Manufacturers who have an online retail strategy often ask us if they should have their own ecommerce website to sell their products directly. A direct-to-consumer (D2C) website can work well along a traditional wholesale business, especially as a way to reach the end customer more closely. But there are caveats.
Building a successful D2C website requires a cautious approach with realistic expectations and an adequate level of investment. Here are the pros and cons of creating a direct-to-consumer presence for your brand.
D2C Can Work with Clear Goals and Realistic Expectations
There’s no right or wrong answer as to whether you should start a D2C website. But the key to all successful direct-to-consumer ventures is having clear goals and realistic expectations.
With the sheer amount of work required to run your own website and sell direct, it’s important to have a well-defined purpose. What are you hoping to get out of running your own direct-to-consumer website? What will a D2C business help you achieve that your current wholesale business does not?
Once you have your purpose, you can set your expectations. D2C websites often produce what is put into them, meaning if you want a robust and successful operation, it will require a sizeable investment. This level of investment includes substantial financial backing, proper employee headcount, resources for website maintenance and more.
“Manufacturers that want to build a D2C site should make sure they really understand what their objectives are and be honest about whether they can meet those objectives. It’s critical that they level set about how much they’re willing to invest,” said Josh Walter, BrandJump CEO and Co-Founder. “Direct-to-consumer can be a worthwhile route, but only with realistic goals and the investment to match.”
With pragmatic goals and proper investment, a successful D2C venture is possible for manufacturers.
Selling Direct to Consumer Allows Brands to Connect with Customers and Control Their Brand Image
While a D2C business might not be for every manufacturer, the appeal of the model is clear, especially when it’s operated alongside an existing wholesale business. Here are a few benefits to selling direct to consumers.
Direct Customer Contact
There are subsects of customers who simply prefer to shop and communicate directly with the manufacturer. This is likely your most loyal group of customers, and there’s a benefit to giving these customers their preferred touchpoint. The direct-to-consumer model allows manufacturers to directly answer any questions and receive feedback.
For example, if a customer has specific questions about assembly or uses of a product, a manufacturer is well-suited to answer those questions directly. They can also use that feedback to make future adjustments in their businesses.
Complete Control of Content/Shopping Experience
A major plus of a D2C operation is that manufacturers have full control over the content and the website’s shopping experience. Manufacturers can strategically tell their brand story, use robust imagery and write all their own bullet points and product descriptions in the way that they feel best showcases their products.
This level of control can also extend to the general shopping experience of the site. Manufacturers can build out a site that ensures their products and content look great and provide a seamless on-site customer experience.
Access to Customer Data and Insights
Managing a D2C business also gives you access to key customer data and insights into how customers shop on your site. Collecting key customer data points like name, location, email address etc. allows you to have a better pulse on your customer base, communicate with them directly and can inform future decision-making.
Interaction and behavioral data are also valuable pieces of information. Metrics like page views give you insight into how customers are browsing your site, and data like email sign-ups and account activations can show user intent.
All this data can and should be used to better inform your marketing, website structure, product development and more.
Higher Margin
One of the major allures to selling directly to consumers is being able to sell products for a higher gross margin.
This is certainly true, but it’s important to consider your increased costs elsewhere. Running a D2C website requires a significant level of investment in areas that aren’t baked into the traditional wholesale model: shipping, advertising, returns, customer service, website maintenance, and more.
A Successful D2C Operation Requires an Immense Amount of Time, Resources and Money
To be successful within the direct-to-consumer model, you’ll need a hefty financial commitment, especially if you’re expecting hefty financial rewards. It’s unlikely that a D2C store will put out more than you put into it. It’s important to understand some of the obstacles manufacturers will have to overcome.
Driving Customers to Your Site
The difficulty of driving visitors to your website is often overlooked. It’s one of the hardest aspects of operating your own website.
“It’s important to remember this isn’t like the movie Field of Dreams where, ‘If you build it they will come,’” said Walter. “If you build it, some will come, but it might not be at the volume you might’ve hoped for.”
To drive traffic in a meaningful way, manufacturers will have to beef up their marketing budgets to invest in paid search, SEO for organic search, display advertising, social media, email marketing or a mix of all of these. This will require investing in the tools and workforce to execute it.
Too Much Control
Having complete control of your website, content and customer experience can be a good thing, but it comes with loads of additional responsibility. In a wholesale ecommerce model, retailers handle difficult aspects like shipping, marketing, website maintenance and customer service. In a D2C model, you’re completely on your own to ensure those areas are covered for your store.
Channel Conflict
It differs depending on the retailer, but not every retail partner will be ecstatic about your new D2C business and the potential for increased competition. There are retailers, both on and offline, that may view the venture as a big “no no”’ and it could impact future partnerships/business.
If—after carefully weighing the pros and cons—a D2C website appears to be a worthwhile venture for your brand, be prepared to explain your position to any existing or future retail partners.
A D2C website might not be for everyone—whether it’s worth the time, money and resources will depend on your business strategy. But with realistic expectations and an adequate investment manufacturers can reap the rewards of a direct-to-consumer model.
