How to Make the Switch to Direct-to-Consumer
In the traditional model for product sales, a manufacturer would produce mass amounts of a product and wholesale it to a retail provider. Customers would then choose the retail outlet that carried the brands they preferred on their shelves. The service model was similar. Agents would “sell” a service to consumers, acting as the middleman and collecting a fee.
When sales first went online, this model was largely preserved. Large ecommerce sites acted as the middleman — a one-stop-shop, as it were. But things are changing in eCommerce, and the voice of consumers is being heard. In fact, recent trends and reports indicate that 55% of consumers prefer to buy directly from the manufacturer, and over 50% prefer to visit the brand website rather than the retailer website. These trends have prompted many brands to switch to direct to consumer marketing and sales.
What Is Direct to Consumer?
Direct to consumer — or D2C — means that a business sells directly to customers, cutting out the middlemen. It is a different strategy than business to business, or B2B, where a company sells to third-party vendors, wholesalers, and retailers. D2C eliminates the intermediaries and allows the business to engage the clientele directly.
The traditional B2B eCommerce model looks something like this:
- Merchant > Platform > Advertising > Customer > Platform > Merchant
The third-party vendor always comes between the customer and the manufacturer. However, the D2C model eliminates those walls:
- Merchant > Advertising > Customer
D2C is a rapidly growing trend, embraced by almost 60% of manufacturers and accounting for almost $18 billion of total eCommerce sales in the year 2020. The reason for its success has largely to do with understanding the journey of a customer who purchases a product or service.
- The search. When consumers search for a product online, they also search for a brand. They want a product they can trust — something that makes a positive impression on them.
- The comparison. Since there are usually countless purchasing options online, modern buyers spend time researching to compare. In fact, over 80% of shoppers do research online first, with over 60% taking the time to read reviews.
- The purchase. The final step is the purchase itself. However, over 50% of shoppers experience buyer’s remorse after the transaction. The principal reason? A lack of engagement and support from the third-party retailer.
When companies switch to D2C, they help improve the customer journey. Let’s see how.
Steps to Making the Switch to Direct to Consumer
The steps to switching revolve around listening to the voice of consumers and responding with what they want.
Build Your Brand
Consumers are wary of unbranded products or products from an unknown brand. So the first step is to build a brand that customers will recognize and be drawn to. Rather than using a third-party platform for your eCommerce, it’s important to design and build your own branded website and iOS and Android applications.
Advertise and Convert
Advertising should be aimed directly at your consumer audience, bringing them into direct contact with your brand and not a third party. Advertising campaigns can be conducted both online and physically in your community to convert existing third-party customers and engage new customers.
Expand Your Presence
Use your website and social media accounts to expand your online presence. By allowing feedback on all your digital platforms, you’ll be able to listen to your customers and fulfill their expectations. You can coordinate your various channels for consistent advertising and active customer engagement.
Build Brand Loyalty
Engage Your Audience
Whether your company is local, national, or international, you’ll want to engage your consumer audience to make them feel like part of your brand “family.” Besides allowing them to provide feedback and reviews on your website and social media platforms, seek to create relationships by conducting surveys, offering incentives, and communicating your brand image and goals to them.
Benefits of Making the Switch
Because the direct-to-customer model engages your business directly with consumers, you reap benefits that would be unavailable in the traditional B2B model.
- Reputation. Because you are no longer relying on the popularity of third-party vendors to attract customers, you are in control of your brand reputation. You determine what first impression new buyers have when introduced to your product(s). You can build your brand reputation in parallel to the growth of your business, promoting increased brand loyalty and expanding your customer base.
- Marketing. Having a branded website and a social media presence gives you multichannel marketing opportunities. Again, you are in control of your marketing strategy and image. Being in control also means you can keep marketing, packaging, and your online presence consistent with your brand.
- Engagement. What many third-party vendors are lacking is the kind of engagement customers prefer. Sure, they may have a few reviews featured at the bottom of the page, but customers want more. They want insight and information on the product, and they’ll trust it more if it comes directly from the source. They want support in case they have questions, and they want to know they can trust the brand. Such trust only comes from direct engagement.
- Optimization. With D2C, you can optimize your product prices and marketing costs. Because you’ll be eliminating intermediaries and selling at retail value, you may increase the profit margin for your product(s). This means you can turn some of that margin into discounts for customers, something buyers love. Or you may bundle your products or offer other incentives that attract new customers and build brand loyalty. Additionally, your marketing strategy will be more focused, aimed directly at the target audience, reducing marketing costs or opening up new marketing opportunities.
Solutions by Ally to Help You Make the Switch
Ally is a software-as-a-service platform for facilitating transactions between merchants and their customers. Ally is not another intermediary or third-party vendor. Instead, they provide a system to help your business grow and expand without extra fees or huge commissions. The middleman is cut out, and merchant’s are given the tools they need to interact directly with their customers. Ally’s full suite of software tools provides merchants with everything they need, and they get to keep and build their customer relationships!