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Direct to consumer ecommerce could help your business grow

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Direct to consumer ecommerce could help your business grow

Direct to consumer (D2C) ecommerce is an effective way to add an online complement to your existing channel strategy. And it could help you achieve long-term success. Carl Gardiner, Trade Digital Specialist at Scottish Development International, explains how.

As we try to adapt to the changing business landscape, ecommerce has shifted from a ‘nice to have’ to a ‘must have’ for companies looking to thrive.

Carl Gardiner, Trade Digital Specialist, Scottish Development International

The benefits of ecommerce in a shifting business landscape

The benefits of ecommerce (selling online) are well established. It can help you reach a wider range of customers in your target markets, both internationally and domestically. It also provides a range of tools you can use to convert interest in your product or service into real sales.

Based on the conversations I’ve had with a wide range of companies in recent months, it’s become clear that companies who traditionally rely on physical or face-to-face sales were particularly affected by the restrictions put in place as a result of the Covid-19 outbreak. Faced with this unique challenge, it's encouraging to see that more and more companies across Scotland have started thinking about how to introduce an ecommerce component to their existing business model.

As we try to adapt to the changing business landscape, it seems to be the case that ecommerce has shifted from a ‘nice to have’ to a ‘must have’ for companies looking to thrive.

The key to success is choosing the right ecommerce approach for your business, and making sure that your online activity compliments and supports your existing sales channels. For a growing number of companies, a direct to consumer approach to ecommerce is proving to be the most effective way of achieving their online sales ambitions.

What is D2C?

As the name suggests, direct to consumer (D2C) is a form of ecommerce that involves a direct transaction between product owners or manufacturers and buyers (you're a product owner if your company owns the product, has rights to the product, or owns the patent). D2C allows you to bypass the traditional middlemen such as agents, distributors, stockists and retailers, giving you direct access to customers online.

Given that most retailers now have both online and offline channels, many companies, particularly those who sell their products primarily through 3rd party retailers, have already achieved some success online. 

However, what we’re seeing more and more, is a growing trend where companies want to take greater control of their online activity by introducing a direct to consumer approach to ecommerce. For example, in the USA, an estimated 48% of manufacturers are currently planning to establish a D2C channel.

The growth of D2C ecommerce has been fuelled by new technology that makes managing all aspects of the online sales process much easier and more cost effective. Traditionally, the set-up costs for a wholesale or retail network could have been prohibitive for companies looking to adopt a D2C approach.

But now you can sell direct to consumers without having a costly infrastructure. This new technology gives you a range of options to choose from when it comes to selling your products direct to consumers online.

D2C ecommerce platforms

The emergence of sophisticated ecommerce platforms such as WooCommerce, Shopify, Shopify Plus, BigCommerce and Magento, to name just a handful of the hundreds available, have made it possible for anyone to set up a store and sell their products online. However, these D2C ecommerce platforms need to be supported with appropriate marketing and infrastructure to attract customers and ensure that they're serviced quickly and efficiently.

Creating a standalone online store for your business will not only provide you with greater sales margins, it will give you greater control over how your products and your brand are presented online. However, setup and ongoing costs should be reviewed carefully.

The rise of emarketplaces

The alternative D2C approach is to sell your products through an emarketplace. It’s fair to say that the rise of emarketplaces has also been a game changer. Amazon, eBay, AliExpress and other global emarketplaces make it possible for companies of any size, from new starts to multinationals, to sell directly to their customers on a global basis.

By selling your products on an established emarketplace you won’t be directly responsible for driving traffic to the website. Companies like Amazon attract millions of customers each day. However you'll be competing with other brands selling similar products, and the gross margin on your sales is likely to be narrower compared to selling on an ecommerce platform.

Many companies are finding success online by putting in place a D2C approach using a combination of both ecommerce platforms and emarketplaces. A range of support services have grown up to support this type of approach. This includes integrators such as ChannelAdvisor, Linnworks and Lengow. Integrator software helps you track all of your online sales from different channels.

As with all aspects of ecommerce, there is no single correct way of doing things. Ultimately it comes down to which approach is right for your business.

Sales, customer insight, and brand awareness

Regardless of which approach you take, there’s little doubt that D2C ecommerce can be hugely beneficial for your business.

There are the obvious benefits of increased sales and greater control of how your brand is perceived across both international and domestic markets. Also, D2C - more so than any other form of ecommerce - will provide you with immediate and often detailed feedback on your product. You’ll get direct feedback from consumers, the good, the bad and the ugly, rather than the possibly more sanitised reports you might get from a retailer.

This kind of direct, unfiltered feedback is particularly useful when selling internationally, as products often need to be modified to suit overseas markets. The reality is that many products that sell well in the UK market often need adaptation before they will achieve success overseas.

Countless successful domestic products have been withdrawn from international markets due to poor sales. In many cases, getting accurate and timely customer feedback through D2C channels, could have provided the insight needed to adapt those products to meet local tastes and become a strong sales performer.

While this kind of direct customer feedback can be slightly daunting for a lot of businesses, I believe that companies who are geared up to deal with this feedback will gain valuable insight that they can use to adapt and improve their product in real time – resulting in an improved product and greater sales.

How will D2C fit into your wider channel strategy?

One final thing to consider before embracing a D2C approach online, is to make sure that you really understand your existing sales channels. And to be certain that the D2C channels you add will fit within a wider channel strategy.

Many companies, for example, have made the decision to sell on only to discover that their products are already being sold there by their distributors or retailers.

The most successful brands are those who add a D2C channel in a way that maintains and integrates their existing channel relationships effectively, allowing for sustained growth both domestically and internationally.

Next steps

Find out about selling online

Read our guide to online international marketplaces

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