CX & Design October 21, 2020
B2B Commerce: How to accelerate your D2C plans
Spurred on by the coronavirus pandemic, an increasing number of B2B manufacturers are exploring the possibility of going Direct to Consumer. For manufacturers and consumer packaged goods brands, selling directly to their end consumer means developing existing processes and creating new capabilities. In the latest edition of our Dept Talks Live series, Dept’s Principal Consultant, Jonathan Whiteside, took the audience through the what, why and how of going D2C in the B2B manufacturing space.
Why launch a D2C
There are three main reasons to go Direct to Consumer. The most obvious is improving margins. D2C allows manufacturers to sell at retail price, rather than wholesale, increasing the profit on each product. It’s important to not to see this as cutting out the middleman. Instead, look at D2C as a supporting channel. Resellers play an essential role in the discovery, providing an audience that is interested in the product, an audience that the D2C model follows up with.
Second, D2C provides a new form of brand experience. From discovery to delivery, your brand has total autonomy over how the audience connects with your brand. In the modern market, experience operates as a key differentiator between each offering. Packaging, speed of delivery, ease of ordering the product, customer support, each of these interactions can be managed by your company, creating the opportunity to offer customers a market-leading experience that drives their future preference.
The third is it allows brands to gather more insight. By involving the business in every step of the sales process, from discovery through to returns, a company can gather more data on consumer behaviour, trends in their industry and general customer feedback. This is useful information when companies look to improve their offering, adapting it to meet new customer demands and recent shifts in what the market wants.
Why brands should act now
Why is it important at the moment? We’re at a point in time when there is an extremely low barrier of entry into e-commerce. Through the use of commerce platforms and online marketplaces, it is easier than ever to start your own e-commerce offering. Equally, it is easier for disruptors. Instead of a capital intensive set-up, many commerce platforms now provide a ‘pay as you grow’ model. Online only or online-first brands have grown through the use of commerce platforms, selling the same product but through an e-commerce only model, achieving each of the three goals mentioned earlier.
As a manufacturer entering this space, creating a D2C offering is not about being competitive with existing sales channels. Done well, D2C expands the audience through wider channels, adding to the sales figures rather than cannibalising current customers.
COVID-19 has pushed the need for e-commerce options. Physical sales decreased during the pandemic, while e-commerce boomed. This is an acceleration of existing trends; over the past decade, we have witnessed the slow fall in high street sales. Store closures have forced experimentation, causing businesses to act fast, faster than we’ve seen in recent years, despite the obvious trend of brick and mortar losing sales to e-commerce. Necessity has pushed previously offline companies to have a go at D2C. The interesting result is that In a disrupted situation like this, existing shopping habits entirely reset.
One FMCG manufacturer that has made this move is Pepsico. Having never sold directly to consumers, Pepsico moved quickly to set up two D2C channels, one for their snacks and one for their cupboard filler products. These two channels allowed Pepsico to support their existing channels through the crisis.
How to set up a D2C
When considering how the business can put in place a D2C model, begin by thinking about your capabilities across production, marketing, fulfilment and data. Production will already be well developed as a manufacturer. Marketing may also be well built, with strong in-house or outsourced SEO and advertising capability.
Fulfilment and data use are more likely to be new additions. How to take orders, how to show inventory, take payment, returns, and customer care, these are new challenges to plan around with. Similarly, managing, interpreting and applying data, particularly new data streams entering the business, requires a digital solution to maximise the outcome.
To meet these new challenges, brands need to choose the right platforms which match their needs. So, begin by researching e-commerce platforms that provide a pay as you grow model. These SaaS solutions avoid the difficulty of a capital intensive starting point. Services like Salesforce, CommerceTools, BigCommerce and Shopify Plus each have a distinct proposition for businesses.
Each platform provides the tools you need to provide a modern e-commerce offering. Simple features are ready built, like basic product pages and baskets. These platforms are typically good at integrating with existing systems, like an ERP inventory management system or any marketing tools used by the business. With this plug and play design, the speed of setup is much faster.
When selecting a platform, make sure the commercial model scales with your business. As the current market is built around ‘pay as you grow’ offerings, this can make all the difference. Also, ensure that the platform is built to achieve your KPIs for a D2C channel. If personalisation is an important feature, ensure that there is software in their offering to build personalisation into the service.
Next, think about how your offering can be built. Don’t over-engineer the solution and add too much complexity. Agility matters in this current market, aim to get an e-commerce site online and prove it works by taking revenue, rather than perfecting a service that includes every single product.
To simplify the updating and upgrading process moving forward, make use of headless commerce-enabled software to connect each front end into a unified back end. If the business already has tools like a CMS, make use of them to speed up the process of content creation and ease asset management. Choose the platform with pre-existing integrations that you can use.
Create a unique experience
Lastly, think of your brand experience. What do you want visitors to the site to take away? E-commerce experience is your brand experience. It needs to be frictionless and fast. Can you provide quick delivery, easy product discovery, simple returns and customer support? If these points fall down, it reflects badly on the brand itself. Again, this shows the importance of starting a little smaller and testing, ensuring that every function works.
Working with Bugaboo, Dept knew the importance of making the brand experience come on alive on site. Using Salesforce Commerce Cloud, Dept built a new website with unique and customisable elements for the stroller giant.
D2C enables brands to have more data at their disposal
Data will be ever-present when planning this project. With full autonomy over the entire manufacturing and sales journey, your business can close the sales loop. In the reseller journey, leads are passed on from manufacturer to reseller. In D2C, you own your e-commerce sales, meaning everything can be measured and therefore optimised. Conversions can be attributed to designs and behaviours. Insights can be found in interesting places, such as the on-site search bar. It can reveal what customers are searching for and how you can perfect your product line.
For example, an on-site, a feature like Triumph’s bike configurator is there to personalise a bike purchase, but also to provide an insight into consumers. What accessories are popular, what are the most common combinations, how can Triumph create offers and suggestions based on these common choices?
Another option? Marketplaces
Marketplaces are also worth considering. Amazon is integral to this, playing a role in each e-commerce journey, as a point of discovery, a price comparison hub or a checkout. Listing on Amazon can be the fastest way to market for new D2Cs looking to broaden their audience beyond website visitors.
There are two choices on Amazon, being a seller or a vendor. Sellers sell through Marketplace, manage their own products and inventory, set their pricing and ship the goods. In return, your business gets all the data from the sales journey. There is a monthly fee to use seller central, and there are some minimum requirements to meet, around delivery time scales and returns.
The other option is Amazon vendor central. Manufacturers sell to Amazon, who then operate as the sole merchant, managing end to end, setting the price and advertising the products. This service is invitation only.
Alternatively, you may find that the best approach is to build a stronger B2B wholesale offering: a self-service, frictionless offering with consumer app quality. Working with Brenntag, Dept built a chemical distribution portal that allows Brenntag to unite a fragmented sales channel in one space, providing secure, easy reordering of chemicals.
Harness the power of D2C
Each business will adapt to the D2C model in a different way. As a manufacturer, now is the time to take the plunge and start to plan the first steps your business can take to offering that direct channel, the test case that proves the system. With proven success, more and more opportunities will arise.