By Thai Son, Chief Executive Officer, SmartOSC
For ages there were clear distinctions between B2B and B2C. The factory sold to stores in bulk (B2B), and stores sold to consumers in smaller quantities and at a mark-up (B2C). This model worked fine. Until 20 years ago, when the initial Dot-Com wave permanently changed these market dynamics.
The potential to distribute through resellers combined with the new capability to sell products online and ship them directly to buyers was a tremendous change. It offered brands the ability to creatively experiment with how and where they would distribute, what their retail partnerships would look like, and whether they wanted to open storefronts or go with an ecommerce only approach.
The direct-to-consumer (D2C) model allowed them to offer customers modern experiences tailored to their preferences and behaviors from end-to-end. The biggest problem was large corporations and manufacturers didn’t know exactly how to do this yet, so many relied on marketplaces to learn the ropes before investing fully in their own ecommerce storefronts.
As a result, we now see many huge manufacturers present in both conventional retail spaces and online via branded ecommerce sites. Whether a mixed D2C and conventional retail approach or a pure D2C one is better depends on the specific direction and goals of each manufacturer. But there are some immediately apparent advantages of having an online D2C sales channel, including:
- Personalization and customization
- Greater product variety
- Guaranteed stock
- Exceptional service
- Increased cost control
- Influence over marketing, production, and distribution
- Opportunities to connect (email marketing, social media, etc.)
- Actionable data insights
“Direct-to-consumer brands are shaking up the consumer goods market by owning the whole customer experience, rather than simply the product, and there are aspects of how they operate that all brands could learn from.”
How manufacturers can successfully adopt the D2C model
There are three areas of focus that successful D2C brands all share. Manufacturers looking to embrace D2C should consider how to harness each for their unique spaces.
1. Lean products
Historically, brands needed to maximize the effectiveness of their shelf space. This meant selling tried-and-true products was the only way to go. But ecommerce has brought about a trend of companies setting themselves apart through the use of niche products or highly creative branding and product design.
Lean is often the way to go when trying something new. A lot of the hugely successful D2C ecommerce pioneers started by promoting one or very few products they knew they could do exceptionally well and relied on that promise of quality and consistency to win over customers before developing further.
This trend also dovetails nicely with the minimum viable product concept, where you offer just enough value for the first wave of customers to buy, try, and give feedback. This allows you to further improve the product quickly, without waisting money on an inventory of sub-optimal products.
2. (Re)Launch with a bang
To penetrate these highly competitive markets, D2C brands need to make a lot of noise both before and during their launch. Unless you’re a multinational brand that already has everyone’s attention, you’ll need to be creative and rely heavily on turning your early adopters into micro-influencers from the get-go.
“Their competition was well-known. They were not. Their competitors spent millions of dollars on advertising every year. They could not. They needed to change this state of play quite rapidly and get at least some semblance of traction — otherwise, they would not be able to survive.”
This shouldn’t deter manufacturers from going D2C, but rather motivate them to become more creative with their marketing efforts. Remember the freedom of the direct-to-consumer model creates a blank canvas for portraying your brand.
One way brands have scaled quickly is by offering incentives to early adopters, such as free or discounted products for those who get a certain number of friends to join their email list or competition entries triggered by tagging a specific number of friends on social channels. Manufacturers should get creative as they (re)launch their D2C approaches.
3. Customer Experience
It’s the ecommerce buzzword of the century: customer experience. But for good reason — as long as you know what it means today. It no longer only highlights how a customer feels after purchasing your product, or their opinion of your brand.
It refers to the effect the entire journey has on each customer. Experience Commerce is the term Sitecore uses for relevant, holistic, seamless, and personalized commerce journeys. The type of journeys that make customers feel cared for, appreciated, and understood.
Successful B2C ecommerce brands are pushing the limits of what Experience Commerce means, paying attention to every aspect of the business that might touch the customer and improving accordingly.
It should be no different for D2C.
With your business in a customer-facing position, you need to work to keep customers satisfied and making repeat purchases — and that means ensuring their journeys are personal, connected, and relevant.
As you’re no doubt aware, that’s easier said than done. But the first step to getting to your goal is determining where you’re at relative to it. When it comes to Experience Commerce, Sitecore created a self-assessment questionnaire to help you do just that. Download it here to determine where you’re at and your next best steps.
Thai Son is an entrepreneur and the Chief Executive Officer of SmartOSC. Follow him on LinkedIn.