There's a huge shift in B2B sectors that's seeing brands that were once a supplier to the wholesale and retail sector choosing to go direct to the consumer (D2C), and where 90% of those consumers say they are more than happy to deal with them - so, is today's supplier possibly tomorrows competitor?
“At its simplest definition, retail is the sale of different goods and services to customers with the intention to make a profit”
I've had the privilege of helping several B2B brands enter into the D2C space, here's what they, and I learned along the way - it might help you also?
Below are a relatively small number of provocations and potential solutions for companies considering entering into the D2C space - the main article can be found here.
- DISTRIBUTION: The challenges B2B have is no different than that facing a secret Avon project I worked on all those years ago. As such they're all experimenting with ways to 'get closer' to you and me without annoying the plethora of wholesalers and retail stores they rely on for their distribution base.
- OPERATIONS & LOGISTICS: One of the biggest investment challenges are the operational and logistical changes required to re-engineer quite a lot of the business. Moving from shipping boxes for wholesale and retail to shipping parcels to consumers requires a different set of skills and infrastructure.
- MARKETING & CUSTOMER RECRUITMENT: When the people who are currently buying your product from an intermediary are invisible and you don't know who the end customer is how do you go about building a direct relationship in order to grow those sales.
The first and relatively easy one that helps mitigate points 1 & 2 are 'Marketplaces'.
Choosing to get on board with a marketplace (Amazon etc) today is relatively straightforward and certainly a great way to access millions of potential consumers, shift product and drive volume. You choose an API partner to help with product integration and listings. Get this process right and you have access to massive volumes of traffic, marketing, and customers for you to place your product in front of. Amazon (for a price) can even help you with those messy logistics of shipping and painful customer returns and refunds.
Of course all of this can give you dynamic access to global consumers as well as help move the top line revenue dial, but it all comes at a price.
Whilst you're busy growing your top line revenues, paying hefty commission and logistics fees you're also growing another distribution base which in principle is no real difference to that of your incumbent wholesaler or retailers, so what's really changed? If your revenue streams are totally reliant on Amazon in particular you need to ensure you understand it's their bat and ball not yours, so when they insist you offer 'Free Returns' you need to comply, and a few 'service' slip ups can see your listings relegated to the equivalent of page 2 on Google - and who really goes there, game over!
The final point to note about product listings on marketplaces is that they're primary objective is to benefit the consumer not you. This means that most listings are driven to the top based on a combination of price and review ratings. As dynamic pricing is a key factor for 'Amazon' to 'get the sale' you need to be cheaper than the next guy - so you could quickly find yourself in a race to the bottom, and if lucky surviving on less than wafer thin margins. This is because most marketplaces and in particular Amazon claim direct ownership of the customer who 'you' sold your product into - in simple terms 'these will never be your customers', they belong to Amazon. - but.....there is a way to leverage this relationship in order to build a lower cost bridge to your bright new D2C future. Ask me how!
To find out how they can also recruit new customers for less by leveraging 'Social Media' than the traditional eCommerce and retail sector click here for the full article.
“ABI Research forecasts total e-commerce revenue of US$3.52 trillion in 2020, growing Year-over-Year (YoY) at nearly 19%."