Direct-to-Consumer – at JDS Strategists we define this as the practice of selling directly to the end customer either via your own website or on marketplaces such as Amazon. For this article we will be focussing on selling through your own website.
It is crucial that this is approached strategically to reap the most rewards. So, to help with that here are 5 fundamental questions you MUST answer to do it and do it right.
1. Why are you doing it?
There are both significant benefits, and inevitable challenges to DTC. These could include (but certainly will not be limited to):
Increase gross margin Retailer backlash
Reduce reliance of retailers Skills and resource
Control end-end CX Changes to operations
Data Capture Internal culture
Your ‘why’ can be any or a combination of the benefits, and it is critical that you keep it front and centre. The challenges are unavoidable and in the heat of battle, it will be easy to forget your ‘why’. This could result in conceding to short term pressures, undoing any progress that may have already been made.
When you decide on your ‘why’ make sure to communicate it consistently and constantly across the business.
2. Who will be commercially accountable?
This will potentially (. . . inevitably) invoke the age-old sales vs. marketing debate. It is unlikely when you first get started that you will be able to invest in a full time ‘Head of DTC’ position, but this should be the ultimate goal.
Instinctually you may be distracted by titles and department headings. However, DTC must form part of a broad business strategy. It is personnel skills and competencies across your senior Sales and Marketing teams that must take precedent. And whoever is chosen must be actively supported by leadership.
JDS would always recommend that one person have accountability for the delivery of a DTC project along with relevant experiences of Ecommerce and project management. It is these criteria that should form the decision process, not job titles!
3. Where will the required expertise and resource come from?
Assuming you are starting from zero, specialist marketing and ecommerce expertise is a must to maximise success and alleviate challenges. You have 2 primary options:
Outsourcing: Specialist agency / consultant.
In house upskilling: External training courses / ‘on the job’ training / recruitment.
Outsourcing initially can significantly increase your chances of getting it right first time. Consultants can help to build out the plan, processes and lead internal project team. Over time they can also help with upskilling and resourcing to manage it ongoing internally.
How will you adapt your operations?
You are in essence becoming the Retailer when you open up DTC, so Retail-CX fundamentals must be considered – convenience, speed and quality.
Web & Ecomm: website should be live and ready to sell.
Single pick/pack/ship capabilities.
Delivery within 1-3 days max.
Good communication throughout.
Returns: ‘Consumer Contract Regulations’ apply, and customers will expect a seamless returns process on warranty repairs or guarantees (free of charge).
Website support / phone / email
Day-to-day queries will increase with DTC sales growth.
Pre-sale support could also service as a USP.
When comparing it to traditional operations, you should assume a minimum 200% increase in operational costs. This is why it is imperative that you involve all departments from day 1, so everyone knows and the plan and more importantly is invested in its success.
5. What will your value proposition be?
Why should a customer buy directly from you, vs. a traditional retailer?
Reasons to buy ultimately come down to Product, Price and Promotion (or Added Value). You should never underestimate the attraction to consumers of being able to buy direct. There is an automatic trust (assuming your brand is robust), so this is a USP that no retailer can compete with.
Assuming therefore that you ducks are in a row with your three P’s you need to then consider what could stop a consumer buying direct from you.
Ability – is your website transactional?
Awareness – is it obvious that you can buy?
Approach – Is it a smooth, easy (and enjoyable!) experience?
Remove barriers to early growth and consider how quickly you want to grow the channel. More aggressive USP’s will deliver faster growth but increase risk and vice versa.