Direct-to-consumer (D2C) marketing is quickly becoming the choice route for CPG (Consumer Packaged Goods) brands and manufacturers to gain entry into the market directly rather than via a middleman structure.
This is no surprise as the advantages of going direct to the end-user are numerous, some of which include; breaking the barrier between the consumer and producer, which provides the manufacturer with greater control over its marketing, sales tactics, reputation, and branding.
It also helps the manufacturer to directly engage with its target audience thereby learning from them and improving its products and services.
Top brands like office supplies manufacturer Quill have already taken the huge step into direct-to-consumer marketing and it is predicted that a lot more producers will forward their steps in 2021 and beyond.
That said, though the entry barriers to start the direct-to-consumer marketing model are relatively low or non-existent for manufacturers it's important to note that you'll be facing off against retail giants such as Walmart and Amazon who currently already have a gigantic customer following.
This is why you must put a strategy in place that will aid you to stand out as a distinguished brand and disrupt the marketing ideology in your niche.
So in this article we will be showing you all there is to know about direct-to-consumer marketing. But first, what exactly is it?
What is Direct-to-Consumer Marketing (D2C)?
Direct-to-consumer is a low entry barrier eCommerce strategy that permits Consumer Packaged Goods brands and manufacturers to engage and sell directly to their end target audience (the consumer).
The approach builds a bridge over the conventional method of engaging a reseller or traditional retailer to put your product on the market. In direct to consumer, a company sells directly to the end-user via an online medium.
Going direct-to-consumer has a lot of advantages as we've already seen in the introduction with competitive pricing being a huge one for consumers.
Other benefits include the producer having direct contact with the end-user to get a better understanding of their target audience and the opportunity to freely experiment with new offer releases, by testing new products with a consumer segment to gain reviews and feedback.
Why choose D2C Marketing Over wholesale?
So we've already established that taking the direct-to-consumer marketing approach disrupts the conventional model entirely with producers eliminating the middleman or reseller and selling directly to the consumer.
However, even though the retailer is cut out this doesn't mean that dtc brands don't involve the retail side of the equation in their strategies.
In other words, choosing the direct-to-consumer route means that the producer takes full responsibility for everything retail within the business as well as the original production and fulfillment responsibilities.
You may question the approach and ask yourself why would a producer take on this huge responsibility when they can simply keep selling their goods to traditional retail at wholesale?
The reason revolves around two aspects; both of which are hinged on the behaviors, expectations, and evolving needs of the contemporary customer.
First, the modern consumer expects to engage with the source directly when researching to make a product choice decision as well as a brand decision.
For example, 59% of consumers prefer researching the manufacturer's website with 55% of the same preferring to buy the same way.
Think of it, a customer looking to buy a tennis racket will most likely visit the manufacturer's website for research before purchasing than a retailer selling the same item for more information.
For argument's sake, imagine if the manufacturer didn't provide the needed information to consumers looking for it on their website. The particular customer will most likely get frustrated and could probably opt for another brand of rackets instead.
So with regards to providing the consumer with their expectations, it makes absolute sense for dtc brands to put direct-to-consumers marketing efforts in the pipeline for the future.
It's also important to note that since a lot of consumers are opting for the source directly; it means they won't be doing business with resellers or retailers.
This means that as a manufacturer you can no longer count on the reseller or retailer to sell your products and will have to take control of your sales and marketing tactics.
What Do I Need to Consider When Going Direct-to-consumer (D2C) with My Marketing Campaigns?
If going direct-to-consumer sounds a lot more attractive and appealing to you than the wholesale approach and you are looking to leverage the marketing strategy for customer acquisition then there are 2 primary pitfalls you need to look out for:
1. Ensure that Your Business is 100% Ready to Transition from Wholesale to Direct-to-consumer
Going d2c won't just happen, it will take a sizeable amount of effort on your part, to say the least.
For manufacturers looking to transition to a direct-to-consumer model, this involves investing in enabling and training your workers, developing new processes, and involving it in your current ones, and overall making sure that your business is capable of operating profitably and efficiently under the direct-to-consumer marketing model.
Going a step further, you have to possess a clear rationale as to your choice in switching to direct-to-consumer in the first place. You also have to be able and prepared to communicate this rationale to employees and your target audience in ways that are valuable to each party.
Without this transparency and clarity in place there's a huge possibility that your direct-to-consumer efforts may fail.
But with open communication in place with your customers and team, you can make sure that everyone involved and impacted by the transition is 100% ready for it.
2. Get Your Partners Ready
If you decide to opt for a hybrid model that involves you selling wholesale to retailers as well as directly to end-users there is a huge possibility of alienating and hurting your retail partners in making this transition.
Because you are selling directly to consumers you essentially become a competitor to your retail partners that sell your products. And as we saw above when given the option of purchasing your product directly from you or through a retailer the customer will most likely choose the first.
So while you wouldn't want to steal your partner's business, you also wouldn't want to have your items remaining unsold on their shelves. Instead of completely cutting ties with your retailers, you can engage your partners to find out a profitable way to move forward for both parties.
