Where traditional retail relies on distributors and wholesalers, going Direct to Consumer, better known as the abbreviation D2C (which sounds like a cheesy nineties boyband), removes the middle people, allowing brands to have more control of the entire customer journey and experience.
In this article, we spoke to GO! Network agencies alongside members of our own team to discover the key benefits and potential challenges of going D2C with your business - and what you need to know before making the jump.
What is D2C?
D2C is an e-commerce strategy that allows businesses and manufacturers to have end-to-end control of making, marketing, and selling products directly to the consumer through digital channels.
As you can imagine, there are several competitive advantages to this.
Why are more companies deciding to go D2C?
To discover why more and more brands are taking the decision to move D2C, we spoke to Sam Johnson, one of our Brand Partnership Managers here at GO!.
Sam regularly works with brands to find agency partners that can support on their D2C projects. From his experience, the decision for brands to go direct-to-consumer has clearly been influenced by market conditions over the last couple of years.
“There’s a necessity in many markets to navigate around the high street, as well as the ever-increasing prevalence and popularity of online marketplaces.
From the brands I have spoken to, this raises two key areas of importance - how are they seen and how are they found? In essence, how easy is it for their target audience to find their products - and what is their overall impression of the brand by the time they get there?
I believe this is why, as a team, we have seen a rise in PR and creative brand needs as well as a continued need for proactive search and performance partners.”
If you’re evaluating the jump to D2C, GO! can help you assess your needs. Get started here.
How do you know if going D2C is the right move for you?
Before jumping headfirst into taking your products direct-to-consumer, there are few things that should be considered to know if it’s the right move for you.
Choosing to go D2C depends on the type of business you have, alongside some other details.
Very clearly, depending on the type of product you sell can massively affect your digital strategy. Products that take more of a discussion between stakeholders and are a more considered purchase are not always appropriate to sell D2C. Lower price items usually benefit more from a D2C strategy.
Another determining factor as to whether D2C is right for you is the number of products you want to sell. Because you will be managing the full sales process, you will need additional resources to ensure it runs smoothly without sacrificing customer service.
If this sales process cannot be managed on scale, you might want to consider if D2C is right for you.
Sue Benson, Managing Director at The Behaviours Agency believes there are three triggers for clients to decide if going D2C is the right move for you:
- Your products are performing well through your other digital ecosystems.
- You are under significant margin encroachment from retail partners.
- You have built a social community to leverage.
What are some of the more common blockers for moving D2C?
Even with the ideal product and a social community who you know are going to interact well by moving D2C, there are still common blockers businesses face when doing so. For Sue Benson, these can be summed up by “the two I’s – infrastructure and investment.
Infrastructure REQUIREMENTS FOR D2C
As we mentioned above, because you will be managing the full sales process, additional resources and infrastructure will be needed to ensure the process runs smoothly.
“I think what has caught some brands off guard, is the undervaluing or unforeseen importance of solid tech / infrastructure in the background and a supply chain solution that isn’t completely vulnerable to turbulent political and economic market conditions.” – Sam Johnson
So which resources do you need to have up to scratch to prepare for the move?
Preparing your Website for d2c
Perhaps most obviously, you will need to make sure your website is up to scratch and that you have chosen an e-commerce solution that works for you. In a recent article, we discussed the three different options a company has when building an e-commerce strategy.
- Custom build the e-commerce website.
- Choose an e-commerce packaged solution.
- Go with a hosted e-commerce solution.
You can read more about knowing when and where to platform your products here.
Customer Service NEEDS FOR A D2C APPROACH
If a product is bought in-store and is faulty, it’s very likely that the customer will go through the store to get the problem solved.
If it comes directly from the consumer, then you will need to be able to handle this yourself. Before going D2C, ensure that you have a team in place to handle the customer experience and customer service process.
PREPARING YOUR Digital Channels FOR D2C
To effectively compete in the D2C market, you must become digitally savvy marketers. It doesn’t mean that you must develop expertise in (or even use) all digital marketing channels. It’s likely though, due to the competitiveness of online retail, that you’re going to want to use more than just one or two channels.
When going D2C, the most successful businesses use multiple types of media, earned, paid and owned along with numerous digital marketing channels in order to guide customers along the sales funnel. As such, you’ll need teams or experts available to help you do this.
BUILDING Investment FOR D2C
One of the biggest challenges for brands going D2C is getting the sufficient ‘buy-in’ from within to support the model. Internal stakeholders who rely on established retail channels that have high sales volumes are more likely to question why going D2C is needed.
When this is the case, it is important to get momentum with internal stakeholders at the earliest possible time in the D2C business planning phase.
D2C channels that are successful require leadership input, planning, investment, and the ongoing support of everyone in the team. Tasks that are traditionally managed by retail partners (customer service, for example) will now be performed internally.
Luke Burnett, Senior Project Manager of Relative Marketing says that “whilst it is attractive to be able to have full control over all elements, you must be comfortable and be able to take responsibility for every step of the process.
Before going D2C, companies only had to think about the manufacturing and production of their products.
Now, they must quickly learn and consider marketing and sales strategies on top of supply chain and fulfilment. This could mean setting up new departments, hiring new staff and expanding your business network. While you may benefit in the long term, the short-term investments could be a potential blocker.”
What does a common D2C project ENTAIL?
Although no two projects are the same, businesses still face a common journey and challenges when deciding to go D2C. We asked our agencies what a common D2C project looks like for them.
AUDIENCE ANALYSIS AND CONSUMER BEHAVIOUR
“As a behavioural science led business, we always start by understanding your audience and their motivations, barriers and behaviours. From there, we can build out what the impact on your brand is - does it need strengthening from a proposition viewpoint to meet those new consumer insights?
We'll explore what we need to do to make the brand top of mind on the purchase journey, and finally focus on how we make it easier for consumers to shop. By doing this, we create a frictionless journey. Then we go mad with data & CRM planning!” – Sue Benson
DEVELOPING A COMPREHENSIVE MARKETING FUNCTION
“We have worked with clients where we have, in effect, become their marketing department. We took control of all communications between the business and customer in the form of brochures, websites, emails, social media and more.
When working with D2C brands, you must consider all elements and all touch-points.” – Luke Burnett
While the decision to go D2C rests on a variety of factors, and despite the initial investment in certain infrastructure, a business can save time and money by going D2C.
As a D2C business, you won’t have to distribute part of your revenue to retailers or distributors.
Cutting out the ‘middle people’ means you cut out any costs associated with them. Cutting costs means the greater potential for increased profits as well as more money to re-invest. Here is a summary of the key learnings from this article:
- Going D2C removes the middleman and allows you to have more control over the customer journey and experience.
- Choosing to go D2C depends on the type of business you have alongside the type of product and how many you want to sell.
- Infrastructure and investment are some of the most common blockers for going D2C.
If you’d like to learn more about going D2C or are in need of an agency partner to help with the process, let us know here and one of our team will be happy to chat!