One of the fastest-growing strategies in eCommerce is the direct-to-consumer business model. But what does D2C really mean and why is it so popular?
The D2C model means selling products online directly to end-consumers, bypassing the middleman. This model empowers manufacturers to get more control over their brand reputation, truly understand their customers, and offer their products at more affordable prices while retaining their desired margins.
The model doesn’t come without challenges, however. When the competition is so fierce, marketing becomes expensive. Order fulfillment is difficult to manage when customers expect same- or next-day delivery. Optimizing raw material inventory management, avoiding stock-outs, and boosting production is essential in staying efficient and keeping up with customer demand.
A recent study reveals that almost 90% of consumers prefer to buy directly from the brand if given the option and more than 80% expect to be able to transact with a brand on its website. These findings pressure manufacturers to include D2C into their strategy, regardless of the challenges they might face.
The only thing left to do for manufacturers is to plan for the potential obstacles that come with going D2C and find ways to overcome them. Here we discuss 6 essential strategies to ensure success when selling directly to consumers.
Although it might seem pretty straightforward at first, going D2C isn’t as simple as building up a website and setting it live. It requires a significant amount of investment, necessary to hire new people or train existing staff, change business operations, manufacturing processes, and essentially reorganize the entire organization.
That means that adding D2C to your strategy is a major decision, which might not succeed if it lacks attention, commitment, and resources. Having every stakeholder in your organization on board with this move, involved in this process, and ready to prioritize this strategy is essential to take your organization in the right direction.Also read: Top 10 IT Skills in Demand for 2021
Bypassing the middleman has major benefits, but it also means you’ll be responsible for order fulfillment, shipping, and delivery, as well as marketing your products. Organizations ready to adapt quickly and implement new technology to help with these processes are the winners in this equation.
However, partnerships are also a solution if you don’t have the possibility to fulfill orders on your own. For example, Amazon fulfillment is a great option to ensure fast and reliable shipping for your customers.
Selling D2C also means you’ll interact directly with customers, get access to their feedback, and watch their purchasing behavior first-hand. This data is a gold mine for a D2C brand. Collecting and harnessing it the right way is essential in order to be able to refine your activities, based on customer feedback and increase their satisfaction level. You can use this data to make more informed decisions from marketing to sales, and even product development.
Younger consumers consider sustainability to be a top priority, with 45% of them deciding not to purchase from certain brands because of ethical or sustainability concerns, according to a study by Deloitte. Sourcing eco-friendly materials, mitigating waste, and running lean manufacturing processes is no longer a competitive advantage but a must in order to sell to Gen Z.
More than half of consumers interviewed in another research by Deloitte showed interest in buying personalized products or services, and 1 in 5 are ready to pay a 20% premium for that. This means that businesses not offering the option to customize a product to their customers are at risk to lose both revenue and customer loyalty.
Selling directly to consumers is a potentially profitable avenue to explore, especially if you are ready to join the manufacturing digital revolution and bring your brand to the modern world. But although this strategy comes with various benefits, it is not easy nor expensive to implement. You must have a complete overview of your business’ capabilities to add D2C as a sales channel before you embark on this journey.
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