Brand growth in the face of new challenges
Until 2020, D2C strategies were seen as a nice-to-have. But faced with the disruption of a global pandemic, ecommerce as a whole has grown exponentially. So much so, it’s becoming a must-have for companies looking to interact with consumers, stakeholders and influencers.
The figures say it all. In the UK, it took a decade for ecommerce as a proportion of all retail to grow from 10% to 20%. During the coronavirus pandemic, it grew from 20% to 30% in just eight weeks.
More recently, global inflation has made its mark on every industry. CNBC reports that even high-income consumers are becoming more cost-conscious. Inflation is undoubtedly responsible for the global mindfulness in consumer spending.
That’s not to say D2C is the perfect solution for every B2B business out there. Traditional supply chains still work well for some brands. But even without the pandemic, it’s hard to see how the constraints of old-fashioned retail partnerships can take every brand towards a successful future.
What exactly is D2C?
Pre-internet, business was largely dictated by distributors. Today, business is different.
D2C means brands are able to produce, pack and distribute their own products. Bypassing the need to negotiate with retailers, D2C is all about cutting out the middleman.
Brands enter the market directly rather than going through a third party. This benefits the business by eliminating barriers, increasing profits, giving back control and boosting engagement.
Essentially, it brings a company closer to its customers.
But making the move from B2B to D2C is not an easy one. First, you need to understand the practical implications on business operations and fulfilment processes.
7 things to consider about D2C
Fed up with handing your profits over to retailers? Before you take the plunge, take time to consider the implications and decide whether going D2C is right for your brand.
Here are seven things you need to think about before you start building new direct sales channels with consumers:
1. Partnerships are key
When making the move to D2C, it’s important that a business doesn’t alienate its retail partners. This is easily done. Even with a hybrid model (when a business still sells wholesale to retailers as well as directly to customers), a business makes itself a competitor to its retail partners.
With a reduced reliance on partners, brands could find themselves in a stronger negotiating position with retailers. But if retailers see D2C as a threat, that bargaining power will be lost.
Rather than cutting all ties, brands need to work harder to find a way to remain close to their partners and not lose money.
Retailers might even encourage brands to move to D2C. If a business can build brand reputation through D2C, it will help sell more products through all channels. Viewed as an opportunity, businesses could reduce channel conflictions by launching new brands and products.
A study by Forrester Research found that nearly half of manufacturers said that D2C helped boost brand awareness and increase sales for their channel partners.
The trick is finding a balance that lets both the brand and partner companies boost profits.
2. Taking control of the brand (means getting personal)
Arguably the biggest benefit of D2C ecommerce is the control a business gets over its brand. Transitioning from a traditional supply chain to a D2C model means that a brand’s marketing efforts become fully focused on its customers, rather than its wholesalers.
Brands know that consumers’ expectations of them are high – and they expect personalisation.
According to data from Retail Week, 68% of consumers said they’re happy to provide personal information if they get a more tailored shopping experience.
But these expectations go beyond personalised offers. Today’s consumers want the reassurance that a brand knows who they are and understands what they want.
By giving more control to brands, not only do customers get a more personalised digital experience, it also helps strengthen the financial health of the business.
3. Consider a subscription-based model
Operating a brand on a subscription-based model could prove to be a real success. Companies that have already gone down this route are already vastly successful. That’s because they’re making it super simple for consumers to buy something they already use on a regular basis.
Of UK adults, 79% are signed up for at least one subscription service.
It was previously predicted that the subscription box market would reach £1bn by 2022. However, that was before COVID-19 turned everything on its head and created an even more lucrative market for D2C subscription-based models.
Offering a cancel-any-time subscription option encourages more people to sign up – as does an easy, no-fee returns policy. Retention rates depend on the company’s ability to adapt, recommend, make the most of technology and personalise the product or service to the individual user.
4. Website optimisation for success
If a business is going to succeed in D2C, it needs to increase its online presence and attract new D2C customers. For that it needs to be on top of SEO.
According to a report by Search Engine Journal, 51% of D2C brands say SEO is a top acquisition channel.
There’s a lot involved in optimising a website. It means focusing on the design (it needs to be mobile-friendly); adding user-friendly features (quizzes and free trials are always popular); and building up reviews (responding properly to both good and bad reviews) and more.
But it’s worth it, because the higher a website ranks in search results, the more traffic will come to the site. And D2C relies on attracting the right audience.
A/B testing: increasing conversion and retention rates
There’s one question many businesses forget to ask themselves: how much of a marketing strategy is based on what we know instead of what we think we know?
Customer data is out there and available. The problem is knowing how to leverage and analyse it. A/B testing allows brands to base decisions on accurate behavioural data rather than assumptions.
In short, A/B testing means happy customers. That translates into better click-through rates, higher conversions, more revenue, greater loyalty, and fewer complaints.
6. Getting products faster to market
Many legacy brands shy away from innovation because it can be risky. When the average new product launch takes between 18 and 36 months, it’s easy to see why.
With D2C, businesses can reduce these risks by launching a new innovative product on a smaller scale. By testing products with a focused demographic and making adjustments where required, companies can better understand what customers love or hate about a new idea.
7. Taking order management to the next level
In a B2B company, systems and operations are already focused on order management. But with D2C, there are additional requirements, such as payment options, payment gateways, single-item despatch, and returns.
Using a single piece of software to manage orders helps streamline the fulfilment process and avoid unnecessary work. Sales peaks and troughs are always going to be dealt with, but by having one central hub, businesses can avoid overselling and simplify the process of selling through multiple websites, marketplaces, and physical stores.
Supporting growth across multiple channels and touchpoints and improving conversion rates also helps a business know when to scale up operations.
Grow your brand, gain control
The biggest challenge for any business moving into D2C is the shift in responsibility for fulfilment, packaging, returns and warehousing (in addition to building your online presence).
Optimising fulfilment is complex, so choosing the right partner is crucial. Here at Linney, we optimise your ecommerce process through an end-to-end marketing service, from website optimisation and brand activation to a state-of-the-art warehouse management and distribution service.
Using the robotic storage system AutoStore™ to store and retrieve items without human intervention allows for efficient, accurate and fast order fulfilment. This ensures the smoothest experience for your brand and customers.
Our ecommerce fulfilment solutions help clients branch out into new channels and markets. To find out how Linney can help streamline your ecommerce journey and grow your brand, speak with the team today.