Though many mistakenly assume that the world of DTC e-commerce is dying, direct-to-sales e-commerce is providing many companies with an additional revenue stream, access to more informative consumer insights, and greater control over the brand experience as a whole.
Just like any sales channel, DTC is changing as more brands take their business online. Oftentimes, many assume that the reason they’re not generating enough revenue is due to their DTC channel, which acts as a middle-man in the selling process.
However, if operated effectively, DTC can increase your overall revenue stream, while also gaining you access to specific categories in specific markets that would otherwise be out of the brick-and-mortar retail reach.
But starting a DTC channel isn’t as easy as it once was. With the shifting landscaping of online marketplaces, many DTC startups struggle to make a lasting impression and often bail out before exploring the benefits of this digital e-commerce platform.
Fortunately, that’s where we come in. As you consider jumping into the world of DTC, let’s first analyze some key questions to ensure your DTC company is a success.
Are You Operationally Prepared?
Though DTC is primarily an online business, there will be several back-office operations to consider. Chances are, you’ll need to store, pack, and ship your products in a warehouse, whether it be rented by you, or run by a third party.
If your business is just starting, this might seem like an unnecessary step, or perhaps one that should be saved for the future. But as your business grows, this area will need excessive and precise planning. If you fail to do so in advance, these back-office operations can quickly become time-consuming and therefore costly.
As you lay out your operational plan, keep in mind that your goal is to ensure a solid supply chain. Oe misstep, and the entire plan can come crumbling down, putting your DTC business in jeopardy. Additionally, if you determine that your brand would be better off outsourcing fulfillment, you should look into partnering with third-party logistics.
Why Should a Customer Buy Your Product?
In today’s digital e-commerce age, it can be difficult to market a product as truly one-of-a-kind. More than likely, there are dozens of other brands that are selling the same or a similar item. For many businesses, the challenge isn’t convincing people to consider their product, but rather, convincing customers why their product is more worthy of purchasing than their competitors.
First, you must understand that your customers have multiple options available to them. What does your brand offer that the others don’t? What makes your particular version of a product more special than your competitors? Answering these questions will help you determine the best strategy to market and sell to your consumer base.
Secondly, notice that the communication of a product can make or break a sale. Customers are usually drawn to vivid, but plain language — they don’t want to feel pandered to. Be clear about your product benefits and features, but avoid any flowery or boastful jargon.
Additionally, emphasize what’s unique about your product, but use benefits that differentiate you from the competition. For instance, if you’re selling a software solution, don’t say, “Our software makes you more productive.” Instead, opt for something like, “Customers report an average (percentage) decrease in costs, which is nearly double the industry average.”
The key is to use concise language that showcases the benefits and uniqueness of your product. The more concrete you are with your description, the more likely your product will stick in the mind of the consumer.
How Will You Generate Sales?
Generating ongoing sales can be easier said than done, especially in the beginning stages of your DTC business. As a general rule of thumb, the sooner you utilize your early customers, the better.
Though they might be few in number, your first few customers will prove to be the most valuable. Encouraging early feedback and reviews on your products and services — including every aspect of the customer experience — will allow you to start developing a competitive advantage as soon as possible.
Unfortunately, many DTC companies ignore this step in the preparation process, forcing them out of business early on. The key is to engage in this conversation with your early customers and use the subsequent response to improve your sales plan.
How Often Will You Run Promotions?
While most companies don’t consider this question until later on in their DTC journey, it’s always wise to get a leg up on promotional campaign planning.
Depending on the nature of your company, you might choose to run seasonal or yearly sales or launch promotions on a daily or weekly basis. Whichever method you choose, ensure your company has the flexibility to update your product content as needed. This not only includes product descriptions, but also social media posts, homepage content, and other web pages.
Occasionally, you might want to target select sales to a specific group of customers. In this case, make sure your e-commerce platform can support a fluid experience. Whether or not you choose to obtain this capability through an in-house coded or third-party integration is up to what works best for your brand.
What Is Your Customer-Retention Plan?
The power of retention is often an overlooked component in the DTC planning process. While getting a customer to buy your product is important, there are still crucial steps that come after the sale. The customer making a purchase is only the first part of the journey.
Turning a first-time buyer into a loyal customer will largely depend on how you cultivate the company-customer relationship. Building an honest and deep connection will solidify this long-term bond.
Whether that’s through sending an engaging email after a purchase, requesting a review after a product is received, creating a point-based loyalty program, offering a post-purchase discount for a returning customer, or even sending a simple “thank you” message, all of these are examples of effective retention strategies.
Starting your DTC brand might seem like a daunting task, but with enough preparation beforehand, you can turn even the smallest idea into a consistent revenue stream. Though it will take time, testing, and continuous improvement on your part, maintaining the growth mindset and using the above steps to guide you can ensure your DTC business is set for success.