Going Direct to Consumer While Maintaining Your Relationships with Retailers

Connect with consumers directly to build better relationships with them and with your retail partners.

Time to read: 7.5 minutes

 
Eric Lessard
Senior Product Marketing Manager, Salesforce

Not so long ago, shopping required leaving the house. Not anymore. Now, when we need to buy something — food, clothing, furniture, a new electronic device — we often start and finish the shopping process online. And that creates an opportunity for every brand to go direct to consumer (D2C).

When shopping happens in physical stores, brands need to be sure their products are on the right shelves in the right places. But when shoppers search for a product online, they can end up buying it from anywhere, including from the brand itself — if it has a direct-to-consumer channel.

You’ve probably already bought from a brand’s D2C site, perhaps without even realizing it. You might have landed there while shopping online when stores were closed due to COVID-19. Or you might have followed a link from a social media ad or an email marketing message. A D2C channel is convenient for consumers and offers many benefits for brands.

 

99% of leaders of consumer goods companies are investing in D2C sales.

Consumer Goods and the Battle for B2B and B2C Relationships,” Salesforce Research, 2019.

What does direct to consumer mean?

Direct to consumer is when a brand sells their product to the end user. In the past, brands often distributed products only through retail partners. For example, a maker of tennis rackets sold them through a sporting goods store. With a direct-to-consumer channel, the same tennis racket maker can sell the equipment directly to the player. Common direct-to-consumer channels include ecommerce websites, apps, and direct sales by phone. D2C channels often complement, rather than replace, traditional retail channels. For example, a confectioner might place their candy in gift shops, and also sell it directly to consumers online.

Many industries are launching direct-to-consumer channels, including telecommunications, grocery, and even automotive, with manufacturers selling vehicles to new owners without the involvement of a dealership.

What is the difference between business to consumer (B2C) and direct to consumer (D2C)?

B2C describes any company selling products to the end consumer. D2C is when the maker of the product sells it to the end consumer. A B2C company could be a retailer, or marketplace or a manufacturer selling D2C. However, it’s possible – and becoming more common – for brand manufacturers to sell their products in two ways. One is a business-to-business (B2B) channel, in which they sell their products wholesale to a B2C retailer. The other is a D2C channel, in which they sell their products directly to end users. D2C sales often happen online, although some brands also have retail stores.

Why go direct to consumer?

When a consumer goods company looks beyond its wholesale strategy to include D2C channels, they tap into new opportunities to build relationships with existing customers, expand their reach to new audiences, and grow sales beyond the limitations of current retail partners. They can even use their D2C site to test new products and collect first-party data that can help them improve their business.

One real-world example: A leading bicycle maker opened a D2C channel. They collected data from their customers and learned that gender-differentiated sizes were unnecessary, since every rider was unique. They saved millions of dollars by eliminating male- and female-specific bikes.

Consider the following advantages of going direct to consumer.

Access first-party data that helps you personalize customer experiences.

When distribution partners sell a company’s products to the end consumers, only those partners have access to that customer data. Those partners, whether they are a retailer or a marketplace like Amazon, tend not to share what they know.

Instead, if a company sells products direct to consumer, they collect that first-party data themselves. They can identify customers and deliver targeted promotions and offers using their website or app, email lists, point-of-sale systems, and social media channels.

Knowing more about their customers helps brands cross-sell and upsell. It can influence product development and marketing tactics. They can acquire new customers more easily by using what they know about current shoppers.

Test and iterate rapidly.

In a traditional wholesale model, many retail distributors are reluctant to stock their shelves with untested products. They may require larger financial commitments to offset potential losses.

A direct-to-consumer channel lets companies try out new products and improve them based on customer feedback. They can survey customers about what they like and don’t like about the products and develop new iterations quickly. For example, the KIND snack company sells products directly to consumers and offers a subscription service and the opportunity for individuals to choose their snacks. This lets customers try out new products before making a bigger commitment. And the company quickly learns which new products are a hit and which might need some adjustments.

Expand sales despite partner limitations.

Wholesale brands depend on their distribution partners to give them more shelf space, placements in additional locations, and onsite marketing opportunities. By going direct to consumer, brands can find uncaptured pockets of opportunity. They can reach consumers who don’t live near a retailer and offer a greater variety of products than retailers can keep in stock. This is especially important as some retailers consolidate their businesses and shutter locations. Brand manufacturers can fill the gap with their own D2C sales channels.
 

56% of organizations expect the majority of their revenue to come from digital channels within the next three years.

