Nothing should ever come between you and your customers.
The customer relationship needs to be yours, and yours alone.
That means having complete ownership over the data that informs you about customer needs and pain points.
It also means you’re ultimately responsible for the quality of the experience you’re delivering.
For a long time, this kind of closeness with customer wasn’t always possible, particularly for small and medium-sized businesses SMBs.
In order to scale and reach the largest possible addressable market, SMBs have traditionally relied on third parties to assist them with various aspects of their operations. This could include everything from inventory management to fulfillment and even selling products through physical stores.
SMBs and even larger companies may still opt to form agreements with wholesalers, big box retail organizations and a host of other intermediaries. Thanks to advancements in technology, however, there are many more who are taking advantage of the direct to consumer (D2C) model, which is also sometimes written as DTC.
What Is Direct To Consumer (D2C)?
As the name implies, a D2C company does all the customer-facing things that make for a tighter customer relationship. It allows customers to buy from the company directly, for example, particularly through digital channels. It may also have more direct oversight of functions such as customer service, but the primary aspect is removing the middleman from the purchase process.
Depending on how it is executed, a D2C strategy can offer a range of benefits, like:
· Data: Selling directly to customers means firms can gather more information about the journeys that lead to a purchase, trends in customer preferences and much more. Having a greater volume of first-party data can then become highly valuable in areas such as marketing.
· Control: Working with wholesalers and distributors mean some areas of business are out of a company’s hands. Going D2C means you can potentially bring your products to market more quickly and ensure your customer experience reflects the brand image and reputation you’re cultivating.
· Cost Optimization: There can be a number of expenses related to working with third parties, such as handling product returns and fees to assist with areas like inventory management. A D2C firm can avoid these costs and possibly enjoy higher margins on the sales they make.
Essential Elements To Embrace D2C Successfully
Though the advantages are compelling, not every company is ready to adopt the D2C model out of the gate. There may be changes to internal processes or investments you’ll want to make first.
Make sure you think about having:
1. E-commerce technology you can count on
If at any point customers aren’t able to click a “buy” button and place an order, they’re probably going to shop elsewhere. That’s why cloud-based tools tend to work best.
Some of the other features of a best-in-class e-commerce platform include having an easy way to see what’s in stock, the ability to sell online through any channel, and artificial intelligence (AI) to better understand trends and patterns in the sales you’re generating.
2. Integration with tools that deliver a holistic experience
Your e-commerce data is gold – and not just for those in charge of sales strategies. It can also be a critical component of helping customers when they’re in need. If service agents need to do digging in multiple systems to get answers, however, you risk being known for letting customers down.
D2C technology should also connect to those on the marketing side, who need real-time information to plan effective promotions and campaigns. If the whole point of adopting D2C is to get closer to the customer, personalization should enhance the ways you engage with them.
3. A strategy that builds loyalty and repeat purchases
Some D2C companies are not only great at selling to the masses but developed a devoted base of fans. This can come through VIP programs where they’re offered a first look at upcoming product releases, or special pricing based on their account history.
Many D2C brands have also found success by moving beyond individual purchases and creating a subscription services. This allows them to create a curated package of items based directly on each customer’s interest and enjoy a more predictable income stream.
4. Clarity on the scope of your D2C operation
Some companies decide to go all-in on selling directly to customers because it’s core to their vision and mission. Others may want to diversify and explore all possible options. That means they might sell some items directly, while others continue to be available through marketplaces and channel partners.
Customers should never be confused over where to make their purchases, and there needs to be seamlessness in handing off those who come to a D2C firm’s web site and any third party. This also requires more legal due diligence to avoid conflicts of interest or violation of contractual obligations.
5. Reliable logistics and fulfillment
Adopting D2C is like making a promise that you’ll handle everything, including the all-important step of actually getting products into customers’ hands.
This doesn’t mean you have to handle warehouse duties yourself. There are plenty of third party logistics (3PL) companies that have deep experience in keeping inventory up to date and navigating the process of shipping and receiving goods.
Data plays a vital role here, too, though, to opt for a technology platform that allows you to share the right information with other stakeholders who might become part of your D2C ecosystem.
Conclusion
Is D2C the right move for your business? If you’re still not sure, there are plenty of role models who can provide you the extra insight you need.
Look in almost any industry niche – from fashion to cosmetics to baby products – and there are likely a few D2C brands that have stood out among the larger entities that sell a wider catalog of products to consumers. Read their blogs. Look for them at industry conferences. Follow their best practices.
In the end, becoming a D2C firm means you’re committing to customer-centricity – as long as you keep them top of mind, you’re more likely to see a direct payoff for your efforts.
