s new D2C appcould spur further growth.
Apple Inc ( NASDAQ:AAPL ) designs, manufactures and markets smartphones,personal computers, tablets, wearables and accessories. The companyoffers payment, digital content, cloud and advertising services.Customers are primarily in consumer, small & mid-sized business,education, enterprise and government markets worldwide.
Apple Inc is one of themost recognisable D2C businesses. The company’s products areavailable to consumers through its website and its distinctive brickand mortar stores, which are a major part of its brand identity.Indeed, its App Store also allows the business to manage digital salesof its software to users of iPads, iPhones and Macs.
These D2C shopfrontshave been enormously successful for the company. It stated in January2022 that the App Store alone had generated $260bn for developers and that 2021 had been a recordyear for the platform.
The ownership of this apparatus gives the business asignificant amount of control.
For example, the business revealed in Septemberthat it is hiking App Store prices in Europe and Asia to combat the impact ofsome international currencies’ current weakness against the USdollar. For some platforms such a move might be a disaster, but thepopularity of Apple Inc’s products indicates that this might be achange that consumers simply have to swallow.
But this strangleholdcould break in future, particularly as the cost-of-living crisisbegins to bite. Indeed, Apple Inc has already backed down from plans to increase production of its recentlylaunched iPhone 14 in the wake of unexpectedly low demand.
Nike Inc ( NYSE:NKE ) designs, develops and markets athletic footwear,apparel, equipment and accessory products for men, women and children.The company sells its products to retail stores, through its ownstores, subsidiaries and distributors.
Nike Inc has really thrown itself into thetask of removing the middleman by embracing D2C tactics.
The company’s fourthquarter earnings , which were released in late June, showed that revenuefrom direct sales to consumers grew by 7% to $4.8bn during the periodas its digital offering showed particular strength.
This led Matt Friend,Executive VP and CEO, to comment:
"Two years into executing our ConsumerDirect Acceleration, we are better positioned than ever to drivelong-term growth while serving consumers directly atscale."
Nike Inc first announced intentions to improve its relationship with customers back in 2017, citing aneed to be “more aggressive in the digital marketplace” and focuson the constantly changing needs of customers.
Despite the apparentsuccess of its direct offering, the company is facing challenges, asdealing directly with customers has not allowed the business to escapesupply chain issues. Indeed, the end of September saw Nike Inc’sshare price drop sharply after it emerged that shipping difficulties left the business unable toshift large quantities of its merchandise before demand fell.
Shopify ( NASDAQ:SHOP ) provides a cloud-based commerce platform. Thecompany offers a platform for merchants to create an omni-channelexperience that helps showcase the merchant's brand.
While not itself a D2Cproposition, Shopify is reaping the benefits of the rise in popularityof the business model. That’s because the company aims to givemerchants the power to run their own ecommerce stores, essentiallypowering other businesses’ D2C offerings.
Indeed, Shopify ischampioning the idea that businesses must expand beyond the D2C modelto a connect to consumer, or C2C , model. Thebusiness says merchants must seek to form genuine connections withcustomers and is tailoring many of its new tools for thispurpose.
Whetherthis kind of experience is the future of ecommerce remains unclear,but Shopify’s offering is clearly resonating to some extent. Thebusiness’ most recent earnings update, which covered the three months ended 30 June2022, saw revenue climb by 16% to $1.3bn as merchant solutions revenuerose by 18%.
However, the business has faced some difficulties recently.These include the business cutting 10% of its workforce at the end of July as CEO Tobi Lutkecautioned that the company’s expansion plans had not beensuccessful.
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