As the COVID-19 pandemic continues to escalate, the global retail scene is changing before our eyes. With social distancing and isolation measures now commonplace, and all non-essential brick-and-mortar stores having to temporarily close their doors to help prevent the spread of coronavirus, customer behaviour is evolving fast.
Expert opinion suggests various levels of social distancing and ‘in person’ work disruption could continue for the foreseeable future, with most resolute that a vaccine is 12 to 18 months away at the earliest. We feel businesses should be problem-solving with this time-scale in mind.
In the immediate term, day-to-day shopping has rapidly shifted online. Consumers are flocking to ecommerce stores, with some industries (particularly groceries and health) seeing huge spikes in traffic and orders. One initial survey suggests that up to 57% of consumers in affected regions are shopping online more frequently to buy products they’d usually get in-store, putting a strain on store performance, supply chains and logistics across the globe.
For B2B brands selling their products through brick-and-mortar retailers, this shift in buying behaviour represents a significant challenge. With in-store footfall decreasing daily, it may no longer be enough to rely solely on brick-and-mortar retailers to stay in business.
So, how can B2B brands adapt? We think this change in customer behaviour represents a commercial challenge to be grabbed with both hands: the transition from wholesale to direct-to-consumer (D2C).
B2B wholesale vs. D2C ecommerce
But first, a quick round of definitions and a comparison of these two business models.
B2B wholesale involves selling your products to retailers in bulk. This type of business model involves moving large quantities of products through long-term deal structures. The purchasing retailers then resell the products in smaller quantities to the end-consumer.
D2C, on the other hand, is an ecommerce strategy that allows manufacturers to sell directly to the end-consumer through an online medium. There’s no ‘retail middleman’ so-to-speak. Since the D2C movement began, global names such as Glossier, Casper and Dollar Shave Club have taken the market by storm, well and truly disrupting the ecommerce industry.
The benefits gifted by a D2C strategy include having full control over the customer experience, from discovery right the way through to delivery. Not only does this allow for increased customer-centricity, but it provides merchants with a comprehensive view of their business, with key insights into merchandising and customer data readily available. Plus, no middleman means lower distribution costs.
Discussing the benefits of a D2C model, Sean Clanchy, Director of Swanky Australia, said:
“One of our clients has recently gone through an 18-month transformative period moving from B2B-first to D2C-first. As a result, they’ve seen 600% growth in their retail business topline revenue, at 3x the margin! And interestingly enough, their additional expenditure on brand advertising has driven an increase in B2B sales, with new stockists actively pursuing their brand.
On the other hand, we’ve had other clients who are, and always have been B2B-first. They spend a serious amount of money on sample stock and fashion agents selling to their consumer boutiques. They don’t own their B2B relationships and, in times of major flux, don’t have enough of a D2C channel to underwrite a drop off in B2B sales with more profitable D2C ones.”
6 things to consider when moving from B2B to D2C
Moving from traditional sales distribution channels to a D2C model will need careful planning. Here are six things to consider when you’re setting out on the transition:
#1 Cooperate and communicate with your retailers
Don’t give your retailers the silent treatment. Engage with them. Strategise with them. Work with them. Communication is key to avoid damaging your relationships.
If you’re going to be adopting a ‘hybrid’ model where you continue selling wholesale to retailers and directly to individual consumers, there are of course risks to consider. Essentially, you’re becoming a competitor to your retailers, which doesn’t come without its challenges.
Experimenting with D2C doesn’t have to mean burning bridges with your existing retail partners though. Together, you can work out a profitable way to move forward. What this looks like will be different for every business, but it might include segmenting your product lines between D2C and wholesale, for instance.
#2 Invest in your ecommerce site
As the cornerstone of your D2C operations, your ecommerce store needs some serious commercial planning put into its design, tech and overall user experience. After all, this is where customers will experience your brand and see your products.
First off, make sure the ecommerce platform you use aligns with your business’ commercial priorities. With your long-term goals in mind, do your research. Compare and explore options. Don’t rush your decision. Some things to focus on include reliability, scalability, flexibility and value.
