Should you sell direct to consumer (DTC)? The internet has changed how products are sold. Manufacturers who previously relied on a network of brick-and-mortar wholesalers and distributors are now using digital channels to sell DTC. New channels such as online marketplaces like Amazon, Wal-Mart, and Home Depot augment company-owned websites.
Is selling DTC right for your manufacturing business? Selling DTC takes a different mindset in everything from packaging to messaging; however, it can be highly profitable. If you decide to explore your B2C options and pursue DTC selling, here are a few things to keep in mind.
The Benefits of Selling DTC
Selling DTC for manufacturers provides many benefits. That’s why more and more manufacturers are adding DTC channels. From better control over brand image and pricing to better data, here are just a few benefits of selling direct to consumers.
Reduced time to market
Selling DTC reduces the time to market for new products and reduces the length of the sales cycle. Product development cycles improve as well as you can prototype, test, and move to market quickly. Since consumer feedback is direct, you iterate, respond, and improve with agility.
Improved brand control
When you sell directly to end users, your brand image can’t be distorted or diluted by third-party vendors. You maintain complete control of the brand image and message. A Kelton Global survey of customers finds that 42% of shoppers expect to buy directly from brands online.
Better price control
When you sell DTC, you have better control of product pricing. Not only does selling direct provide a means to reinforce MSRP, but you can communicate directly with buyers about price points. DTC channels provide an opportunity to strengthen value proposition messages.
Rich customer data sets
Quit relying on warranty cards and product registrations to get end-user data. When you sell direct you can gather a goldmine of consumer data. This improved customer data allows you to create more effective promotions, better products, closer consumer relationships, and the basis for even more sales.
Mitigating the Potential Risks of Selling Direct to Consumer
Selling direct to consumer isn’t without risk. However, if you anticipate these risks, you can mitigate the negative impact they might have. It’s all about having a plan to offset potential adverse effects.
Potential Damage to Relationships
Manufacturers rely on strong and long-standing relationships with their wholesalers, distributors, and retailers. Making the move to DTC sales can be perceived by these third parties as a threat to their business.
Mitigate this risk with openness and transparency. Communicate plans before implementation. Focus on the goal of customer satisfaction. If the customer isn’t happy, nobody is happy. Remind wholesalers, distributors, and retailers that they provide access to multiple brands, products, and lines. As a manufacturer, you can’t compete with these offerings. Also, create exclusive products for your B2B channels that you will not make available through your DTC channels. Consider offering exclusive colors, finishes, sizes, or features not available in your DTC products.
A Retail Infrastructure and Mindset
Selling direct to consumers requires a deep understanding of retailing. This includes customer expectations for the purchasing experience and the more extensive support required by retail sales. Failure to create the expected customer experiences or failing to provide adequate human resources can damage the brand’s image.
Mitigate risk with the digital and human assets you need for selling, shipping, and supporting direct sales. Consumers buying online want an Amazon-like experience. So, make the website as self-serve as possible. Offer click-to-chat for support or sales information and ensure that customer service and social media marketing can listen as well as interact. Consumers expect fast shipping, intuitive packaging, and frictionless returns.
Frank Lowe can help you explore consumer-friendly packaging and packing options. Our packaging solution team will get to know your products and your customers. Then together we can explore your options including extruded polyethylene foam, cork, and felt pads. We’ll pursue the most effective and cost-efficient solutions. Then we’ll create custom protective packaging needs. Whether you need to simply protect the corners or the entire product, Frank Lowe solutions are designed for your specific needs.
Selecting the Right Channels
Once you’ve decided to test D2C sales, you’ll need to identify the proper channels for your products. You might want to start with just a few products or lines to test your D2C strategy or start with a single channel and scale up as you validate.
This is the traditional channel manufacturers use to create an experience where customers interact directly with the brand. It is enabled with eCommerce so sales start and complete on the website. You’ll gather valuable analytics on each visitor and information about every customer. The revenue and data are all yours.
According to McKinsey & Company research, the COVID-19 pandemic shifted consumer buying habits and accelerated the popularity of digital marketplaces. Consumers expect more personalization in the buying experience, and marketplaces are delivering. Long-established marketplaces such as eBay, Walmart, and Home Depot have loyal fans that make their favorite marketplaces their first stop when researching a purchase. Place your products on these marketplaces and immediately gain access to their following. eBay offers the ability to participate in online auctions or sell at an established price. The marketplace operator assumes the risk of fraudulent transactions, and they don’t share analytics. You’ll receive minimum customer data and must pay to participate in the marketplace.
Amazon is such a large and powerful marketplace; it deserves consideration on its own merit. Amazon operates two marketplaces, one for consumers and Amazon Business for more traditional B2B products. Both are huge. Selling on Amazon puts your products front and center of buyers who make Amazon their first and last stop when making a purchase.
It also requires attention to packaging. When you sell using a fulfilled-by-Amazon model, your products will be handled by multiple warehouses and be subject to additional handling. Once again, this is where it pays to work with Frank Lowe to explore your packaging options, pursue the right solutions, and create consumer-friendly packaging that can stand up to the rigors of Amazon processing.
Is Selling Direct to Consumer Right For You?
Selling direct to consumers can be highly profitable when done correctly. However, you must adopt a consumer-first mindset and be ready to engage in different methods of marketing and selling. Consumers have high expectations for customer experience, shipping, and customer service. Make sure you can meet or exceed expectations.