5 Reasons Why Brands Should Consider Direct-to-Consumer E-Commerce
There once was a time when the lines between brands and retailers was very clear. Brands produced their goods, and sold them at wholesale price to retailers, who then sold them at suggested retail price to the end consumer. This has been the traditional model for the past century. With the invention of the internet and online shopping, this gave rise to a host of new pure-play online retailers, but the fundamentally linear model of the brick-and-mortar world – manufacturer to retailer to consumer – remained largely intact.
Fast forward to 2017. This traditional linear model no longer rules. Consumers now have more access to information and buying opportunities than ever before. They can compare price, read product reviews, complain on social media, order an Uber with touch of a button, and so on. Consumers have different perception of buying these days, The expectations that customers have of both brands and the retailers that sell those brands has changed over the past decade. Meeting these expectations is forcing brands to rethink their sales strategy. Many brands have invested time and energy in establishing more direct to consumer sales channels, otherwise known as D2C e-commerce.
According to a study by Forrester Research conducted on behalf of Digital River, slightly over half (52%) of consumers would prefer to buy from the brand.
Depending on the product category, net margin dollars per unit doubles with D2C. One vendor interviewed for this report reported seeing increases among customers from 50% to as high as 400%.
Retailers rarely carry a brand’s complete product catalog, preferring instead to provide shelf space for products most likely to generate regular sales. By opening and managing their own online store, manufacturers can offer as wide a product assortment as they want, further augmented by their own content such as detailed product descriptions, photos, and videos, which retailers may not use.
Improved Engagement and Loyalty
D2C gives manufacturers an alternative channel to consumers where they can counter the effect of price competition. They gain data on their customers’ purchasing habits and can tailor product assortments and promotions accordingly.
Access to customers in new geographies
Online marketplaces, website translation and localization software and services, and cross-border software solutions that handle customs, duties and taxes, and payments, are now widely available, and consumers in fast-growing economies are a ready and willing market for foreign brands.
Many large companies like Timberland, REI and Under Armour are finding success expanding their direct to consumer sales channels. It’s no wonder more brands plan to grow their D2C sales avenues and invest in their mobile and e-commerce sites. As more retailers aggressively pursue this strategy, the brands that can deliver the best experience—both to their customers and to their partners— are in a position to win.