At Swanky, we see Shopify as the go-to solution for most ambitious enterprises looking to stand out in today’s crowded marketplace. For us, it provides all the key components of an enterprise-level ecommerce solution without unnecessarily complicating your day-to-day operations.
What’s more, the platform allows its merchants to invest their resources into the growth of their business rather than worrying about the technicalities of managing an online store – which is perfect for B2B businesses making that transition into D2C.
Ultimately though, the platform you trust your brand with should always be based on a detailed assessment of your specific requirements and resources – along with some careful research into what each of the main contenders on the market can offer you.
Once your ecommerce platform has been decided on, it’s time to build your site with end-users in mind. Your online store needs to inspire buying action, at the same time as communicating trust and being easy to navigate. Here are a few ecommerce site ‘must-haves’ to consider:
- Strong brand representation.
- Clean, simple, mobile-friendly design.
- Intuitive navigation.
- Advanced search options.
- High-quality product imagery.
- Accurate product information.
- Strong calls to action.
- A streamlined checkout experience.
#3 Use data to supercharge the customer experience
A successful D2C strategy has customers at its core. Use data-driven persona profiles to get a detailed understanding of your customer. Consider things such as:
- Demographics (e.g. name, age, gender, location)
- Purchasing behaviour
- Social media habits
- Preferences (e.g. styles, colour)
Armed with these personas, you can tailor your D2C strategy accordingly to provide a highly engaging user experience.
And these insights will only get stronger thanks to the very nature of the D2C model. Selling direct allows you to collect rich customer data that you can use to provide an intuitive, personalised experience at every touchpoint. In turn, this leads to improved loyalty and higher customer lifetime value.
#4 Mix up your marketing tactics
As a D2C brand, it’s up to you to market your products. Promoting your offering to the end-consumer requires a whole different approach compared to marketing to a retailer. You’ve got full control over how you build relationships with your customers and how you deliver value to them.
You might be up against some pretty big competitors with your D2C venture, so creativity is essential. Indeed, many of the most successful D2C brands are known for their one-of-a-kind approach to marketing. Here are some tried-and-tested D2C marketing strategies to inspire you, complete with a few famous examples:
- Use the power of social media to not only reach your audience, but to learn from them – find out where your audience hang out and get active on those channels.
- Use influencers to spread the word about your brand (check out some of our favourite influencer marketing campaigns by Shopify Plus merchants, including D2C mattress brand Simba).
- Experiment with video content. Pioneering D2C razor brand Dollar Shave Club famously launched their ecommerce site with a hugely successful viral video, which eventually led to 12,000 subscribers in just two days!
- Encourage user-generated content to boost awareness and garner trust.
- Start an online community. Dog product subscription service BarkBox have got this nailed, with subscribers feeling a strong sense of camaraderie across social media when their monthly boxes arrive (check out #dogsofBARK!).
#5 Optimise and automate fulfilment
For B2B brands selling wholesale to retailers, pallet-sized orders are often the norm. When it comes to D2C ecommerce on the other hand, orders are much more frequent and usually single item dispatch. As such, moving to a D2C operation will mean a big change in your operational procedures.
You might have to review the systems you have in place to handle fulfilment, along with things like your warehouse layout, packaging materials and inventory monitoring. There’s also a huge shift in thinking required when it comes to managing returns and exchanges.
In D2C, the focus is on a fast and frictionless buying experience for your customers. Your saviour? Automation.
While ecommerce automation was once a solution reserved only for the biggest businesses (with the biggest budgets), it’s now transforming the way that ecommerce stores of all sizes operate. It’s all about streamlining, speeding up and simplifying routine processes, with far-reaching benefits for your customers, your staff and your revenue.
Inventory and Order Management Solution, Linnworks, helps retailers automate their entire online selling processes from one centralised system. More specifically, Linnworks connects all your sales channels and synchronises your inventory to ensure you’re not overselling, while providing you with complete visibility of your stock and warehouse operations for increased efficiency and greater cost-savings.
