With lockdowns rolling on across the nation, high streets forced to temporarily close and shoppers staying home, there has been an undeniable change within the retail landscape. These changes have affected businesses of all shapes and sizes.
For manufacturers, their normal supply chain may have been through stockists and retail partners who then sell on to the end customer. However, the pandemic has inevitably impacted the high street, making it difficult for manufacturers to sell their products due to many physical shops being closed. Combined with the evolution of digital, new opportunities are being exposed that allow traditional businesses to adapt to modern day shopping behaviours.
A direct to consumer (D2C) selling model is more than simply driving direct sales, however. There is a whole host of reasons why direct to consumer selling could benefit your business.
What does D2C mean?
Direct to consumer does what it says on the tin – it involves businesses selling directly to the final consumers. This approach cuts out the middleman, allowing you to provide products to your customers without the need for third-party retailers.
Direct to consumer brands
The events of 2020 have impacted all types of businesses. But those who were already selling D2C were in a stronger position when the pandemic took hold, while brick-and-mortar stores scrambled to adapt as fast as they could.
Even some of the world’s biggest brands including Coca-Cola and Heinz to Home have adapted their models to leverage the demand of online shoppers by selling direct to their doors.
Coca-Cola
Investing in their digital capabilities to strengthen consumer connections, Coca-Cola have been adapting to changing shopping behaviours. The global soft drink manufacturer has predicted three key shopping behaviour shifts due to the pandemic:
“…a return to known and trusted brands; a huge shift towards eCommerce, and a sleeker and slimmer innovation pipeline.”
While their D2C journey began a few years ago, Coca-Cola’s direct to consumer approach has been intensified due to the pandemic. Using Magento, they have upped their D2C activity, capturing the increased online demand for at-home consumption.
Heinz to Home
Possibly the star of the D2C show, Heinz launched their first ever D2C store this year in just seven days! Providing their isolated customers with their favourite products, Heinz To Home got their foot in the D2C door and the brand is in a strong position to continue building upon this success.
Should you sell direct to consumer?
The drastic shift in shopping behaviour has highlighted just how important it is for businesses to have a direct relationship with their customers.
Research conducted by the Centre for Retail Research forecasted that approximately 20,620 retail stores will have closed their doors once and for all by the end of 2020. Although saddening for the high street, these numbers highlight the need for direct to consumer selling online. This approach can protect your business against an uncertain future.
The opportunities
The option to shop online is a welcome one this year. Many brands have taken the step into eCommerce who haven’t done so before. Others have expanded their offering to include the likes of gifting services in an undertaking to meet their customers’ changing needs.
More than generating sales, direct to consumer selling can strengthen your business in many ways:
Don’t rely solely on your retail partners
Do you rely on your physical retail partners to drive sales? If so, your sales, and ultimately your business success, are in their hands. Direct to consumer selling not only provides the opportunity to increase sales but also to pick up ones that may have been missed in store.
Take control of your customer journey
When you sell your products through a third-party, there is minimal insight into the customer journey and why your shoppers chose you over the competition. A D2C relationship allows you to engage with the people purchasing and consuming your products. You have the freedom to gather feedback on products and use this insight across your wider business operations.The manufacturer-to-wholesaler-to-retailer model was fitting in a time when managing customer relationships was tricky. However, as technology has evolved and the likes of Magento Commerce have come onto the scene, order management workflows have been streamlined. This enables control over end-to-end interaction with your customers, from product discovery all the way through to conversion.
Test new products
Having a direct relationship with your customers allows you to capture important and valuable data that you would otherwise be unable to. This data can be used across each aspect of your business from manufacturing to marketing and even distribution. As such, direct to consumer brands have the freedom to test new products or limited editions using this insight, before releasing it to the rest of the market to save time and money.
Expand your market share
eCommerce knows no boundaries. You can sell to a customer halfway across the world as easily as you can sell to a customer just down the road. Direct to consumer eCommerce brands can expand their market reach, engaging with larger audiences to gain more market share.
Increase customer loyalty
Every business wants a loyal customer base. Fortunately, customers are bought into the prospect of buying direct from the brands they love with 55 percent saying they would prefer to buy direct from a business. It’s very likely that as manufacturers become comfortable with selling direct, this trend will go from strength to strength allowing you to leverage customer loyalty.
