2020 was the year that proved the power of direct-to-consumer (D2C) sales. While over 80% of traditional retailers suffered a decline in sales during the pandemic, only 22% of D2C brands saw the same consequence. Not only is the more reliable revenue stream attractive to brands, having full visibility over the end-to-end customer experience and cutting out the middleman is undoubtedly a selling point following a challenging year in a highly competitive market. With more control over the consumer journey, products and services can be better optimised – even personalised – and ultimately costs can be cut.
Nevertheless, there is plenty to consider for companies that typically sell business-to-business (B2B) but are hoping to expand into the D2C market. Not only does marketing content, style and tone of voice need to shift, but brands can run the risk of alienating their retail partners if they appear to be prioritising their own channels. In the worst-case scenario, a mis-managed expansion into the D2C market could not only fail to resonate with consumers, but it could also damage relationships with retail partners and ultimately harm all revenue streams. Therefore, it is essential that businesses examine the best way to keep partners and resellers happy while also maintaining control of their products and customer experience.
Be prepared to split business processes
Once a brand identifies the opportunity to expand into D2C sales, its target audience and how it reaches them will inevitably change. For example, rather than only addressing prospective business clients through LinkedIn, organisations will now also need to assess the preferred social media platform of their target consumer audience. The marketing team must embark on detailed research that tackles the issues of how their ideal customer likes to be communicated with and which messaging resonates most with their demographic. This can cause the marketing strategy to shift significantly, and require retailers to manage new D2C marketing activities alongside their existing B2B programme. What’s more, warehouse and delivery logistics are an important consideration and decision-makers must get to grips with how their target D2C customers feel about fast, same-day delivery, or whether they are more environmentally conscious and prefer slower, most sustainable delivery. While B2B is predominantly driven by price, D2C success can be based on many variables, including product quality and consumer values, and recognising this difference is vital.
Therefore, while operations will look very different across B2B and D2C, it is essential that the workforce is prepared for an increase in workload in the early days of expansion. It is also advisable to split the two sides of the business into separate functions in order to avoid overly complex messaging that attempts to resonate with both businesses and consumers, or logistical nightmares with delivery fleets that cannot efficiently deliver large B2B orders in the same journey as small D2C purchases. By implementing separate teams that oversee operations within their specific markets, a brand can be sure that both their loyal retail partners and their consumers are receiving the service they deserve.
Optimise product release strategies
Another good starting point when expanding from a solely B2B brand is to establish a product release strategy by choosing between the three most common retail launch formats. The first option is a staged release, in which a brand’s products launch over different channels at separate times and consumers are allowed access to new lines before they become available to retailers. The second common strategy is a partial release, in which the consumer and retailer launches occur simultaneously, yet certain unique products or ranges are held back for a later date and can be distributed either to consumer only or retailer only markets when it best suits business need. Finally, exclusive releases involve specific product lines being distributed across the D2C channel only. In this case, retail partners would be neglected in a bold market shift.
However, for organisations hoping to take a less aggressive approach to D2C expansion, these strategies can all be reversed and turned on their head. A partial release could involve prioritising support for retail partners by launching products on retail channels before later making them available to the D2C market, ultimately demonstrating a commitment to distributors but still allowing consumers access once those relationships are secured. Subverting the partial release strategy can involve making core lines readily available via a brand’s website for the D2C market, while retailers can have access to full ranges. Exclusive releases can also go in favour of the retailer, instead reducing accessibility for the D2C channel and providing a ‘find the retailer’ link for any interested consumers. While it is essential that brands identify the best way to get their products to market, close relationships with distributors and their sales platforms can be vital to ensuring customers get access to the products they want, when they want them.
Without sufficient forward-planning – including establishing product release strategies and implementing internal market-specific teams – successfully reaching the D2C environment may be a challenge. However, the most important consideration for every brand should be ensuring the customer or client – whether that is another business looking to distribute an exclusive range, or a single customer looking for a personalised item – receives an optimised and streamlined retail experience. By prioritising satisfaction for buyers and partners simultaneously, brand success will ultimately become a much smoother journey.
Credit: Mel Tymm, Industry Principal, Naveo Commerce.