Why this idea means business : We explore how having an online store benefits your business. Learn how it boosts connections, commercials and control of your online selling. Read this to learn how these online store benefits underpin your D2C business case.
The answer is ...
The answer is a mobile phone. Specifically, the phone of the sales manager who looks after their biggest trade customers.
Your relationship with these customers usually has the most impact on sales.
Spend all the time you want on marketing plans and brand activation. But if your product isn’t available to buy, you get no sales. And until recently, product availability meant selling via these big retailers.
Retailer relationships
In these cases, much depends on the relationship with the retail buyer.
How they see you as a supplier. If they see what you sell as a way to grow their business. If they like what you do. How confident they are in your track record of delivering what you say you will. Whether they feel your new product or campaign will help deliver their business objectives.
Like any relationship, you have to work at it. There will be good times and bad times.
They work with you because it helps them get what they want. Most suppliers have an ongoing love-hate relationship with their retail customers.
Let’s look at 2 contrasting retailer relationship stories. We won’t name those involved for obvious reasons.
Love you - mistakes happen
First story starts with a very savvy sales manager we know. He was at a company conference a few years ago. A few beers into the evening event, he sent a ‘miss you, love you’ type text to his wife. At least that’s what he meant to do.
In fact, it went to the most frequently contacted person on his phone. Which wasn’t his wife. It was the buyer at his biggest account. Which he realised when he got this text back. ‘Appreciate it, mate. But don’t think this was for me ;-)’.
There was some piss-taking afterwards. Obviously. But because the relationship was already good, it did no harm. In fact, it probably helped. When your retailer relationship is good, it’s easy to get past the inevitable mistakes which happen.
Hate you - prices and margins
But many retailer relationships aren’t so good.
For example, we worked with another business that’d been arguing with a major retailer on prices and margins for over a year.
The relationship was tense. Top-to-top meetings. Delays launching new products. Nasty emails.
It got to the point where the retailer would send a list of demands every Friday afternoon. Always a Friday afternoon, with a response required by Monday.
Just to screw up the supplier’s weekend.
We know of another retail buyer who got so angry in meetings, that she’d get right up in the face of suppliers to shout the odds. They started taking tissues to the meeting, so they could wipe the buyer’s spit off their face afterwards. Not a great basis for a relationship, right?
Online store benefits?
You might well ask what all this has to do with online store benefits? Well, when you set up your own online store, you move away from all of that. No external retailer because YOU become the retailer. Less dependence on retail buyers, overall. Far fewer challenging conversations.
The ups and downs of your retailer relationship don’t go away if you still sell via retail. But the risk of the downs is much less. You’re not as reliant on your sales manager’s phone. The buyer’s mood becomes less important. There’s less spitting.
There aren’t many businesses where D2C will completely replace traditional retail channels. But we see many benefits to having a D2C channel as one of your sales routes to market. The biggest is it gives you an alternative to relying on retailers to sell your product.
Beyond that, there are 3 main online store benefits we’ve seen, which emerge as you go through the e-Commerce planning process. These are :-
- Connection.
- Commercial.
- Control.
Online store benefits - Connection
Your digital marketing is likely already engaging with customers through websites, digital media and social media.
These activities drive awareness and consideration.
D2C extends the connection opportunity to build your brand with those customers further down the purchase funnel.
It allows you to directly manage trial and loyalty without needing online retailers.
When a customer buys direct from you, they show high engagement and trust with your brand. What could show a customer’s trust in you more than sharing their credit card details? When they trust your order to delivery process to deliver the product safely to their doorstep?
For marketers, D2C is the ultimate relationship builder. Where you move from ‘unknown’ user data in Google Analytics to actual customer details. Their names. Where they live. Permission for you to contact them. And details of their purchase history from you.
It amazes us that so few marketers are excited by this. It’s an amazing marketing opportunity to connect with real paying customers. (See also our functions of e-Commerce guide for more on why D2C is such an opportunity for marketers).
Online store benefits - Commercial
Then there’s the commercial opportunity.
D2C changes the way businesses think about their overall profit and loss. No more trade margin when you sell direct.
Except, of course, very few businesses could rely on D2C sales alone. So there’ll still be trade margin discussions. (National account managers can breathe a bit easier). But if 5-10% of your sales can come through your own channel, that’s a good thing.
You get a lot of commercial benefits from that.
Less dependency on the retailers. The full retail price goes into your bank account.
However, as per our online store business model guide, there are also a lot of extra costs you have to consider before selling D2C. Credit card surcharges, warehouse costs, packaging costs, delivery costs, refunds and returns as a few examples.
Some of these can freak out accountants new to D2C. But overall, the commercials generally work well on D2C business models.
Online store benefits - Control
And finally, as far as online store benefits go, is the control it gives your business.
For us, it’s the most powerful of the online store benefits. You control the whole D2C experience.
You directly manage the whole journey. From the first point of customer contact to the product landing on their doorstep.
It means you can act much more quickly to take advantage of opportunities and fix issues.
You have deeper knowledge of customer interactions with your product. Your e-Commerce dashboard summarises everything you do from reaching customers to building loyalty.
It’s your processes which test and optimise your online store and your customer service team that keep customers happy.
Your CRM program creates its own data. You don’t have to rely on the retailers to gather marketing data about your customers or find out how your products are performing.
Conclusion - Online store benefits
Despite all these online store benefits, D2C isn’t for everyone. There are no guarantees. Many have tried and failed to make it work. There are many barriers and issues to overcome.
But we wouldn’t dismiss it as easily as some marketing pundits have done.
With the right business smarts behind it, it can digitally transform your business to have that direct customer connection.
You may be a complete beginner in the D2C journey. Or you’ve started but are struggling with managing an online store. Keep going. Connection, commercialisation and control make all the challenges worthwhile.
Check out our how to set up an online store guides for more on this. Or get in touch if you’d like to learn more about online store benefits.
Photo credits
Visa card and laptop : Photo by Anastasiia Ostapovych on Unsplash
Phone notification : Photo by Jamie Street on Unsplash
Two women signing documents : Photo by Gabrielle Henderson on Unsplash
Man shouting at phone : Photo by Icons8 Team on Unsplash
Heart Button : Photo by Kelly Sikkema on Unsplash
Counting cash : Photo by Sharon McCutcheon on Unsplash
Small fragile delivery box in hand : Photo by jesse ramirez on Unsplash