The challenges
According to a recent study, the future of retail growth comes from direct consumer relationships. While it’s clear there are countless opportunities within direct to consumer selling, as with any growing trend, it doesn’t come without its challenges.
Partner conflict
A barrier of direct to consumer selling is the risk of jeopardising the relationships with your retail partners. Will your partners see you as new competition and drop you from their offering?
Going D2C doesn’t mean replacing your retail partners. Retailers are likely a significant source of revenue for your business, so you don’t want to pull sales away from them. You simply want to reduce your reliance on them by driving direct sales yourself.
See this as an opportunity to diversify your channels. What could you offer that your stockist don’t? It could be a limited edition of a specific product line, customisable items, bundles and pricing discounts, loyalty schemes or subscription services. Exclusively offering these while also selling the standard product on your own D2C website could be the best way of keeping everyone happy.
Why should a customer choose you?
Why should your customers come to your website when they can get the same product somewhere else? You need to create a wider D2C strategy and perhaps the help of an eCommerce consultant to guide you through this process.
It’s important to consider how you will establish your brand as a D2C provider. Your audience, even the ones who already purchase your products through third parties, won’t know you are now online. Raising brand awareness and highlighting the value you offer is key to driving traffic to your website.
Do you need a new brand?
Expanding on the need for a direct to consumer eCommerce strategy, have you considered whether your D2C channel will be for new products, existing products or premium, exclusive versions? If you’re expanding into new products, would your offering benefit from a new brand?
Many manufacturers don’t have a consumer facing brand. This means you’re relatively unknown to the people who are already consuming your products making it difficult to compete with already established stockists and third-party retailers. For some, creating a completely new brand designed solely for direct to consumer selling can help strengthen your proposition and allow you to compete with existing competition.
Do you need more people power?
Have you considered how this change could affect your people? Direct to consumer selling will require a different team structure and it’s likely new roles will be needed.
You should have an experienced strategy and leadership team in place to guide your wider teams in this new endeavour. A technical team should also be on hand to help you create a secure online shopping experience. Trading becomes all the more important as you will now be dealing with your customers directly. This could include a customer service team, merchandising and website administrators who will all play a key role in creating a positive shopping experience. Finally, your marketing team will be paramount in helping position you as a direct to consumer brand and promoting the value behind your offering.
Is D2C the future of retail?
Businesses need to be looking towards the future, into a post-COVID world. While the pandemic can be held responsible for accelerating the opportunities behind eCommerce, the change is here to stay.
Will a direct to consumer eCommerce website help you succeed? No matter what you do next, this isn’t a time to stay still. The number of direct to consumer brands were expected to grow by 71 percent in 2020 alone.
If this is a business model that suits your business, don’t get left behind. Be in control of your future, protect your brand and serve your customers directly with full ownership over a D2C offering.
Can Magento and Pinpoint help you?
When you make the decision to sell D2C, selecting the right eCommerce platform is key. An eCommerce consultant will be able to weigh up your options and help you make a decision.
Take the time to consider which eCommerce platform is best suited to your D2C objectives as each has their strengths and weaknesses. If you need further guidance, gain insight from our many years of experience in the world of eCommerce to help you choose the right eCommerce platform.
Your aim is to find the platform that will support you in meeting your customer needs, while you nurture those relationships and build for the future. Ideally, you need a platform that can scale with ease alongside your business, that will keep your customers and eCommerce store secure and is simple to maintain with the support of an eCommerce agency.
Magento offers a wealth of functionality to help you transition into direct to consumer selling by:
- Creating engaging customer journeys with the use of Magneto Business Intelligence.
- Crafting personalised shopping experiences by customising the experience of each visitor. Show different products, customised checkout and unique pricing structures based on individual customers.
- Building an omnichannel shopping experience using click and collect services and Magento’s PWA Studio for an app-like browsing experience.
As a Magento eCommerce agency, we have supported many clients in building their D2C offering. Working with renowned direct to consumer brands including Casio, Beer Hawk and Osprey Europe, we have empowered them to sell at scale, automate their shopping journeys and create personalised onsite experiences.
If you want to pick our brains on direct to consumer selling or need guidance on how to get started, get in touch with our Magento experts.
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