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Going Direct to Consumer While Maintaining Your Relationships with Retailers


January 27, 2022
7 MIN READ
Vinculum
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Vinculum
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With changing times, the consumer’s shopping preference has seen changes too. Earlier, what used to be the procedure of going to market and purchasing the required stuff has now changed to simply sitting in the comfort of our home and shopping for everything online, whatever the products may be. And that is why all brands must turn to the D2C (direct-to-customer) model.

A D2C channel is highly recommended for brands as it is very convenient for consumers. The advantage of shopping online is that consumers can purchase a product from any website or even the brand having the D2C channel itself. This hasn’t usually been the case when consumers had to reach out to stores, as stores had to be sure of keeping their stock full almost every time.

A D2C channel may comprise commercial websites, apps, and direct sales by phone. But they don’t replace traditional retail channels completely. Instead, they are more like a complementary channel for brands to sell their products. As seen from the recent trends, many brands are going the D2C way instead of just relying on physical shops.

In the usual B2C (Business to Consumer) model, the company selling the product could be anyone, either a retailer, or marketplace, or a manufacturer selling D2C. The scenario has evolved such that a brand can sell their products through the B2B (business to business) model, i.e., selling their products wholesale through a B2C (business to consumer) retailer or selling their products directly to consumers D2C channel online.

Why D2C:

A D2C model helps the brands significantly expand their reach to many new customers and build relationships with the existing ones. The brand’s sales increased too much higher numbers than the usual retail channels. Plus, the brand can garner reviews and collect data directly from the consumers, which they can use to improve their business.

Advantages of going D2C

  • First-party data accessibility to personalize customer

experience In the B2C channel, only the retailers or the marketplace have access to the customer data. But they don’t share this data with the brand whose products they are selling.

Hence, if any brands sell their products directly to customers, they have access to all the collected data themselves. They can leverage all the information from the data to gather intelligence about customers’ spending behavior and deliver targeted promotions and other offers through different touchpoints.

  • Testing and Rapid Iteration

Having the data collected by the D2C channel through customer feedback and surveys, brands have more confidence in launching new products and rapid development of iterations. This wasn’t the case with the traditional wholesale model earlier, as untested stocking products was quite risky and required significant financial commitments to mitigate any potential losses.

  • Sales expansion despite partner limitations

A D2C channel helps brands to expand their potential point of sale. It opens up new avenues to increase business. It offers them the opportunity to reach out to untapped customers while also selling a wider variety of products than that could be stocked—this removed shelf space constraints and different locations that they had to face earlier.

  • Improved product profit margins

A D2C channel enables brands to generate a higher percentage of revenues compared to B2C media as there are intermediaries involved, which results in higher profit margins. This isn’t the case in B2C channels because a substantial amount is deducted as commission for the intermediaries, reducing profit margins.

  • Make more innovative marketing investments

The data collected by brands help them derive insights into key pointers leading to customer conversion and its costs, different metrics driving sales to their websites and other such facts. The brands can leverage these insights for informed decision-making to increase their sales.

  • Feedback generation loop

The direct connection that a brand develops through the D2C channel helps them gain insights into customers’ experiences and expectations. Through the feedback generated through online surveys and customer feedback, brands can look forward to improving their products and operations. As a result, brands can use various tools like AI and Analytics to the data to gain valuable insights.

Learning to go D2C

With ever-increasing competition from other brands, and some of them going D2C themselves, a business can’t expect to grow much without going D2C themselves and just relying on retail partners. They can look forward to consolidating their hold over the market by learning to go D2C to complement their existing wholesale channels.

Some of how you can do this are:

  • Build a branded website

Buyers shopping online find products to be more accessible and desirable. Brands can also provide free samples or trials to entice customers and make shopping easy with bundled discounts and free shipping.

  • Open retail stores

Brands with their retail stores can provide more holistic customer experiences. Going omnichannel with such stores is more desirable for customers for easy access and convenience.

Harmony between Retail partners and D2C channels

Retail partners usually view the brand’s D2C expansion as a threat to their partnership, which is not unreasonable. They are concerned about market saturation, price reduction, conflicts over their territories, and overlying issues about the existence of both D2C and retailers selling to the same target audience.

To mitigate this existential crisis among different partners, a brand can strategize its operations so that it complements the pre-existing channels and helps increase sales.

Some of how D2C oriented brands can avoid conflicts with their partners are:

  • They use the D2C website to test new items to determine their popularity and price and share the insights with distributors to help them increase their sales.
  • The data collected about customers over time guided the right customers to specific retailers offering special discounts or promotions, thus increasing footfalls and ensuring a maximum number of sales.
  • Investment in marketing spreads awareness about the brand, which will have a ripple effect on retailers, thus boosting their sales.
  • Try creating distinct and enriching experiences for customers shopping directly through D2C, as the customers get to connect with brands and gain vital information about them now. A tie-up with retail channels would drive the interested customers directly to the retailers, eventually driving sales.
  • Providing exclusive access to merchandise and discount offers to retailers not available on the D2C channel.

Maintaining a healthy and harmonious relationship between a brand’s D2C channel and retailers/ distributors is paramount. This can be made to turn out into a win-win situation for both D2C and retailers, as it improves sales for everyone.

Although some conflicts may arise, it’s essential for the overall benefits of every party involved to mitigate any arising issues and compensate with mutually beneficial initiatives.

Finding the brand made it easier for consumers

A customer may browse in retail stores to get their desired product immediately, or they may go over the website to search online. Eventually, the D2C channel helps customers get closer to the brand as they get to know more about different products available and help customers get exactly what they desire. In the long run, the D2C channel helps the brands grow and strengthen their relationships with their retailers.

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