Thinking DTC vs Online Retailers
Building a successful direct to consumer (DTC) store has its own ups and downs. It’s a hard path of understanding your consumers, educating them on what you have to offer and finally providing them with service that works for them.
The last bit there is the key, service that works for them and not the one that works for you.
And this is the primary reason as to why brands need to consider building a positive and long-lasting relationship with the online retailers and get used to the fact that retailers are going to be key brand partners as online shopping and ecommerce grows globally.
There are many reasons why a consumer might prefer shopping from retailers and not a DTC store.
· Credit/Debit cart already registered
· Already have an account
· Existing knowledge of delivery/return policies
· Personalized recommendations
· One day deliveries
· Subscriptions and savings
· Retailer Wallets
And there are many reasons why a consumer might prefer shopping from DTC store.
Better Shopping Experience
Special SKUs and Limited Editions
The key for brands is to manage consumer expectations in terms of retailers and DTC and having different strategies focusing on offerings that work on each.
Key pointers to be have a successful Online Retailers:
Getting Basket space is as important as shelf space.
Out of all the possible reasons a consumer might prefer shopping from an online retailer is that they want to shop multiple products at the same time, and your product just tends to be one of the products in a basket.
Cross promoting against complimentary products where chances of add to carts are maximum.
Volume is the key
Especially for low margin retailers. Promoting products, sponsoring top sku’s to drive mass purchases is the key.
Competition is good
Selling amongst your fellow competitors provides a chance for brands to learn more about their consumer, their likes and dislikes. Online retailers becomes great source to learn from the positive and negative reviews of your competition and capitalize on them.
If planned well, retailers can eventually help brands get added insights, added incentives, and better consumer understanding. These can in return help improve the DTC shop.
Key pointers when forming a DTC
Consumer Data and Control
Having a DTC store provides brands with an opportunities to own and build a a deeper relationship with their consumers. This deeper relationship in return provides a chance to be more targeted and more meaningful with the ads, emails, overall communications etc.
One of the biggest challenges that a DTC + Online Retailer focused brand faces is to decide what SKUS work on DTC vs retailers. A good DTC strategy would be to have focus on niche SKUS that are occasion specific (think Cadbury’s personalisation around holidays).
SKUs that are readily available can be made part of the retailer strategy with focus on volumes.
We all know that consumers tend to dive towards online retailers around special occasions like Black Friday, Cyber Monday etc. So capitalizing the relevant data from DTC /brand.com and amplifying the focus towards retailers across SKUS is a good opportunity with DTC aswell.
These are only some of the very basic high level pointers to consider when debating DTC vs retailer Channels. A lot also depends on how you are planning supply chain for, using/controlling re-sellers across both channels.
A lot also depends on understanding where/how consumers tend to find your product, what places they eventually buy it from. Understanding these patterns and applying that to your DTC first/ Retailer also strategy is necessary.