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3 Reasons Brands Should Shift to a Direct-to-Consumer Model

READ THE ARTICLE ON ENTREPRENEUR AS WRITTEN BY OUR PRINCIPAL BRAND ARCHITECT – JONATHAN RIFF

The days of having to leave the house, deal with traffic, find parking, and fight the crowds in a retail environment are long gone. Online shopping is not as foreign to most consumers like it once was. It’s now mainstream and preferred, due to its convenience and ease of use, along with it being a lower cost option in most cases.

Many companies sell online, but they sell via marketplaces like Amazon, eBay, Walmart, etc. Then, there are brands that went direct-to-consumer right away and grew into billion-dollar whales that dominated their space in a short period of time.

Brands like Dollar Shave Club, Casper, Purple, and BarkBox came out swinging, gained momentum, and snowballed their growth selling directly to consumers, without any retail partners or third-party marketplaces.

While there are some added details and costs — like warehouses, order fulfillment, customer service, etc. — to consider, there are several benefits of going the D2C route. I want to highlight three of them specifically.

1. You Control and Collect Valuable Consumer Insight Data

When you sell direct-to-consumer you maintain control of all your customer data and have access to analytics and data that you won’t get if you sell on Amazon, for example. Sure, your seller account gives you some information, but nothing like you have access to when you own and control the platform.

Seeing where your conversion traffic comes from before making a sale allows you to learn about your customers and also identify potential advertising opportunities. Seeing how your website visitors interact on your website and what flow they follow before making a purchase allows you to provide a better overall customer journey.

Every action that a consumer takes on your website has a reasoning behind it. Being able to track and analyze this data allows you to discover the “why” part, which can then help you better market and cater to your audience. The benefit being more conversions.

Also, when you control your data it eliminates the possibility of being on the receiving end of the backlash caused by a data leak. Even though it’s not the brands’ fault, a consumer will often relate a bad experience like that with the product they purchased on the platform.

2. Existing Demand Drives New Revenue

For brands that sell via third-party outlets and platforms, the consumer is usually introduced to them when they visit a physical retail store or shop on a platform such as Amazon or Walmart. That retail store or third-party platform is being compensated in the form of profit margin or a percentage of the sale for that introduction.

A brand that builds a loyal following and happy customers via a D2C model doesn’t need that other channel for that introduction. The demand is already created, and once it is that “middle man” isn’t needed to fulfill it.

A brand can take that money saved by skipping a third-party partner (revenue cuts taken by platforms and the lower margins selling wholesale) and invest that money into growing its presence on social media. This alone can help create a huge following and demand.

3. Ensure a Pleasant Direct Customer Experience

Nobody can tell your brand’s story the way you can, directly. Today, consumers become attached to a certain brand because they feel a connection. The only way to create that connection in the first place and maintain that relationship is by selling directly to the consumer.

That connection will never occur in a retail setting, nor on Amazon or another mega online marketplace. Selling direct also allows you to ensure each customer has a pleasant experience. You have no control over how a third-party marketplace treats your customers, or how a retail employee interacts with someone buying your product.

The only way to be 100 percent certain that each customer is treated properly and your brand is portrayed and represented professionally is to eliminate the middleman. Then, there is nobody to blame but yourself in the event a customer is not satisfied with their experience. If this happens, you can pinpoint the problem, make changes, and then offer an even better direct experience for your customers.

 

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