Retail

How Brands Can Avoid Direct-To-Consumer Pitfalls

How Brands Can Do DTC Offerings Right

COVID-19 didn’t create the idea of selling direct to consumer, but the outbreak has massively expanded consumer interest in the idea across virtually all commerce verticals, sticky.io Chief Operating Officer Ro Bhatia told PYMNTS in a recent conversation. He said DTC is looking less and less like a subset of eCommerce and more like something that everyone playing in the digital ecosystem needs to add.

 

“We’ve talked to a lot of enterprise companies and popular names and also companies that no one has ever heard of that are all wanting to offer direct selling,” Bhatia said. “Many are currently selling already on Amazon, but they want to go direct to customers and develop channels outside of Amazon. We have also seen a bunch of firms that are already selling DTC that are suddenly seeing enormous growth that their framework wasn’t developed to handle. Their platform is not able to scale, [and they’re] searching for how to create a better framework for what they’re already doing.”

But Bhatia said that like any other upgrade or addition, simply doing some patched-together variation with DTC isn’t the same as doing it right. Brands looking to sell directly to end users need a vision for what their omnicommerce experience should be, and a plan for how they’re going to deliver something to complement their existing business instead of merely complicating it.

Going DTC Without Creating Conflict 

Brands that are either expanding existing DTC operations or have only sold through a marketplace can use channels like Amazon without creating potential conflicts in their path to selling directly to consumers. On the other hand, brands with existing wholesale relationships with retailers face the difficult situation of creating a perception that they’re suddenly competing with their own distributors.

Bhatia noted that when sticky.io has early conversations with brands looking to step into DTC, one of their top concerns is not messing up existing relationships with retail partners. They don’t want to risk sparking a civil war within their supply chains.

“We show them that going direct to consumer doesn’t have to create conflict,” he said. “In fact, not only can it maintain commercial relationships with retail partners, but it can actually strengthen the bond between the companies and their retailers.”

For example, brands can differentiate their offerings across channels, selling some goods in retail stores and a wider assortment on their websites, Bhatia said. That makes a brand’s DTC effort an expansion of what its retailers offer rather than creating direct competition.

He also noted that sticky.io is increasingly seeing brands team up with their retail partners on delivery, giving customers the option of purchasing goods online and then going a local shop to pick something up. For example, The Honest Company has been particularly effective in partnering with retailers to help create and scale its DTC omnicommerce offering, Bhatia said.

Lastly, he said brands that launch DTC programs create vast troves of data they can share with their partner retailers. “That helps them improve their own direct-to-consumer offering — not only for one product, but the overall line-up on their own channels,” Bhatia said. “That’s very, very powerful.”

The Value Of The Right Partnerships

There’s an awful lot that goes into building a delightful, sticky, DTC business that can scale nationally and even globally. Bhatia said there are parts of that effort that brands should focus on and others they should outsource.

For example, he said, few brands can build their own DTC platform that offers a smooth transactional experience, a full range of payment capabilities on the front end and seamless fulfillment on the back end. Trying to do so will likely be a mistake in terms of both developmental expenses and lost opportunity costs, he explained.

“The time it will take a brand to do something they're not equipped to do  — and that is not their main business  – will be detrimental to the growth of the overall brand,” Bhatia predicted. “It could take years to build a fully scalable platform that will have all the commerce-related functionality that a brand would need to scale. It's just not smart to try to build it.”

Instead, he recommends finding a good technological partner to deliver a direct-to-consumer experience that will engage one’s customer base. After all, given the changes that COVID-19 is foisting on the market, DTC is becoming less of an optional move for brands and more of a mandatory one.

“Going direct to consumer shouldn't be optional anymore. It shouldn’t be, ‘should I or should I not?’” Bhatia said. “The real question is: ‘How soon can I create a direct-to-consumer offering?’ Those are the discussions that are needed. It was happening already, but COVID-19 has expedited the entire process.”

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