Thsi article was originally published at Manufacturingdigital.
To say the pandemic changed eCommerce would be a massive understatement. Aside from the migration to online shopping, many manufacturers started investing in selling directly to customers – also known as D2C commerce.
Long before the pandemic, many forward-thinking manufacturers embraced the D2C and built successful businesses with this selling model. Dollar Shave Club, a shaving razor manufacturer, introduced the first D2C razor subscription service on the market, disrupting the industry dominated by Gilette. The D2C underdog grew from $4 million to $240 million in revenue in just four short years.
Similarly, Casper, a mattress manufacturer, uses web content and their eCommerce website to convince customers to buy a mattress sight unseen. They designed an easy purchase process to make it easy to purchase mattresses in a traditionally cumbersome, offline-only buying journey. They’ve designed their mattress to fit into packaging for easy delivery by mail. Within two years, Casper reached $100 million in revenues, making it a role-model for the competition.
So why aren’t all manufacturers experimenting with some form of D2C? The reality is that direct-to-consumer selling is not for everyone. There are some things to consider as you evaluate whether D2C selling is right for you and whether you’ll succeed in the long run.
Why is D2C Attractive for Manufacturers?
Essentially, the D2C business model eliminates the middleman for manufacturers – that is, wholesalers and distributors, to sell to customers directly. However, eliminating the middleman, simplifying supply chains, and passing on the potential cost savings to customers aren’t the only reasons manufacturers are attracted to the D2C model.
More control of prices
When you sell D2C, you control the prices. Since there are no distributors to partner with, you won’t have to worry that they will slash prices or dilute the value of the product.
More control of product
With a shorter line of communication with customers, you can bring products to market faster, iterate, and collect feedback from customers.
More control of relationships
Remove distributors and retailers, and you can forge relationships directly with customers. This approach offers numerous advantages, such as greater customer focus, agility, and competitive differentiation.
More control of data
Over time, you’ll be able to use this richer understanding to tailor your products, promotions, and marketing campaigns to the needs of different customer segments.
The prevalence of online shopping means that customers are just a few clicks away from purchasing your products. With some marketing magic and digital commerce technology under your belt, it’s never been easier to scale a D2C brand – even if you’re a relatively unknown manufacturer.
There Are Risks to D2C, Too.
Given all the advantages, going the D2C route isn’t a path to guaranteed success. If you plunge into selling direct to customers without adequate preparation and considering the potential downsides (and every industry is different here), you could be headed for disaster.
Many of those who succeed with D2C start their business this way. That’s because they don’t have to worry about existing partner relationships and how existing consumers will see their brands. There’s no fear of disrupting existing distribution networks or cannibalizing sales on other channels (because there are none).
To mitigate such risks, established brands often need to hire new staff, retrain existing ones, and focus on communicating with distributors and retailers to get them onboard.
Is Your Company Ready for D2C Selling?
While selling D2C is not entirely risk-free, there are numerous benefits to moving to this sales channel. Being aware and having a clear business strategy can make or break your D2C plans. Realize you’ll have to double down on changing your organizational processes, rebuilding existing partnerships, retraining employees, not to mention marketing to customers. But doing so the right way will guarantee greater sales and long-term success.