This can involve selling only particular products direct-to-consumer or shipping high-performing products to particular retailers or it could involve such partner retailers taking on a more direct approach in promoting your offers.
Regardless, look for a method that is profitable for both your partner and you.
How D2C Brands Approach Marketing
The clearest difference between how a conventional manufacturer and a direct-to-consumer brand approach marketing is that direct-to-consumer businesses take full ownership and control of the end-users customer journey from start to finish.
This isn't a job that should be taken lightly. The advantage to this added responsibility is that d2c companies are free to sell their products and brand how they see fit or better put, how they know they will effectively engage with consumers and create loyal customers.
Breaking this into simpler points direct-to-consumer brands have complete control over the following:
- Who their target audience is.
- How they build relationships with the end-user.
- How the brand delivers value to its target audience.
As already mentioned, one of the primary reasons for companies in recent times choosing to go direct-to-consumer is that the conventional retail experience is no longer satisfactory to the modern customer. So it won't be a best practice for direct-to-consumer brands to simply replicate the current customer experience.
On the contrary, you have to offer something different with regards to the marketing strategies utilized and the channels used to implement them.
The idea is that direct-to-consumer frees you from the restrictions of the conventional business model and enables you to engage your target audience the way you are certain they want to be treated.
Whether this means giving them a more personalized experience, providing top quality and engaging content, or something completely different, the direct-to-consumer approach can allow you to become more engaged and connected with your target audience than ever before.
Is Direct-to-consumer (D2C) a Passing Rave Or is it Here to Stay?
In this article, so far, we've discussed the investment that transitioning to direct-to-consumer marketing requires which begs a few questions:
- Will end-users continue to opt for direct-to-consumer brands as they have in current years?
- Will there be a massive evolution of retail stores in a bid to regain their footing shortly?
With the primary question being:
- Is transitioning into direct-to-customer worth it for your brand in the long run or is it just a passing rave?
There's no ignoring the fact that direct-to-consumer businesses are currently in the spotlight. From the success experienced by brands like Casper, Away and Warby Parker, everywhere you look fresh direct-to-consumer manufacturers pop up. But this doesn't mean that this marketing approach is a fad that will soon fade out. And the explosion of direct-to-consumer businesses is anything but arbitrary.
Direct-to-consumer businesses have experienced such massive success in the past few years because they're able to adequately cater to the evolving needs of the modern customer such as offering authentic and personalized service online or offline.
Just like the decline of brick and mortar stores was anything but random. Instead, it happened because of the brands' inability to measure up with the customer's expectations. The desire of the consumer for example to have better personalized engagement with companies that they do business with certainly isn't a passing rave that will fade away shortly.
The truth is customer experience is growing in importance as time goes by to the point that it is predicted that it will overtake product and price as the determinant factor that separates your brand from another.
So the question isn't whether direct-to-consumer as a marketing model will fade out of relevance but rather it is whether your business will continue to use the direct-to-consumer marketing approach profitably and effectively into the future.
Plus, given that direct-to-consumer is the current hot trend in eCommerce platform marketing you can expect that companies using this approach will begin to evolve their strategies making them even better to stand out from the competition.
7 Tips to Get Started with D2C Marketing
To separate your brand from its competitors and make a mark in your niche you have to stand out right from the get-go of launching your direct-to-consumer brand. So here are 7 ways you can begin:
1. Your Product and Marketing Methodologies Must Focus on the Customers Pain-points
You need to focus your branding and product messages on fixing consumer pain points in your industry. Take Bonobos for example. The male fashion brand is one of the oldest direct-to-consumer companies, founded in 2007. And when they started they had a very clear objective: making better pants for men.
Before the launch of Bonobos, the brand found out two things:
- A lot of men have difficulty in finding the perfect pair of pants.
- Men don't enjoy or like going out physically to shop and buy pants.
Deeper research also led the brand to discover that pants manufactured in Europe were most times too tight around the thigh area and high-rise and pants manufactured in the United States were quite baggy.
So Bonobos went to work and manufactured a pair of pants that satisfied and fit perfectly between the two extremes. At the initial promotion of their product, the early end users of the item shared amazingly positive reviews boosting the company's growth. Down the years they expanded their range to include shirts, swimwear, formal wear, and other cloth types.
2. Embrace Simplicity of Choice
Before launching in 2014, direct-to-consumer mattress brand Casper in research observed that the process of purchasing a mattress was a herculean task with regards to customer experience. The sales staff were very pushy, the prices were all over the roof, and the numerous options available to consumers put them in confusion.
So Casper took a unique approach to the mattress industry. They offered a single model of a mattress, delivered straight to the end user's door, at an affordable price. By cutting out all the tough decision-making processes, Casper succeeded in achieving $1 million in sales in just the first month, and $100 million within 2 years.
The company also discovered during their initial research that a lot of consumers in their target audience preferred either a latex mattress or foam mattress. By combining the two desires, Casper manufactured a great mattress that satisfied both needs.
Even though certain consumers preferred to have innerspring or air, losing out on such prospects meant laser focusing their efforts on pushing just one mattress, which was the choice of the majority.
