Once upon a time, shoppers went to local stores and markets for goods. Then came the shopping mall to make buying easier. Next, technology created online shopping, and suddenly people made purchases without leaving their homes. This ability to connect directly to consumers prompted some B2B brands to dip their toes in retail waters to increase margins and deepen customer relationships. Technology made direct-to-consumer (D2C) selling easier than ever.
So, what is D2C selling, and what is the allure of retail for manufacturers and distributors? D2C eCommerce allows businesses to bypass the middleman and sell their products directly to end users. For B2B sellers up to the challenges, it provides a closer relationship with the customer, greater access to customer data, deeper marketing and sales insights, and new revenue streams with higher margins.
The challenges are not insignificant, but they are not insurmountable. Here are the main challenges and strategies for overcoming them.
1. Damaging relationships
Why mess with a model that works? Many B2B sellers fear adopting the D2C selling model due to the risk of disrupting relationships with existing partners. After all, it takes years to build relationships and perfect the distribution network for your products. You avoid slapping the hand that helps you sell your products.
But, as B2B markets consolidate, it’s more important than ever to grow your reach, differentiate from competitors, and offer customers a great experience.
The solution: Communicate openly with partners and create ways for them to continue successfully selling your products. You may share part of the customer journey to optimize customer satisfaction and retention. In addition, consider limiting your D2C offerings and give distributors exclusive rights to the newest or more desirable products.
2. Mastering a different marketing mindset
Your consumers and retail partners aren’t the same. While B2B brands know how to engage with business buyers, consumers have vastly different needs. Consumers use social media like Facebook and Instagram to learn about new products, meaning you should be there, too.
If you lack in-house B2C marketing resources, you must hire people that understand B2C marketing or work with an agency to create a new, consumer-centric marketing strategy.
The solution: Spend some time learning about your customers. It will help you define a brand image that appeals to them. Then, determine what they might be interested in based on their location, demographic profile, or past purchases. From articles to videos to social media posts, ensure it is relevant to your audience.
3. Learning to retail
Many manufacturers or distributors sell items in bulk to a small number of buyers. These transactions are very different from selling individual items to end users.
Emotion plays a bigger role in consumer purchases. These emotions can be triggered during eCommerce experiences with multiple product options, eye-catching ads, promotions, andr other incentives. Many retail buyers focus on cost and convenience.
The solution: Expanding to D2C selling requires learning about your buyers and learning how to speak to them. Consumers may be less concerned with productivity benefits, KPIs, and technical specifications and more focused on lifestyle benefits, availability, and positive products reviews from other buyers.
4. Greater competition
Ask any Amazon seller, and they’ll tell you how difficult it is to catch customer attention. Even with a simple Google search, customers are often overwhelmed by choice. And if your brand does not give customers what they want, they will look elsewhere.
Indeed, one of the biggest challenges for D2C brands is dealing with increased competition in the B2C space. Whether you sell on a platform like Amazon or start your own D2C site, you need a competitive advantage to stay in front of customers.
The solution: While you may think listing on Amazon will dilute your brand or commoditize your product, it may do the opposite. Your product can be in front of new audiences that are only found on alternative selling channels, leading to greater reach and sales.
5. Integrating multiple models and data
Many B2B brands are not prepared to manage D2C selling. It requires an investment in technology, marketing, and new channel management. In addition, the new data captured must not remain in silos, but flow throughout the organization.
With direct access to customer data, D2C brands can launch new products, test customer reception, and gather feedback. This way, brands can prioritize money-making initiatives, tweak what works, and discard what doesn’t.
The solution: Partner with professionals that understand technology integration. They will help you overcome back-end integration challenges such as integrating warehouse management, inventory, and order processing. The same applies to other areas of your business – from marketing to customer service to overall customer journey optimization.
6. Omnichannel shopping
Customers expect seamless experiences regardless of how they interact with brands. They can reach out to you online, explore in person, and cross-shop your product with your competitors. Sometimes at the same time!
They also increasingly expect more sophisticated payment and shipping options and the ability to order online and pick up at a physical location.
The solution: Let your understanding of your customer power your omnichannel strategy. Focus on activities that drive engagement, relationships, and retention. Next, align your marketing, supply chains, and eCommerce to support their shopping experiences.
7. Internal commitment
Many D2C initiatives fail to get off the ground because the leadership is not on board with the idea. Like with any other transformational initiative, cross-functional and channel collaboration is key.
