Why read this? : We look at how having an online store benefits your business. Learn how it drives better connections, commercials and control of your online selling. Read this to help build your D2C business case around these 3 key online store benefits.
We start with an unusual business question.
If you asked most consumer-led business leaders what the most valuable piece of equipment in the company was, what do you think the answer be?
Good answers. But wrong.
The answer is ...
The answer’s a mobile phone. But, not just any mobile phone. It’s that of the sales manager who looks after their big trade customers.
Because it’s usually the relationship with these customers which has the biggest 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, the main way to make products available was selling through these retailers.
For these businesses, 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 actually like what you do. How confident they are in your track record of delivering what you say you will. Whether they really feel your new product or campaign will help deliver their business objectives.
Like any relationship, you have to work at it. There’ll be good times and bad times.
They work with you because it helps them get what they want. Most suppliers have an on-going love-hate relationship with their retail customers.
Let’s look at 2 contrasting stories from the world of retailer relationships. We’ll keep the names of those involved anonymous for what’ll be obvious reasons.
Love you - mistakes happen
First story starts with a very savvy sales manager we used to work with. He was at a company conference a few years ago. A few beers into the evening event, he sent a ‘miss you, love you’ text to his wife. At least that’s what he meant to do.
In actual 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 you meant this for me ;-)’.
There was some piss-taking afterwards, obviously. But because the relationship was already good, it didn’t do any 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 who’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 respond required by Monday.
Just to screw up the supplier’s weekend.
We know of another retail buyer who got so angry in meetings, she’d get right up in the face of supplier account managers to shout the odds. They had to take tissues to the meeting. Because they knew they’d be wiping the buyer’s saliva 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 the day you go in becomes less important.
There’s not 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 :-
Online store benefits - Connection
You extend the connection further down the brand choice funnel.
Awareness and consideration from your online activities are great.
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 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 going into your bank account.
Though as per our online store business model guide, there’s 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 just to pick a few examples.
Some of these can easily 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 the interactions between the customer and your product. Your e-Commerce dashboard gives you a view of all the key interactions between reaching potential customers, and turning them into long-term loyal customers.
Conclusion - Online store benefits, but not for everyone
This doesn’t mean we’d recommend D2C for everyone. Far from it.
But we wouldn’t be so dismissive of it as some marketing pundits have been.
If you have the business smarts to work it through, it can be an amazing digital transformation to have that direct connection with your customers.
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.