Before running off to transition to direct-to-consumer or creating a direct-to-consumer brand, you must know why you're entering into the market in the first place.
Dollar Shave Club and Harry's both had a reason for entering into the direct-to-consumer market and it was because the cartridge razor market for men dominated by Gillette was way too expensive, at approximately $6 per blade.
These 2 disruptive direct-to-consumer brands saw the opportunity here and decided to shake up the market by providing an affordable solution to end-users. Harry's for example, sells their razor cartridge blades averaging at $1.87 for one. And customers have the choice to either go for a $20 metal finish one or the regular $8 rubber handle.
4. Offer Simple, Costless Returns
An idea adopted by brands like Bonobos and Casper, offering a no-fee returns policy gives consumers the confidence and reassurance to buy from you without hesitation.
A lot of direct-to-consumer brands interact and engage with their customers on the web, and most consumers hesitate to purchase from a business that they aren't used to – this is why offering this policy type helps tremendously.
5. Run a Subscription-Based Model
A lot of the leading direct-to-consumer businesses like Honest Company, Harry's, and Dollar Shave Club provide their target audience a cancel-at-will subscription package.
Running a subscription model enables you to save your end-users effort, money, and time. And it also aids you in achieving a stellar customer retention rate.
Take, for example, a review of Dollar Shave Club‘s retention numbers shows that after 1 year, about 50% of their customers are still using the service. After 24 months, the brand even retained 25% of every sign-up. Such recurring revenue alongside the high retention numbers resulted in rapid growth.
6. Use Celebrity Influencers
In 2011, Jessica Alba took advantage of her 11 million followers on the social media platform Instagram to launch a business, The Honest Company, a household brand.
Within a single year of the launch, the business hit a staggering $10 million in revenue and reached $150 million by 2014.
Granted, not everyone is a celebrity CEO – though it'll help tremendously – you can take advantage of celebrity influencers to assist in promoting your product.
Casper's mattress, for instance, reached out to several Twitter and Instagram Influencers during promotion, and even leveraged Hollywood connections. Yes, using influencers is a bit pricey, but there's a massive dividend when the chosen influencer is genuinely active online.
You just need to see examples like Kylie Jenner sharing a picture of a new Casper mattress she got in March 2015 that generated over 800,000+ likes and quickly doubled Casper's sales.
7. Craft Viral Visual Content
There's a notoriously popular viral video created by the Dollar Shave Club that has a viewership of more than 25 million. The video cost the brand about $4500 to create and features Michael Dubin the CEO giving a sarcastic and nonchalant speech.
After publishing the video on the 6th of March 2012 at 6:30 am, the website of Dollar Shave Club crashed, and when the platform was finally restored, over 11,000 orders were waiting for processing.
The success of the Dollar Shave Club video may have looked random, but many deliberate steps were ensured to make sure the video went viral:
- The brand spent more than $10,000 in the promotion of the video on social media.
- They had a shorter version of the video running on late-night TV.
- The brand contacted many publications and gave them early access to the video.
- They spent cash to be mentioned on shows such as Howard Stern.
- They reached out to blogs and websites that were known as tastemakers for their target demographic (males).
The above steps aided in amplifying the reach of the video. And then again, the video was funny.
Should Major Brands Sell Directly to Consumers Rather Than Through Retailers?
Building on the idea that going direct-to-consumer is the new hot thing, it's important to note that a lot of leading brands that have been long operating conventionally are joining the direct-to-consumer train.
For instance, Gillette in 2017, launched a new service for on-demand shaving supply reacting to the huge success witnessed by Dollar Shave Club and Harry. Taking a cue from history, Dollar Shave Club was purchased by Unilever for $1 billion in 2016 – an instance of a major brand transiting to direct-to-consumer by a merger with an established direct-to-consumer brand.
But as we've already seen in this article it is not a question of if any major brand should embrace a direct-to-consumer marketing model. Though transitioning to direct-to-consumer marketing may be great for certain businesses, others may not have the same degree of success after the switch.
So before making the change major brands need to answer these questions:
- Does your business have the capability to undertake a hybrid business model and make sure that both the retail and wholesale aspects run efficiently and effectively?
- Do you have a mutually beneficial and profitable agreement with your brand's retail partners and a clear plan for how to implement the agreement?
- Are you ready as a company to take complete responsibility, ownership, and control of your target audiences' experience?
It's important to state that going direct-to-consumer isn't a “magic potion” that automatically pushes your brand to greatness. Implementing the marketing model without actually knowing the ins and outs will end in disaster.
But if you know exactly what you want to give your customers and have determined that the direct-to-consumer marketing model is the best approach to provide them with it – then you need to begin planning the transition as quickly as possible.
Direct-to-consumer marketing enables wholesale brands to engage with their end-users directly. With this approach, manufacturers can represent their brand and offer customer experience the way they want it. However, done wrongly it can be damaging to the brand.
So use the tips and steps listed in this article to craft a direct-to-consumer marketing model that works for your industry and target audience.
Featured image via Depositphotos.