Finally, the system is able to integrate with your fulfilment and shipping suppliers, allowing for faster and more reliable order fulfilment.
Andrew Thomson, Partnerships Manager at Linnworks says: “Automating sales processes improves efficiency in your business and opens doors to growth by having the ability to easily expand to new marketplaces and create new revenue streams. It means you can spend more time focusing on the revenue-driving aspects of your new D2C venture, like building brand awareness and developing exciting marketing campaigns.”
#6 Invest in a quality ecommerce tech stack
Today, Shopify merchants have access to an impressive array of innovative apps and plugins that will help them grow their businesses and provide that seamless customer experience.
Explore the options available on your platform’s marketplace, and be sure to choose technologies that will integrate seamlessly with each other to support your unique objectives.
Here are some of the key areas you should be prioritising in your bid to build a future-proof ecommerce tech stack, along with some of Swanky’s solution recommendations:
Omnichannel customer engagement
There are a number of solutions out there in the ecommerce ecosystem that can help you create targeted, automated, data-driven marketing campaigns that convert. Whatever your business’ size, turnover or vertical, there’s a customer engagement tool on the market for you. Our favourites include Klaviyo, the dotdigital Engagement Cloud and Emarsys, to name just a few.
Personalisation and testing
When it comes to personalising and testing customer experiences on your ecommerce store, Dynamic Yield, one of Swanky’s solution partners, has you covered. Using the power of its advanced customer segmentation engine, you can implement personalised recommendations, automatic optimisation and real-time messaging.
Smart on-site search
When you consider that search users can be up to five times more likely to convert, it’s no surprise that more and more merchants are turning to third-party ecommerce site search solutions to provide their customers with an intuitive, responsive, personalised online shopping experience. Our favourite solutions include:
- Searchanise, with its affordable options for stores of any size.
- Klevu and its advanced tech stack for high-volume businesses.
- Findify, which offers powerful AI search for larger product catalogues.
Check out our comparison of these three on-site search tools here.
Collecting and displaying user-generated content
User-generated content is a powerful, yet all too often underrated, marketing tool. Product reviews, customer-submitted photos and video testimonials are all effective ways to connect with shoppers and gain their trust (which is particularly important in times like these when uncertainty is so prevalent). We recommend Okendo as a go-to customer content tool.
Loyalty and reward programs
Loyalty and reward programs are a great way to build meaningful relationships with your customers, along with an engaging, inspiring shopping experience. These are key factors when it comes to improving customer retention and lifetime value. Thousands of merchants use LoyaltyLion to help power their ecommerce growth.
There are plenty of tools out there to help merchants provide a first-class customer service. Our favourite? Gorgias. Benefits include being able to manage all of your customer support from across multiple CRM channels in one place, one-click responses and automated inbox management.
ERP and fulfilment
Another bit of technology to prioritise as part of your future-proofed ecommerce tech stack is an enterprise resource planning (ERP) system. As we touched on earlier, automating your retail operations with one of these systems is key for streamlining your admin tasks and providing a frictionless end-to-end shopping experience for your customers. Check out Brightpearl and Linnworks for all your ERP needs.
To find out more about our favourite ecommerce solutions and how they can accelerate your online growth, check out Swanky’s Ecommerce Spotlight series.
With social distancing measures closing the doors of brick-and-mortar stores and forcing customers online for the foreseeable future, traditional B2B brands face a significant challenge. One fast and effective way to adapt to the seismic shift we’re witnessing in the retail industry is by rapidly introducing and investing in a D2C retail channel.
When executed carefully, with clear commercial priorities guiding the way, going D2C could free you from the constraints of the traditional B2B wholesale model and bring benefits for you and your customers.
Your ecommerce experts
If you want to know more about transitioning from wholesale to ecommerce, including advice on picking the tech stack that’s right for your business, get in touch with our friendly team of Shopify Plus Experts today.