Adobe’s Scott Rigby lists the various factors that organisations must consider when launching a DTC e-commerce strategy.
Business-to-business (B2B) organisations are beginning to see the advantages of a direct-to-consumer (DTC) e-commerce strategy. The benefit of selling directly to consumers and bypassing third party retailers is an opportunity that an unprecedented number of organisations are adopting.
With e-commerce in Singapore growing by 71.1% in 2020, benefits include revenue growth by opening up a new selling channel and gaining deeper customer insights through data collection.
With many confined to their homes in 2020, e-commerce engagement soared like never before. Conversely, many had to deal with a baptism of fire in the absence of their traditional brick-and-mortar channels. This dramatic shift looks set to alter behaviour across companies, customers and the number of sales that DTC accounts for in the coming years.
However, at Adobe, we continue to see B2B organisations experiencing major growth pains on the path towards launching a DTC e-commerce strategy.
Despite many B2B organisations being well-established in their existing models, the dynamic DTC landscape is uncharted territory. These organisations now face the same challenges all brands face online – standing out in a highly competitive and saturated environment.
Organisations must take into consideration these factors:
1. Build a well-defined business case for DTC e-commerce
This will help address the outputs and the investments required. It must also outline what the perceived benefits to the organisation are. When the case to adopt a DTC strategy isn’t well-defined, there will be a lack of understanding of what is needed for success and what the end goal is.
This business case should create a vision for the project that demonstrates the organisational benefit and how the solution can continue to evolve once deployed, with a platform innovation roadmap. This should outline future investments which will be required beyond the initial development or “phase one” rollout.
2. Cultivate a unique product and service offering with growth potential
Simply offering the same products and services you already have available through alternative partners and channels won’t be enough to drive long-term success. The target should be to create a product and platform with the capacity to evolve.
In today’s undoubtedly competitive e-commerce market, organisations that evolve with their customers stand the best chance of capturing market share. As e-commerce customer demands and demographics change, so must the products and services that DTC organisations offer them. Organisations that cultivate unique offerings stand out from their competitors. Consider the following options:
3. Steer clear of channel conflicts with a solid pricing and promotion strategy
Channel conflict occurs when the product's manufacturer “steps on the toes” of its retail partners. Selling products directly to consumers effectively disintermediates channel partners. Channel conflict undoubtedly sours partner relationships, causing significant and harmful reputational damage and potentially ruining the partnership permanently.
By offering customers uniquely priced products and services, promoted with an alternative approach, an organisation alleviates potential partner conflicts. Cutting out intermediaries with a DTC approach also helps organisations reduce costs. Furthermore, they can now invest cost savings back into fine-tuning their offering to suit evolving customer demands.
4. Make real-time inventory accuracy a top business priority
A well-architected inventory solution is crucial to the success of e-commerce platforms selling DTC. Organisations should assess existing systems' ability to be tightly integrated, resulting in solutions that provide the business with real-time inventory visibility and accuracy. For example, stock availability on the e-commerce platform should not conflict with stock pre-assigned to retail partners or large-scale orders.
Where system integration capability is restricted due to legacy systems or isolated technology, an analysis of additional system upgrades should be undertaken to understand the broader implications of gaining the level of inventory control required.
5. Prioritise the customer experience and demonstrate the benefit of buying direct
For an organisation to be successful at DTC e-commerce, the customer experience should be front and centre. Strengthen it by conveying how their products benefit customers, as well as the case for customers buying directly to cut out the middleman. Organisations must clearly convey how their products benefit customers and why buying directly is beneficial for them.
Furthermore, the data and insights that e-commerce platforms provide are compelling. These metrics that might have been unavailable to brands before are now easily accessible, allowing businesses to make data-driven decisions.
Platform availability is 24/7 and as such, DTC demands organisations to get serious about customer service of a quality that does not fluctuate around the clock.
Besides improving customer service, businesses should make it clear that buying directly from brands means a better experience for customers, especially in the areas of faults or returns. Developing a more transparent line of communication is imperative to ensure that experience is not jeopardised.
6. Create a sustainable customer acquisition strategy that will evolve with the business
Part of being successful at DTC is understanding the importance of customer acquisition. Whereas product and technology see significant investment, very little is seemingly dedicated to customer acquisition strategy. This is a common challenge amongst organisations. Due to not allocating from the onset, there often isn’t any budget left over at the tail end of a project.
Retail partners, networks and distributors have huge budgets dedicated to marketing and promotion on a scale that is difficult to compete with. Not only does an organisation require an entire dedicated strategy but the business case should also factor in upfront and ongoing budget requirements for customer acquisition. Leaving customer acquisition strategy out of the overall business plan could ruin any potential for future success in a DTC strategy.
With everyone still trying to work out the new normal, one thing remains clear – DTC is the model that an increasing number of businesses are clamouring for. This approach could safeguard the short-term future and evolve into a long-term strategy.
Hence, with all these factors carefully considered, the move to DTC doesn’t need to be seen with any apprehension. There will be no leap – just the next progressive steps towards DTC growing your business.