Since the dawn of the traveling salesmen, companies have sold directly to the consumer. But in the early 2000s, the rise of e-commerce made direct-to-consumer sales an option for nearly any manufacturer on the market. This moment created an incredible opportunity for manufacturers to control their brand message and reach out to consumers directly. You can read more about the rise of D2C in Ironbridge’s previous blog post here.
In this post, we’ll discuss the various approaches, or channels, a company can take to sell directly to the consumer.
E-commerce
Likely the most common channel to sell directly to the consumer is via a manufacturer’s website. With the simple addition of an e-commerce interface, manufacturers can outfit their websites to take orders directly from customers. Of course, these manufacturers must also set up the fulfillment process, which can be costly. If done right, a manufacturer can use their website to not only generate sales but to also collect customer data and ultimately have more control over their brand.
One company that is making a serious investment in D2C sales is Nike. The company saw digital business rise 18% in Q2 of 2018 according to Quartz. Nike’s goal is to personalize products for its millions of customers. The way the brand plans on doing this is by interacting with customers directly and collecting data. According to a Business Insider article from June 2017, “In short, the company is de-emphasizing its readymade network of retailers to create an even more precise targeting mechanism, and it’s doing so under a program it calls Consumer Direct Offense.” Instead of shipping products to boutiques, big box stores and retailers, Nike is segmenting products amongst its own properties: the app SNKRS, Nike brick-and-mortar stores and Nike outlet stores.
Brick-and-mortar stores
Although e-commerce broke open D2C for many manufacturers, others have found success for years in brick-and-mortar retail. Think of Apple or designer brands such as Coach. Often these brands are also available through third-party retailers (you can purchase Apple products at Best Buy and a Coach purse at Macy’s). But the brick-and-mortar D2C model still has merits. The stores create brand presence on a city block and also allow for total control over the customer experience. From the facade of an Apple store to the energy given off by their staff of “geniuses,” the entire customer experience is tightly controlled. Operating a brick-and-mortar store is much more costly than selling goods online, but can also be rewarding for the brand’s image. Furthermore, brands can leverage their physical presence with online interaction for omnichannel marketing efforts.
Amazon Marketplace
Amazon Marketplace is taking out some of the risk of selling D2C. The platform allows manufacturers and third parties to sell goods on Amazon.com. As the leader in e-commerce sales, Amazon’s presence and fulfillment process can help bolster a brand’s D2C sales. Technically the brand is selling through Amazon as an intermediary, but there is still enough interaction and control that Amazon’s Marketplace has become a sort of platform for the D2C model. The main drawback for their model is that Amazon takes a cut of the profits. Many manufacturers see selling D2C as a chance to keep retailer margins and make a larger profit but Amazon Marketplace would cut into that share.
Co-op ventures
Just like Amazon Marketplace giving retailers a space, certain industries need a little more help selling directly to consumers. Consider the produce industry. Sure, a farmer can sell directly to consumers via a farmer’s market or community supported agriculture program, but growth is limited in these venues. A company called Imperfect Produce is collaborating with farms around the country to sell produce directly to the consumer at a reduced price. According to the company’s website, “Imperfect delivers produce to your door for 30-50% less than the grocery store. We do this by sourcing ‘ugly’ fruits and vegetables that usually go to waste on farms. These fruits and veggies taste the exact same on the inside but look a little ‘wonky’ on the outside.” This D2C model again uses an intermediary, but gets close to serving the consumer directly considering the industry.
Multi-level marketing
MLM companies employ representatives to sell their products directly to the consumer (as well as recruit other representatives, thus creating multiple levels). Avon was founded in 1886 and gave women career opportunities without having to leave home. The brand was a pioneer in the D2C space. Today, MLM companies are still popular with manufacturers and consumers alike. Many of these companies still rely on female representatives and products traditionally marketed towards women (makeup, cookware, candles, clothing, jewelry, elc.). One major change in the MLM model is the marketing done by representatives. These brand ambassadors no longer have to rely on home parties for the bulk of their revenue. Rather, many representatives use social media to build and maintain a customer base.
Conclusion
The D2C boom is just getting started. Many new companies are D2C natives and never had a retail presence or brick-and-mortar stores (think Warby Parker and Casper). By leveraging digital marketing and mobile technology, these and other more traditional brands can capture never-before-seen customer insights. And when brands get to know their customer, good things tend to follow.
If you’re looking to make moves into D2C or you’re already there, Ironbridge can help. We’ll look at your data and help you determine which marketing strategies are working and what your conversion rates look like. Contact us for a free quote today.
Stay tuned for more on D2C sales.
Written by Kim Kelly Consulting