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Why D2C Is The Way To Go These Holidays

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By Published On: November 19, 20190 Comments

Christmas is fast approaching. The Australian Retail Association last year estimated that Australian shoppers spent more than $21 billion over the five-week-long holiday season. But just how many of those millions will go to Amazon vs manufacturers?

For manufacturers to remain competitive, they must have complete control of their brands — from initial product ideation to consumer delight — in order to provide brand consistency, collect customer feedback and monitor buying behaviour.

However, most brand manufacturers will not want to impact their current manufacturer- retailer/distributor relationships (as in with marketplaces like Amazon), because they would risk losing reach and exposure. Yet taking a Direct-to-Consumer (D2C) approach could reap far more rewards, especially over a sales season, like Christmas.

Going Direct is outperforming traditional commerce

More and more brands are turning to D2C because it works:

  • A Bringg report says that 87 per cent of manufacturers rate D2C as highly relevant to both products and consumers, with more than half of them already on their way to going direct
  • Forrester reported that 81 per cent of consumers plan to purchase from D2C brands
  • Forbes predicted that D2C will grow by 71 per cent in a few years’ time

So the analysts believe a D2C strategy could be beneficial to businesses – both from a financial and operational standpoint.

6 reasons why brands should go direct

Here’s why brands should shift to a D2C model:

1. Gain higher margins:

Eliminating the middleman by going direct means higher margins. A middleman selling their products means they only make a profit on the markup from cost to gross sale. D2C allows brands to sell products at the same price as retailers, positively impacting their bottom line.

2. Increased control over brand messaging and consumer engagement:

Manufacturers have no control over their brand under the traditional manufacturer-retailer relationship. While they do have control over packaging and other marketing activities, once the product is handed over to retailers, manufacturers can no longer influence the sale, build a relationship with consumers or gather data. Ultimately, the retailers that present the product to the consumer leaving manufacturers with no consumer engagement and no final say over messaging.

3. More opportunities to innovate:

Retailers often shy away from selling products that are new and have no track record of being a ‘hot-selling’ item. This restricts manufacturers to produce only what retailers want; even if it may not be what the customer needs. On the other hand, D2C allows manufacturers to launch new products at a smaller scale, test with a selected demographic and gather feedback.

4. Direct access to customers and their data:

Everyone knows that data is king. Direct contact with customers through each stage of the buying process — including post-sales — allows the collection of their email addresses, location, social media profiles, purchasing preferences, etc. Knowing their buying behaviours helps manufacturers optimise their existing products and, possibly, even create new product lines.

5. Stronger brand loyalty:

Rather than relying on the retailer to produce a delightful experience and exceptional customer service, manufacturers have more autonomy with D2C. They can establish strong relationships with their consumers and drive retention through targeted marketing campaigns.

6. Expanded market opportunities:

Manufacturers are no longer restricted by geography when selling D2C. They can go global overnight by just selling to the right customer segments, in the right market. Consider the potential to sell in multiple markets, across multiple holiday seasons.

D2C suddenly being the hype is anything but random. The reason D2C companies are successful now is because they can cater to the unpredictable needs of today’s consumers. And manufacturers can reap far more benefits from a D2C approach over the holiday season than taking a more traditional path.

Contentserv has launched a new ebook: Manufacturing in the Digital Age – How Data is Driving Your Business to help you learn:

  • Data and the critical role it plays in technology
  • The first stop in your digital transformation journey
  • Key challenges and solutions for brand control and consistency
  • Why product content is the cornerstone to D2C success
  • How contextual content creates groundbreaking product experiences

To access the eBook please click here. If you would like to know how Contentserv can help you with your product experience, feel free to contact us.

In Australia, over the next year, 1.3 per cent of consumer goods retailers are expected to close as physical stores struggle to compete with the low prices, vast range and ease of online shopping. And analysts have been predicting since the launch of Amazon Australia that Amazon will dominate Australian retail by 2025.

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About the Author: Power Retail

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