Direct to Consumer Versus Retailers – The Changing eCommerce Landscape
The power has very much shifted from those who make and sell products to the consumers who buy them. Offering consumers what they want, when they want it, will separate the winners from the losers – PwC Retail and Consumer Report 2018.
To optimise and win in the competitive consumer landscape we need to understand the market and what our customers need
Building a successful direct to consumer (DTC) store has many challenges. Brands must navigate the path of understanding consumers, educating them on what you have to offer and finally providing them with service that works for them. Customer experience is key, and it’s vital to provide service that works for them and not one that works for you.
The last bit there is the key, service that works for them and not the one that works for you.
This is the primary reason why brands need to focus on building a positive and long-lasting relationship with online retailers. As online shopping and eCommerce grows globally, retailers like Amazon, are key elements of the path to purchase.
So why would a customer prefer to purchase from a retailer like Amazon, and not a Direct to Consumer store?
- Credit/Debit card already registered
- Already have an account
- Existing knowledge of delivery/return policies
- Personalized recommendations
- One day deliveries
- Subscriptions and savings
- Retailer Wallets
On the other hand, why would a customer prefer to purchase from a DTC store?
- Better Shopping Experience
- Brand Loyalty
- Special SKUs and Limited Editions
- Personalised Offerings
The key is for brands is to have a balanced offering in terms of retailers and DTC in order to provide an enhanced consumer experience and choice. Brands need to consider the different strategies for both retailers and DTC to become a successful online retailer.
Key pointers when selling on online retailers:
Getting Basket space is as important as shelf space.
Out of all the possible reasons, a consumer might prefer shopping from an online retailer because they want to shop multiple products at the same time, and your product just tends to be one of the products in a basket. Start cross-promoting against complimentary products where chances of add-to-carts are maximum.
Volume is the key
In order for your brand to be successful when selling online with a retailer, especially for low margin retailers, it’s vital to drive volume sales. Brands can do this by promoting products, and by sponsoring top SKU’s to drive mass purchases.
Competition is good
Selling amongst your fellow competitors provides a chance for brands to learn more about their consumers, their likes and dislikes. Online retailers become a great source to learn from the positive and negative reviews of your competition and capitalize on them, as well learn about your own drawbacks.
If planned well, retailers can eventually help brands get added insights, added incentives, and better consumer understanding. These can in return help improve the DTC shop.
How can you get access to the ‘added insights’?
ChannelSight’s eCommerce solutions can help you to get added insights as well as enable brands to understand consumer shopping behavior in depth. Not only that, but it can also help brands to track stock and price fluctuations on their entire retail portfolio.
In addition, brands can also track competitors to benchmark their own offerings. This competitive intelligence can be imperative for brands when making strategic decisions. The reporting dashboard that ChannelSight offers also provides brands with data across the retail portfolio in an easy-to-use format, allowing managers to swiftly analyse their brand’s performance and take data driven decisions. You can learn about our solutions in depth here.
Key pointers when forming a DTC
Consumer Data and Control
Having a DTC store provides brands with an opportunity to own and build a deeper relationship with their consumers. This deeper relationship in return provides a chance to target your audience base in a more meaningful way whether it be through ads or emails. It becomes even more vital in this sense to track your consumer purchase patterns.
One of the biggest challenges that a DTC + Online Retailer focused brand faces is to decide what SKUS work on DTC vs retailers. A good DTC strategy would be to have a focus on niche SKUs that are occasion-specific (think Cadbury’s personalisation around holidays). SKUs that are readily available can be made part of the retailer strategy with a focus on volumes.
We all know that consumers tend to dive towards online retailers around special occasions like Black Friday, Cyber Monday and the holiday season overall. So, capitalizing the relevant data from DTC / brand.com and amplifying the focus towards retailers across SKUS is a good opportunity with DTC as well.
These are only some of the very basic high-level pointers to consider when debating DTC vs retailer Channels. A lot also depends on how you are planning supply chain for, using/controlling re-sellers across both channels.
A lot also depends on understanding where/how consumers tend to find your product, what places they eventually buy it from. Understanding these patterns and applying that to your DTC first/ Retailer also strategy is necessary.
How can we help?
Whether your brand choosing to sell via a retailer or a DTC, we can help you understand your consumers better. Contact us to learn more on how we can help you increase your conversions and provide a better consumer experience.