The Knock-On Effects Of DTC
“45% of adults want to buy direct from a brand” – Forrester
Direct to Consumer (DTC) is more than simply selling products directly to consumers, businesses are using this opportunity to take back control and build new and innovative customer experiences. Getting DTC right can give businesses innovative insights:
Understanding end-users
With digital transformation accelerating quickly and real-time data more accessible, customer behaviour is easier to predict. The last fifteen months have been very fluid with this data allowing businesses to adapt quickly and stay relevant.
Experience is everything
Consumers crave a more personal touch from their brands and DTC can help tick those boxes. The perception of buying directly from brands is that it will mean a better experience regarding faults or returns. This means developing a more transparent line of communication is imperative to ensure that experience is not jeopardised.
The knock-on effects
Partner conflict
So, what happens to your partnerships when you start selling DTC? Undoubtedly there will be conflict. Those partners now see your brand as a competitor, potentially removing you from their shelves entirely.
Ironically, partner relationships may not work for brands either. Established brands like Nike have aggressively pursued DTC by rejecting third-party retailers.
For balance, consider offering exclusive ranges or bundles to your retail partners, whilst selling the ‘basic’ product on your own DTC channel.
Above all else, ensure you are having rational conversations with your partners to future proof your business from unexpected disruptions. It is within all parties’ interest that your brand stays in business and with Adobe digital trend data suggesting brand loyalty erosion in the last 15 months, brands and partners need to work together to showcase premium services offered through the partner channel.
3rd party marketplaces – The double-edged sword
Despite the complexities of the likes of Amazon, Flipkart, et al, these marketplaces offer a sound environment for those unprepared for the demands of DTC.
These are seen as the modern-day equivalent to the department stores. But beware, these marketplaces hold more control over your products and consumer data. Delivering memorable customer experiences is challenging through these platforms, but ensuring your product remains visible is key, see them as a stepping-stone to full DTC whilst building out DTC capabilities and 1:1 fulfilment.
Technology - restraints v reinvestments
With quality technology both affordable and accessible like never before, start-ups are utilising DTC and agile e-commerce platforms and achieving great results across a myriad of different industries. For example, Hindalco and Eternia enjoyed success through DTC by partnering with our technology to deliver bespoke windows for customers.
Conversely, more traditional businesses have struggled with the amount of technology change in the last 30 years. Adobe Digital Trends Report 2021 shows that legacy technology was one of the biggest barriers
holding brands back in adapting to the new world. This technology can also have a huge impact on manufacturing.
Selling as a manufacturer in bulk to retailers is a different process to today’s world of selling thousands of the same product directly to individuals. This will need a completely different set of systems and processes to cope with that complexity.
Digital acceleration is showing no signs of slowing down, so whether you are married to legacy systems or just starting out, staying on top of your tech is imperative.
Overcoming channel conflict
Many B2B businesses, distributors and wholesalers are safeguarding their traditional proposition with innovative ideas. Some are creating “own brand” products, either through existing partnerships or by sourcing products directly. By becoming a manufacturer as well as a wholesaler of other manufacturers’ products, they have more control and reduce the risk of falling behind the online curve.
Co-branded & White label sites
Partnerships are being created in other areas, either with retail customers or manufacturing suppliers, to offer co-branded sites to sell to end consumers. This maintains existing supply chain relationships whilst cementing the working relationship between the two businesses.
Some distributors are adding to their client toolkit by offering websites for customers to sell through as part of their agreements, a modern take on white labelling. This simplified route to market is often too good to turn down for smaller retailers who may not be able to create their own independent online sales channels.
Embrace DTC with your own unique voice
There are countless examples of successful DTC strategies working for many companies. However, conversions don’t have to be everything.
Although inspirational ideas can influence others, what makes customer acquisition successful is when companies showcase their unique voice and channel their strengths. Consumers can sense when companies are copying others and will struggle to buy into a brand if it does not feel genuine. With many more knock-on effects to come, maintaining your unique voice and take on the world is the best way to achieve long-term success. Disruptions are coming, but if they are seen as opportunities then success will be within touching distance.
The Author is Damon Scarr, Senior Sales Director, Enterprise Commerce – APAC, Adobe
