Wholesale and direct to consumer: How DTC is driving growth
As e-commerce continues to boom, wholesale is going direct to consumer, with fantastic results. Learn how a leading food wholesaler went DTC in one week.
More and more brands are extending their go-to-market strategies with a DTC business. What started as a trend led by digital native e-commerce pioneers is increasingly being adopted by mainstream consumer brands. According to a study from eMarketer, US direct-to-consumer revenues were expected to grow by 24% in 2020.
The pandemic altered the way we do business and dramatically accelerated consumer demand for online shopping and home delivery. This has fueled the DTC trend.In some cases, where lockdowns forced the closure of retail channels, DTC business not only served as an additional channel & revenue stream – it became THE revenue stream.
For example, faced with a collapse of their Horeca (hotels, restaurants, cafés) trade and steep drop in food service business, UK-based food delivery company Brakes launched their DTC Food Shop in just seven days by rapidly innovating and extending their existing commerce infrastructure.
Brakes’ established B2B customers — schools, bars, and restaurants — were severely affected by lockdown measures, so the company had to adapt.
Not every brand can launch a DTC commerce storefront as fast as Brakes. The question remains, how do you set up a successful and sustainable DTC business? Market entry barriers are perceived low. However, for a long-term and profitable DTC strategy, brands need to go beyond opening an e-commerce shop and consider multiple components, including:
- Communicating the brand’s story
- Making mobile e-commerce a priority
- Leveraging social media
- Including brick and mortar in the model
- Managing fulfillment
DTC business: Combine commerce with storytelling
Simply creating an e-commerce site with a catalog of your products isn’t enough. To make the most of your direct-to-consumer brand investment, consider the whole customer journey with its multiple touch points, from the brand story and DTC product proposition to customer acquisition, sales, fulfillment, post-purchase experience, and re-engagement.
Going DTC puts all marketing and commerce levers into the brand’s hands: Communicating the brand, its mission, the specific needs each product serves, plus integrating customer stories and content. All these elements are more difficult to communicate if your products sit on a (virtual or real) shelf with competitor products adjacent to them. There’s a big opportunity for control, attention, and exclusivity with DTC when combining storytelling and commerce the right way.
Direct to consumer brands and models that are killing it
Discover some of the best direct to consumer brands and how can you up your e-commerce game to compete in the digital landscape.
Think mobile first for DTC business success
According to Statista, mobile e-commerce accounts for more than 70% of retail e-commerce transactions. In your DTC business, make mobile the first priority; don’t treat it as just an evolution of your web-based shop.
E-commerce on mobile devices does not tolerate any friction:
- Product discovery works different on small smartphone screens versus your laptop.
- Product detail pages must be clean and scrollable on small screens.
- Checkout experiences should be frictionless, with mobile wallet-based one-tap buying and integration with most common payment services.
- AI-based merchandising and personalization helps to recommend the right products right off the bat, so customers don’t have to do another search.
Mobile commerce trends: Mobile sales will dominate B2B, B2C, DTC
Mobile commerce trends in 2021 will drive a lion's share of all commerce revenue, including in B2B, B2C, DTC, and industries.
Progressive web apps have replaced the need for responsive screens or native mobile app development for most cases. Agencies and system integrators can facilitate creation of a unique mobile-first experience starting with vendor-provided templates.
Use social media and marketplaces
Launching a DTC business will enable you to communicate across all channels that you own; and the ones that you have direct influence on. Third-party channels like your brand’s social media accounts or a shop on a marketplace can help drive your message to your target customers.
You’ll only get a restricted set of customer data, but these channels can help drive attention and subscriptions for your DTC initiative and attract an audience especially when starting your DTC operation.
Include brick and mortar in your DTC business
We have seen many traditional brick-and-mortar retailers go online. On the other hand, there are several brands that started online only and moved on to open their own permanent stores or pop-up locations already. The physical store remains a key part of a holistic consumer service infrastructure – for collection, returns, additional purchasing, and convenient access to the product range.
DTC trends: Up your direct to consumer game with these killer moves
Don't ring the death knell for brick and mortar quite yet: Learn the DTC trends that are reviving retail and breaking barriers.
With vaccination programs rolling out this year and reducing risks for the majority of shoppers, having well-chosen store locations can complete the brand, commerce, and service experience for DTC models.
Shops can help address all senses and allow a consumer to feel, smell and touch products. Stores can act as showrooms, decentralized fulfillment centers for online purchases, service centers, event locations, and much more. They can help to tighten a brand’s relationship with a consumer.
Don’t forget fulfillment
The e-commerce experience does not end when the order confirmation is sent. It ends when the product is delivered to the customer, sometimes even after the customer unpacked it, was able to use it to his or her satisfaction, and provide a review of their product experience.
DTC brands must manage fulfillment. Former B2B businesses will have to learn to not only deliver pallets but pick, pack, and last-mile deliver single products and bundles while keeping the customer informed about order status, from capture to delivery. Fulfillment is a unique opportunity to exceed a consumer’s expectations of the brand experience.
Setting clear expectations, providing re-assuring certainty of delivery, and even in-flight options for delivery changes can all help increase customer satisfaction.
Fortunately, brands have a variety of options, from delivering via their own fulfillment centers to using third-party logistics- and last mile delivery providers or delivery from stores – if they’re part of the mix.
There are many more aspects to creating, optimizing, and maximizing the profitability of operating a DTC business, but getting the basics right is the first step.
According to McKinsey, only 60% of consumer goods companies feel even moderately ready to capture e-commerce growth opportunities. Those starting new DTC channels must to do so with a focused and appropriately bundled and deliverable assortment. That way, they reduce complexity and learn how to make the financials work over time.
