More and more organizations are considering selling directly to consumers in a time of uncertainty for brands of all sizes. Adding this sales model should increase revenues – and some brands find they are a natural match, while others struggle to find their way. For every Warby Parker and SmileDirectClub, there are dozens of brands that are faltering.
Many DTC brands are missing the mark from pressures to perform and grow with lightning speed to a failure to connect with the target market.
Here's what you need to know to succeed in DTC:
DTC Fulfillment is Different from Wholesale
Many brands that jump from wholesaling to retailers or sell to businesses launch a DTC program with great promise and high hopes. Reality sets in a few weeks later when the shipping and fulfillment figures roll in.
DTC selling and fulfillment differs wildly from the traditional model, and failing to discern the difference is a costly and sometimes fatal error.
Every DTC package you ship goes directly to a customer – it's right there in the name! This type of shipping means that your fulfillment team will suddenly have far more orders to pull. Pulling 20 inventory items and sending them to one store or location is straightforward and can be accomplished by a single worker in record time. Those same 20 pieces could potentially go to 20 different customers – meaning 20 packages need to be pulled, assembled, checked, and shipped, usually in a very tight time frame. For unprepared brands, this sudden increase in shipping can be a nightmare.
Additionally, you'll also have more customers and prospects that need engagement. Again, that single order of 144 pieces can be dealt with in a single phone call when you are wholesaling. If you have to speak directly or respond to even 5% of those 144 customers, your service teams will be overwhelmed in a hurry.
If you know there are significant differences in the way customers are served and orders fulfilled, you'll go into DTC sales fully prepared for success. Miss out on these critical details, and your entire team could end up scrambling to keep up.
According to The Marker, one challenge many DTC brands were not ready for was the need for incredibly rapid growth. Organizations that courted and accepted venture capital found themselves in an untenable position – stuck having to grow faster than was wise. According to The Marker:
"Perhaps the original mistake of the DTCs wasn't in their vision, but in their decision to take the venture capital in the first place. Now under pressure to grow even faster and at greater scale than they otherwise would have had to naturally, they are being confronted with what happens when growth slows down, the cash starts running out, and investors are expecting their returns."
This swift scaling may have looked good on paper for a while, but over time, the costs outweighed the revenues. Inefficiencies in picking, pulling, and packing, coupled with growing pains in customer service, production, and sourcing, led to trouble for many DTC brands in 2019 – these Warby Parker clones aren't able to sustain the pace that their VCs demand.
When sales outpace every other department in growth – including manufacturing, customer service, and fulfillment, your brand won't meet customer needs. Scaling wisely and reasonably and ensuring that your procedures, costs, and logistics are onboard as well as sales will prevent the disasters encountered by many DTCs this year.
Target the Right Prospects
Since your DTC efforts are best served by finding customers who will become repeat buyers or place larger orders, you need to target them carefully. This type of targeting requires paying close attention to your buyer personas and ensuring you are spending your marketing dollars in the right place.
Connecting your online store to DataQ can help you identify the right prospects and provide you with insights on how much you should be spending on attracting and retaining customers.
If you are courting customers that aren't likely to reorder or that won't order enough to help your bottom line, you're spending money in the wrong place. Retaining customers and building long term relationships is critical to your DTC success; without a strong record of success in these areas, your efforts could falter.
Get Prepared for DTC from the Start
For many brands, the difference between succeeding in this increasingly popular model is all in the preparation. You should understand what demands this unique selling model will place on your existing workflows, target the right customers, and plan for strategic growth.
Get the insights you need to succeed in DTC and to ensure your efforts yield the results you want.
Sign up for a Free 14-day trial to get everything you need to break into the DTC model. With DataQ, you will easily:
- Leverage your customer data and use it for hyper-targeted campaigns on Facebook, Instagram, Google ads, Youtube, Google Shopping, and your preferred email solution.
- View your most essential KPIs without the data chaos and get tailored, strategic recommendations to grow your store.
- Tap into demographic customer data to fine-tune your messaging and further refine your campaign parameters to ensure that you're targeting the right customers with the right message.
Click below to learn more about DataQ and how it can help you as you transition into DTC.
This pandemic will have some long-term effects on shopper behavior as more people are making a habit of shopping online. We will inevitably see an uptick in eCommerce's share of total retail sales in 2020, so if you haven't already, it's best to prepare for this new wave of online shoppers.