Most companies rely on distributors for their products or service to reach the end customer. However, traditional retail does not work for all products. There are some that are better off with a more direct customer journey. This is where the direct-to-consumer system comes in. Direct-to-consumer sales, or D2C selling, is when a manufacturer, maker, or producer of consumer-packaged goods (CPG) decides to forgo the middlemen and sell directly to the end customer. Once you’ve maximized your manufacturing efficiency, it’s not unreasonable to consider cutting out the middleman and selling directly to consumers.
Despite the perceived challenges, the D2C strategy might not be so hard to start or transition into; 81% of consumers plan on making at least one purchase from a D2C brand in the next five years. The opportunity is there; taking full advantage of the opportunity is a matter of finding a strategy to meet consumer demand.
Direct to Consumer Brands
Companies are stepping out into the DTC model from more traditional retail, with over 400 D2C brands existing today. These brands are having marked successes in sales and even managing employee overhead, cutting costs, and satisfying customers with timely order fulfillment. Here are two examples of big brands that transitioned into a DTC strategy with the help of inventory tracking software.
Steps to Literacy
Steps to Literacy increased manufacturing efficiency with inventory tracking software, allowing them to offer 26,000 products to school districts, and thus became an established brand in the DTC model. This DTC company sells exclusively developed educational resource products directly to school districts. This company sells exclusively developed educational resource products directly to school districts. They can attribute success in part through their inventory management software. A lack of demand was not an issue; it was meeting the demand for the orders.
Once they used inventory software, it became easy for them to stay on top of demand and inventory updates, and they discovered they could scale back other costs. They are also able to instill brand loyalty and improve customer relationships. Using an all-in-one inventory tracking software solution, Steps to Literacy discovered that the other successes in budgeting and labor costs were a direct correlation to the software.
Spark R&D uses software to manage inventory for orders on its e-commerce shop, but also partners with dealers in multiple countries. Customers can buy snowboard binding products directly from Spark R&D’s website. Even though this DTC brand was a humble startup, it has grown to require multiple employees to assist in daily operations. Their system did not have a specific way to manage invoices, vendors, and inventory successfully in real-time.
Once they found an inventory tracking software solution, it gave every department access to material status updates in real-time. This helped everyone work cohesively to meet production needs while maintaining a better flow for orders, shipment, and accounting with one software model. This is an excellent example of a manufacturer using a hybrid model of retail and D2C selling.
The Benefits of Direct-to-Consumer Sales
Fostering a connection with a potential customer gives better insight into what your customer wants, needs, and looks for in your brand. A personalized connection is something that many shoppers want. Aside from customer service, about 80% of consumers are influenced to shop with a brand when it offers a personalized experience.
An Intimate Relationship with Consumers
A D2C brand has proprietary data on its customers, which can influence the manufacturing decisions. When a company can cut the middleman out of the line from production to consumer, this enables a brand to gain access to the consumer through emails and social media, for example. Having this and other data puts a business in touch with customer purchase habits, and allows for better insight into the specifics of a demographic.
A D2C brand controls every touchpoint of the consumer experience, meaning a retailer can’t influence how the consumer perceives your brand. You, as the manufacturer, can manage your brand perception. Once you have taken the reins at each point in your business, you can set the tone and standards for a branding strategy.
For example, more D2C companies are adapting social media presence and online advertising to their content marketing strategy. A brand can maintain a real-time connection with the customer through content marketing and social media. You can schedule posts, run contests, and encourage likes, shares, and feedback directly from the customer. At the same time, you’re offering content that enables your brand to reach consumers, make connections, and monitor brand perception.
Speedy Product Launches
A D2C company can quickly implement and test new product lines without having to wait for other members of the supply chain. New products can take months to launch, depending on product testing, production, and shipment. When shipment and availability go through a retailer or other distributor, it takes more time to get to the consumer.
The Challenges of Direct-to-Consumer Sales
Opening up a DTC business channel and working with dealers and retailers may be a small step forward. Transitioning from just manufacturing into direct selling takes marketing, branding, and inventory management tasks. A channel partner can help support the brand in small milestones by offering your product while you focus on the added responsibilities.
Dependent on E-Commerce
Thinking of a more direct sale for your products? At first, it’s incredibly tricky and ill-advised to open multiple physical locations while concentrating on manufacturing, meaning most sales will happen online. Dealers and retailers get your product seen in shops all without the cost of having a brick and mortar location just for your product alone. Staging your products in a retail location with similar products will put your brand in front of consumers that are already seeking a product like yours.
For example, if you are selling a new brand of winter wear targeted just for women, then seeking partnerships with small retailers who cater to women’s apparel could be the first step in transitioning to a physical location.
D2C Equals Multitasking
You can’t just be a maker or manufacturer; you must also cover all the other roles that partners typically include, which means you may have to wear a lot of hats. There are marketing, sales, accounting, and website maintenance tasks to manage. This can be overwhelming in the beginning, and that is why it is ideal to find a partner or channel that can help get your brand off the ground. In the meantime, having the best software in place to help with accounting, inventory, and payroll doesn’t take long to set up.
Software Is the Solution
Through e-commerce integrations, you can offer your products to consumers online while maintaining your relationships with dealers, vendors, and retailers. The case studies show how each company had its own set of challenges when they experienced growth in demand. With the right software in place, this not only helped each business where they needed it, but they also found other ways the integration helped to further grow their business.
Software that integrates inventory management with an e-commerce platform allows you as the manufacturer to do it all. From production, shipping, payroll, invoicing, and tracking employee performance, the software makes work easier. This leaves more time to identify opportunities for a branding strategy.
Creating and fostering a meaningful connection between your brand and customers takes time, but manufacturers can transition and grow their business further with the right strategy and software program.