‘Winning in the aisle’ has always been the rallying cry for most consumer brands. But with a tectonic shift towards online, brands are reinventing themselves to reach directly to consumers and as a result Direct-to-consumer (DTC) eCommerce is gathering pace.
However, merely creating an online platform is not enough to build a sustainable DTC e-commerce business. With 57% of brands claiming they are exploring DTC capabilities, there are a lot of crucial decisions that a business needs to consider before they embark on their DTC journey, no matter the size.
- Build a well-defined business case for DTC ecommerce
A good business case is at the heart of any operation. The business case should create a vision for the project that demonstrates the organisational benefit and how DTC can continue to evolve once deployed, with a platform innovation roadmap. It should also outline future investments which will be required beyond the initial development or ‘phase one’ rollout.
2. Cultivate a unique product and service offering with growth potential
Simply offering the same products and services already have available through alternative partners and channels won’t be enough to drive long-term success for the business. The goal should be to create a product and platform with the capacity to evolve.
In today’s undoubtedly competitive eCommerce market, organisations that evolve with their customers stand the best chance of capturing market share. As eCommerce customer demands and demographics change, so must the products and services DTC organisations offer them.
3. Steer clear of channel conflicts with a solid pricing and promotion strategy
Channel conflict occurs when the product’s manufacturer ‘steps on the toes’ of their retail partners. By selling products directly to consumers a business runs a risk of disintermediating their channel partners.
A conflict undoubtedly sours partner relationships causing significant and harmful reputational damage potentially ruining the partnership permanently. By offering customers uniquely priced products and services, promoted with an alternative approach, alleviates a potential conflict.
4. Make real-time inventory accuracy a top business priority
A well-architected inventory solution is crucial to the success of an eCommerce platform selling DTC.
Organisations should assess existing systems’ ability to be tightly integrated, resulting in solutions that provide the business with real-time inventory visibility and accuracy. For example, stock availability on the eCommerce platform should not conflict with stock pre-assigned to retail partners or large-scale orders.
Where system integration capability is restricted due to legacy systems or isolated technology, an analysis of additional system upgrades should be undertaken to understand the broader implications of gaining the level of inventory control required.
5. Build a strong infrastructure
For the order and fulfilment process to work efficiently, deciding how the eCommerce orders will be processed from end-to-end is essential to build a strong offering. (Systems, locations, whom etc.)
6. Prioritise the customer experience and demonstrate the benefit of buying direct
For an organisation to be a success at DTC, customer experience should be at the front and centre. By showing customers the benefit of buying a product directly with no involvement of the middleman, strengthens the case for DTC.
Furthermore, the data and insights which were possibly unavailable to brands before can be easily accessed and can inform a quality customer experience.
7. Create a sustainable customer acquisition strategy that will evolve with the business
A big part of a successful DTC business is understanding the importance of customer acquisition.
Historically, product and technology see significant investment but very little is seemingly dedicated to customer acquisition strategy. This is a common challenge amongst organisations.
Retail partners, networks and distributors usually have huge budgets dedicated to marketing and promotion that a DTC business needs to compete with. Not only should an organisation have an entire dedicated customer acquisition strategy, but the business case should also factor in upfront and ongoing budget requirements.
Leaving a well-planned customer acquisition strategy out of the overall business plan, could ruin any potential for future success in the competitive retail market.
By taking a DTC approach, organisations can not only reduce significant costs, gain direct access to customers but create a long-term agile business model. Furthermore, they can invest the cost savings back into fine-tuning their offering to suit the ever-evolving customer demands.
With all these factors carefully considered, the move to DTC doesn’t need to be seen with any apprehension. It is a mindset that businesses need to adopt, with no giant leap but a natural progression towards DTC growing your business
Scott Rigby is technology advisor and principal product manager for Adobe Asia Pacific.