By Mel Tymm, Industry Principal, Naveo Commerce
Consumer trends are constantly evolving and the Direct to Consumer (D2C) market in particular has been projected to grow by a staggering 19.2% in 2021 alone. In line with this, recent research has revealed the majority of shoppers prefer purchasing directly from a brand’s site, meaning the lucrative opportunity to sell straight to the customer has never been more appealing for businesses. Not only does D2C pose a more reliable revenue stream, but also full visibility over the end-to-end customer experience and a more direct and efficient route to the consumer. All of these benefits represent the promise of D2C following a highly difficult year in a competitive market for retailers.
There is a lot to consider before moving to the D2C market. Businesses must balance their relationship with retail partners whilst simultaneously focusing on their expansion into a new channel. This can be challenging when including a shift in marketing strategy and warehouse logistics. A mismanaged expansion into the D2C market can result in a failure to resonate with consumers while also driving away partner organisations, ultimately decreasing revenue streams and having a negative impact on the brand – the opposite of the desired effect. Therefore, businesses must invest time and effort rethinking marketing objectives, product release strategies and warehouse logistics to ensure success in both landscapes.
Marketing strategy and target audience
After a brand identifies the opportunity to expand into D2C sales, their target audience and outreach strategy will inevitably change. A company must first undergo research on its new target channel to understand how their customer wants to be communicated with and what messaging resonates. Once identified, they should ideally manage two separate marketing strategies. While B2B marketing requires a financially-focused approach to target prospective businesses – highlighting the ROI of products and appealing specifically to decision-makers – successful D2C marketing puts the consumer at the centre of all outreach efforts. For this, campaigns should filter through more varied social media channels (Instagram and Pinterest for example) and typically appeal to emotions rather than requirements. If companies are unable to manage two separate marketing strategies, companies run the risk confusing messaging and therefore eroding relationships with retailers, while also failing to appeal to the D2C market.
Fulfilment and warehouse logistics
One of the greatest differences between the B2B and D2C markets is expectation surrounding packaging and delivery. Brands making the market transition must quickly get to grips with how their target D2C demographic prefer their delivery experience; fast, same-day service, or more environmentally-conscious and sustainable? They must also adjust their operations and fulfilment strategy to achieve higher volumes of smaller orders for individual customers. Organisations usually have two choices – either to rely on third-party logistics (3PL), or invest further in their own fulfilment strategy. While the former is expensive, it provides the company with the experience and efficiency they may lack whilst breaking into a new market. The alternative – managing fulfilment internally – must include investment in warehouse and order management technologies capable of maintaining both the B2B and D2C workflows within one platform. To make sure this route is a success, it is integral for systems to provide real-time visibility into inventory and stock levels so that stock-outs are avoided, and products are not over sold based on stock availability.
The adoption of product release strategies
When breaking into the D2C market, it is smart for brands to introduce a strategy for product release. There are three recommended strategies commonly used by brands:
- Staged release – a brand’s product launches over different channels at separate times, with the consumer given access before retail partners
- Partial release – the consumer and retailer ranges launch occur simultaneously, yet certain products are held back for a later date and can be distributed either to consumer only or retailer only
- Exclusive release – specific product lines are distributed across the D2C channel only
The product release strategy a company decides to adopt depends on which market it wants to prioritise. It is simple to reverse the strategies above – prioritising retailer partners in an exclusive release, for example, to demonstrate loyalty to the original market. While it is essential that brands identify the best way to get their products to market, close relationships with distributors and their sales platforms are important and can be leveraged to allow new opportunities and ensure products get as much exposure as possible.
The move to D2C is complex, yet it is a challenge many are willing to embrace. It requires sufficient forward-planning and a crucial understanding of the differences between B2B and D2C. However, the most important consideration for every brand is ensuring the customer or client receives a ‘best in class’ experience from initial purchase right through to delivery. By prioritising satisfaction for any buyers, brand success within each market will be far more achievable.