With consumer purchases making a dramatic shift online, the direct-to-consumer (D2C) sales channel has never been more important for consumer packaged goods companies and manufacturers. According to a recent report by eMarketer, US D2C ecommerce sales represented 14.0% of total retail ecommerce sales, and are expected to reach $174.98 billion by 2023. Improved sales potential is key, though other benefits of a D2C strategy include increased brand/product visibility, controlling the customer experience, and owning first-party data to derive further insights and take action.
Although the barriers to entry for online D2C are low, there are definitely challenges to overcome. Here are four common barriers companies encounter, plus some strategies to help navigate them and establish a successful D2C channel.
Key Direct-to-Consumer Challenges, and How to Address Them
Any company venturing into the D2C space must plan for changes to existing processes, the introduction of new processes, and employee training. Yet the success of a D2C initiative will largely depend on the ability to create exceptional customer experiences aligned with the brand ethos. It is crucial to invest in the right digital commerce platform, one that enables creation of dynamic and engaging customer experiences and can manage end-to-end commerce capabilities – including easily accessible customer service. To achieve this, consumer packaged-goods companies and manufacturers should address four core elements.
1) Order Management and Fulfillment
End-to-end order management and fulfilment becomes the brand or manufacturer’s responsibility in a D2C strategy. The digital platform should allow consumers to explore the product catalog and place an order directly. The orders or customers can be automatically directed to the appropriate dealer or distributor who can fulfil the sale. This helps the brands maintain existing relationships with dealers or channel partners while establishing direct relationships with the consumers and collect valuable insights. A lightweight order management solution (OMS) can also be used with the digital commerce platform to help in automatically allocate orders to the right fulfilment source (warehouse, DCs, dealer, etc.) basis on various criteria such as location, stock availability, demand channel, delivery preference, etc.
For smaller brands with manageable orders, in-house fulfilment could be an option provided it ensures fast and reliable deliveries. But larger D2C brands may not be ready for an in-house fulfilment. Partner with 3PL providers that offer fulfilment automation capabilities ranging from custom packaging to real-time tracking for faster delivery speeds. These providers can manage both inbound and outbound shipments. This will help the D2C brands bridge the gap with larger marketplaces which have large distribution networks and established fulfilment capabilities.
Building an online presence and making it resonate with the consumers requires a lot of focused marketing efforts. This may be new for the brand or manufacturer. Once the online digital platform has achieved enough stability, undivided focus should be on the marketing strategy. Start by creating personalized experiences across content, pricing, promotions, etc. The platform should provide the necessary tools for marketers to frequently and consistently create top-quality, engaging content.
3) Returns and Reverse Logistics
Enabling hassle-free returns will play a key role in customer stickiness and repeat buying. While selecting the ecommerce platform, D2C brands must look for platforms that support returns management functionalities and allow customers and customer service agents to trigger and track return requests. There are many platforms that support this natively. D2C brands do not have to build or buy another solution just for the return merchandise authorization (RMA). Once the return requests have been created, shipping labels and packing slips can be generated for returned packages. Alternatively, the designated 3PL provider can handle the pickup logistics associated with a returns process.
4) Customer Service
Consumers want and expect fast, reliable customer service before and after the purchase. Customer service capabilities can be enabled by investing in a good conversational chatbot solution like Avaamo – designated agents can assist consumers in various phases during or after the buying journey. Investing in a good contact management solution will be required. The assisted sales feature of the digital commerce platform is an additional way to engage and help consumers.
Connect to Explore More
The ultimate decision to go D2C is not simple. There are multiple aspects that need to be assessed and addressed before finalizing the strategy. Depending on the maturity of the brand, the strategy and steps to the most effective D2C model may vary.
While it is necessary to kickstart the D2C journey with the right foundational steps and get consumers start engaging directly with the brand, it is also important to keep building incrementally on each of the four areas mentioned above. Gradually strengthen those aspects with additional solutions, capabilities, or bring more functions in-house to take additional control over the consumers’ experience to build long-term relationships.
Connect with us to know more about the right steps to take for a D2C strategy that leverages our market-tested frameworks for platform selection, customer experience, growth marketing, omni-channel, and value integral to any successful D2C business model.