In part two of our series of articles about the 3 main distribution channels present within ecommerce, we discuss how you can add Direct-to-Consumer (DTC) to your ecommerce proposition.
Take a look at part one, where we introduce DTC and explain why some brands have embraced this as their only ecommerce channel.
As a quick recap, in our first blog we explained how DTC offers greater autonomy and control over your customer experience across 3 key areas: Data, Experience and Profits.
Adding a DTC proposition. What’s stopping you?
Renewed relationships with consumers can create efficient new sales channels, powerful feedback mechanisms, irresistible experiences and even unlock entirely new business models.
But there’s a reason why ex-Glossier executive Henry Davis described the dynamic between brands and retailers as a symbiosis where both parties are stood “with guns against each other’s heads.”
Even if you understand the potential of a reinvented distribution strategy, selling DTC for the first time is like building a new bridge whilst simultaneously trying not to burn existing ones.
Let’s address some ways for you to make the shift without alienating your distributors – giving you the imperative to act now.
1. Target underserved segments
In 2018, Verizon quietly launched Visible, which offers no-contract mobile service subscriptions for a flat fee. This doesn’t compete with Verizon’s massive distribution network selling higher-margin services.
K-Swiss, a brand which gained notoriety in the 1960s for becoming the first fully leather tennis shoe, re-entered the market after more than 50 years but with a new proposition – to outfit and inspire the next generation of entrepreneurs.
Aspiring DTC enterprises can avoid treading on the toes of retailers by catering to customer segments that have been poorly served or ignored by traditional distributors.
2. Create new DTC product lines or bundles
Creating a unique D2C product or bundling existing products into a package helps build a direct line to customers, and simultaneously preserves relationships with distributors that focus solely on other product ranges.
Absolut Vodka turned their holiday campaign into a foundation for their direct-to-consumer strategy by offering gift-sets all year round which are solely available on the company’s own website.
Maille Mustard has been sold through distributors to loyal customers since 1747, but its parent company Unilever decided to offer a premium product range to a particular subset of mustard connoisseurs directly.
3. Enable retailers in different ways
Brands can borrow horizontally from the likes of heavy equipment manufacturer Caterpillar, historically resold by local service partners. Caterpillar introduced their own platform for vehicle management that they sell directly to customers which provides insights on the equipment lifecycle – from how it’s used to health and location. This cuts out the middleman to simultaneously sell directly and collect data, but it also benefits local partners by sending alerts to customers when they need to get their equipment serviced.
Customers stay safe and up-to-date; brands regain complete control and insight into their customer behaviour and product lifecycle, and retailers retain a small but significant slice of the pie.
It’s a win-win-win.
Conclusion: Be more DTC
So rather than remaining stuck in a stalemate with retailers, it’s time to make a bold decision to be more DTC.
Making the transition means no more concerns about marketplaces and middlemen keeping your own customer data from you, no more failures to safeguard your customer experience, and no more constant concern over undercutting partners through re-calibration of pricing.
You don’t have to sever ties totally with your distribution network if it doesn’t make sense (for instance, if it means cannibalizing your biggest sales channel), but you should take small, significant, strategic steps towards reclaiming retail’s greatest asset – your customers.
Because your customers will continue to change, and having the power to keep up with them isn’t only a chance to win the retail race – it’s a survival imperative for your brand.
Founded in 2009 in the Netherlands, Paazl is a fast-growing SaaS company that focuses on making e-commerce delivery convenient. We built a data-driven algorithm based on real-time carrier data from over 50 international and local carriers. It benefits e-commerce brands and retailers by optimising cross-border logistics and personalising delivery options. This allows them to visualise time and locations in the checkout page so their consumers can pick when and where they want their items to be delivered. Paazl handles over 20 million shipments yearly, around the globe. Paazl partners include G-Star RAW, Under Armour, Rituals, and Hunkemöller.
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