The solution: To succeed in D2C eCommerce, company leadership must be drive D2C initiatives. They should play an instrumental role in planning, evaluating, implementing, and monitoring channel performance. Only once everything is running smoothly can leadership pass the baton over to the appropriate business areas.
8. Inventory management
Adding a D2C sales channel creates change in the back office. This includes how inventory is distributed and what’s available, and where. For example, if you have a distribution center, a pickup point, and an online store, you must determine availability by location.
The solution: Perform an audit of the changes you must make to inventory management. Avoid creating bottlenecks or problems with inventory movement. Instead improve visibility into stock levels and improve the experience for B2B and D2C customers.
9. Order fulfillment
Today’s shoppers are accustomed to Amazon two-day deliveries. This requires an approach to order fulfillment that may be difficult for some companies. Many manufacturers and distributors lack the additional warehouse space and the ability to maintain quality control, or don’t have the human resources to manage fulfillment, last-mile delivery, or returns.
The solution: One option is researching and integrating with 3PL partners, while the other is building an in-house warehouse and fulfillment network. Evaluate the pros and cons of partnering with a fulfillment provider or building your network in-house to serve your needs.
10. Technical infrastructure
D2C eCommerce requires the support of enabling technology and infrastructure. Any D2C brand must have the right selling platform, back-office integrations, analytics, and other systems. In addition, the whole system must be robust enough to work seamlessly yet flexible enough to change and adjust to new technologies and market conditions.
The solution: Start your evaluation of digital commerce solutions and infrastructure with the right capabilities in mind. Consider features like personalization, multi-organization, international selling, and robust workflows that you need for success.
Ask questions about the platform architecture, APIs, extensions, and partner ecosystem. Look for solutions that appeal to B2B and B2C selling, with the flexibility to adapt to complex back office processes and the ability to help eliminate channel conflicts that get in the way of reaching business goals.
How OroCommerce Can Help Your DTC Strategy
In our experience working with B2B eCommerce businesses, we learned that expanding to D2C is only possible with software built for the task. To make success possible, we developed a platform built from the ground up for B2B selling that also offers B2C capabilities that many of them desire. The result is a B2B eCommerce platform that simplifies efforts of expanding into D2C and charts a path to success.
It includes capabilities like:
- built-in CRM systems for a 360-degree view of B2B and B2C customer interactions.
- the ability to segment customers and tailor custom messages and experiences to them.
- supporting multiple storefronts and selling scenarios out of a single platform.
- offering all-in-one visibility for multichannel order management, tracking, and fulfillment.
- powerful workflows to help realize virtually any pricing, ordering, or shipping scenario.
The Next Steps to D2C eCommerce Success
Make no mistake about it – D2C eCommerce is a challenging endeavor.
Fear of damaging relationships, adapting to retail marketing and selling, and managing new data and integrations can be difficult. And introducing new strategies and technologies to overcome these challenges can seem like a never-ending effort. Luckily, every challenge has a solution.
Aside from having the right mindset, resources, and vision, you’ll need to partner with a technology partner to make your digital commerce plans reality. If you’ve got questions, why not start the conversation with Oro digital commerce experts? They will help you arrive at an answer that makes sense for your business.
why OroCommerce was recognized as Visionary in the 2022 Gartner Magic Quadrant report.
Questions and Answers
Why do B2Bs not sell directly to consumers?
While D2C is gaining popularity, not all businesses can embrace this selling model. Some companies delay selling to consumers because they do not understand the market, struggle with addressing partner resistance, or maintain the desired customer experience across channels. Others have limited resources to invest in marketing and SEO to position their brands to consumers. Lastly, B2B brands grapple with the hard choices of business and mentality transformation needed for selling to consumers.
What is the biggest challenge of selling to consumers?
Some of the biggest challenges are internal and external (partner) resistance, lack of investment, and lack of strategy. Expanding to D2C is not only about getting the right people in place, investing in technology and marketing activities, or even planning – it is about the act of transformation – putting that plan into action. Keep your eye on all the moving parts to successfully get D2C selling off the ground.
Why do B2B businesses fear D2C selling?
Many business leaders and salespeople fear D2C because it presents a new paradigm for customer expectations and customer experience. It creates more risk and consequences of poor decisions. The right D2C strategy is crucial. With careful planning, evaluation, and subsequent implementation, you can proactively address critical issues and guide your company to a smooth transition to D2C selling.