State of Commerce,” Salesforce Research, 2020

Improve product profit margins.

Distributors purchase goods at significant discounts while other intermediaries, including marketplaces like Amazon, charge fees or take a commission. When selling products through a D2C channel, brands are able to capture the entire amount the consumer pays. That means a higher product profit margin, which is the difference between what the company spends to make the product and what it sells the product for, whether to a consumer or a retailer.

Make smarter marketing investments.

Companies can aggregate information about which ads drive sales to their website, increase average order values, and more. They develop an in-depth understanding of what it takes to convert customers and the cost of doing so. They can use these insights to determine how to market more effectively at scale to increase sales.

Establish valuable feedback loops.

With a direct connection to shoppers, brands can learn more about their experiences and about their unmet needs. They can quickly capture feedback through online surveys and from communication with customer service departments and then use the information to improve products and operations. A CRM can help brands reach out to customers and organize the feedback. Applying automation, artificial intelligence, and analytics to the data can yield insights on how to best address shopper pain points.

Learn how to go direct to consumer.

Brands are facing increasing competition from niche stores, other brands going D2C, and even marketplaces like Amazon. Relying too much on retail partners can limit their growth. They can strengthen their position by adding D2C channels to complement existing wholesale channels. The best ways to initiate D2C sales are with a branded website or owned retail channels.

1. Build a branded website.

A digital shopping experience makes your products more accessible and desirable for online audiences. You can share in-depth product information and complementary content, like how-to videos. You might offer free samples or trials, a subscription service, or online exclusives. Make it easy for shoppers to get everything they need with bundled discounts and free shipping. All the extras will encourage customers to come back to your site in addition to – or as a substitute for – existing points of sale in your distribution network.

2. Open retail stores.

In your own self-branded retail locations, you can provide a more holistic customer experience. An omni-channel approach within these stores offer more access, convenience, and education to customers.

Help your partners and your D2C channels live in harmony.

Some retail distributors may see a brand’s D2C expansion as a threat to their partnership and to their bottom line. This reaction is understandable. Concerns companies commonly have when brands go D2C include:

  • Market oversaturation
  • Undercutting prices or other forms of price competition
  • Conflicts over physical territories
  • Issues from selling to the same target audience in a particular market where both D2C and a retailer or distributor exist

However, a smart D2C strategy can actually complement existing channels and boost sales for everyone. You can help assuage retail partners’ concerns by explaining how your plan can benefit them. Here are five tactics consumer goods companies can use to avoid channel conflict when going direct to consumer.

  1. Test new items on your D2C website. This can quickly determine their level of popularity as well as their ideal price points. Then you can use those insights to offer distributors new best-selling items that will fly off the shelves, ensuring both you and your partners thrive.
  2. Use acquired customer lists. When retail partners are offering special promotions, you can drive foot traffic and sales to them.
  3. Increase investment in marketing. Heightened awareness of and affinity for the brand will make products become even more popular among shoppers at partner retail locations.
  4. Create unique or immersive experiences on the D2C channel. Your site becomes a destination for consumers who want to connect with the brand and learn more about it. Knowledge articles, tips, and how-tos can help consumers move along their customer journey. Your site can even tie into retail channels and drive sales there.
  5. Give your retail partners access to exclusive merchandise and let them offer discounts that are not available on your D2C channel.

It’s important to recognize and appreciate the symbiotic relationship between your D2C initiatives and your distributor network. That helps you find ways to integrate your marketing efforts and improve sales for everyone. However, some channel conflict is inevitable. Besides your own B2B and B2C channels, it can come from marketplaces and platforms such as Amazon, affiliate networks that promote your products for you, and even your social media channels.

Mitigate that risk and compensate with mutually beneficial initiatives. For example, load up wholesalers with items that have demonstrated broad consumer interest. Keep more specialized items on your D2C site. This plays to the strengths of each channel.

Make it easy for consumers to find your brand.

Sometimes your customers are browsing in retail stores. Sometimes they are there to get their hands on your product immediately. But more and more, they are searching and shopping online. A direct-to-consumer channel lets them get closer to your brand, learn more about your products, and find exactly what they need. Adding a D2C channel to your distribution mix can help your company improve, grow, and even strengthen your relationships with your distribution partners.
 
 
 

Plan your D2C approach

Connect consumers with your brand while keeping current partners happy
 
  • Find out if you are ready for the D2C transformation
  • Assemble the right team
  • Stay customer-focused

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