Why more manufacturers are going D2C: Direct to Customer

Since the pandemic started, a lot of people have been shopping online. This is causing manufacturers to consider selling their products directly to consumers instead of through middle-men and retail distributors. Yoav Kutner, CEO of IT service Oro, says this is a good idea.

There have always been successful Direct-to-Consumer businesses. For example, in 2011, Dollar Shave Club disrupted the men's cartridge-razor market with their cheaper subscription-based D2C business model. Consumers were drawn in by the promise of a cheap shave, and many realised that the company's blades were just as sharp as more expensive brands. In fact, Dollar Shave Club kept about half of its customers through a full year of subscriptions, which generated remarkably high recurring revenues.

Since 2014, Casper has been selling mattresses directly to consumers. They realized that buying a mattress can be confusing and overly complex, so they offer a 100-day no-hassle return period in order to make things easier for their customers. This strategy has allowed them to bring in over $100 million in revenue within two years.

Many brands, such as Dollar Shave Club and Casper, are successful when selling products directly to customers. This makes it tempting to ask why all manufacturers aren't doing the same. However, if you are thinking of starting to sell products directly to customers, it is important to understand the risks and opportunities involved. Direct sales brings both risks and opportunities, so it is important to consider these before making a decision.

The case for D2C in manufacturing

Manufacturers who sell products directly to consumers (D2C) enjoy several benefits. These include maintaining control over all aspects of the customer relationship, from marketing to customer service. Brand hijacking or distortion is also less likely, and prices are more likely to remain stable. In addition, when manufacturers sell D2C, the MSRP is not just a suggestion - it is the only price that customers will pay.

Manufacturers can create a more direct relationship with their customers by selling products online. This way, they don't have to rely on retailers or distributors. This makes it possible to bring products to market faster and to prototype and test products more responsively as customers communicate their preferences.

Selling products directly to customers can help you understand them better. You can learn what they like and don't like about your products. Then, you can use this information to make your products better, do marketing campaigns that they will like, and so on.

Another big benefit of selling products directly to customers is that you have direct access to them. This means that it is easy for you to reach a lot of people who might be interested in what you are selling. In today's world, it is easier than ever before to start a business that sells products directly to customers.

Considering the risks of D2C 

Still, going D2C isn't a perfect solution or a guaranteed path to growth. If you plunge into direct sales without considering the potential downsides, you could be in for some trouble.

One key risk factor is that when you start selling D2C, you'll impact the way that both consumers and retailers relate to your brand. That can easily disrupt existing distribution and retail channels, or cannibalise the in-store sales that currently support your business.

To avoid these risks, manufacturers need to commit to managing customer relationships in a new way. That often requires hiring new staff with expertise in marketing, logistics, online sales, customer support, product returns, and more - which can be a significant expense for a new D2C brand.

You'll need to stay in communication with your current distributors and retailers. They may see your switch to D2C as an aggressive move, so it's important to talk to them early and often. You could also create exclusive product lines to preserve your wholesale and retail partnerships.

Making D2C work for you and your customers 

So how can you make sure that D2C works for you? It starts by choosing the right channel: some brands find that a single D2C website is enough, while others manage multiple storefronts for different consumer segments, or reach consumers through online marketplaces.

Branded websites offer more control over the shopping experience for your customers. You also have more control over revenue streams, customer data, and other back-end aspects of your ecommerce operations. This comes with some complications, like figuring out how to deal with credit card fraud. You will also need to stay on top of trends in search and social media marketing to continue driving sales.

Online marketplaces can be a good way to reach more people. But you have to pay to use these marketplaces. Amazon is a good example of this. It has a lot of people who use it, and it can be a good way to sell your products. But be careful because Amazon can also promote other products that might compete with yours and hurt your business.

No matter which channels you choose to target, you'll need an ecommerce platform that can help you sell products directly to customers. Look for a platform that can support multiple channels and both D2C and B2B sales, so that your sales strategy can be flexible. Most importantly, find a platform that is powerful and customizable, so that it can meet all of your needs now and in the future.

Selling products directly to customers can be risky, but it has the potential to bring significant benefits for manufacturers who are willing to take the plunge. So don't underestimate the power of selling products directly to consumers. With a clear business strategy and the right tools, you can reach a far larger audience and net bigger profits in the process.

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