A Direct to Consumer strategy enables brands and manufacturers to bypass traditional retail distribution channels and go direct to customers, establishing themselves as the outright guardian of the consumer experience.

Direct to Consumer Introduction

Manufacturers of consumer products spend huge sums of money and invest a wealth of resources into establishing their brands. It starts with product creation, design and testing through to tooling, production and eventual marketing & distribution.

Historically, products were distributed direct to businesses (B2B) who then sold onto the end-user (B2C). This business-to-business approach also included distributing products via wholesale companies, which allowed manufacturers to bulk supply with little emphasis on the ultimate consumer. This business-to-business-to-business route had benefits but as margins & profits declined, brands cut out the middleman and focused on the companies selling direct to consumers.

However, this method of product distribution may have cut out one middleman, the wholesaler, but it was still effectively a B2B to B2C model and the retailer became the new middleman. Brands accepted this for sometime as they placed greatest emphasis on their manufacturing role in this relationship. As the importance of brand marketing increased, they began to want more control over the way their products were displayed and presented to customers.

Executive Summary

This is a quick executive summary to explain the what, why, when & how of D2C strategy. It’s intended to be a one minute read for the CEO and C-suite executive team with the more detail answers being found in the following sections.

What is D2C?

D2C (Direct-to-Consumer) enables manufacturers & brands to bypass existing retail distribution channels of wholesale & retail and go direct to customers. D2C is effectively B2C for brands.

More info in the What is Direct-to-Consumer, D2C & DTC? section.

Why D2C?

In addition to taking control of the customer’s brand experience, data insights from having a direct relationship with consumers is invaluable. D2C also helps to replace lost revenues from declining retail sales channels and improve gross margin by retaining a greater proportion of the previously distributed margin share.

More info in the Why Are Brands Going Direct to Consumers? section.

When D2C?

D2C is applicable for most brands today from a sales & profit perspective. However, the company’s preparation of its systems and operations may not be ready. It is also important to prepare customers, partners & employees before embarking on a D2C journey.

More info in the Considerations Before Implementing a D2C Strategy section.

How D2C?

This article is aimed at this question and whilst there is no short answer, the topic summary includes; Product Strategy, Sales Channel Strategy, Customer Support, Operational Support, Marketing Strategy & Technical Support.

More info in the Direct to Consumer Strategy (D2C): A Guide to Strategy & Tactics section.

Retail Distribution Models

Manufacturers have a number of routes to market with some suppliers distributing products through multiple channels, whilst others focus on just one.

  • B2B – Business to Business: This is where one organisation has a commercial relationship with another company, eg. NIKE sells to JD Sports.
  • B2C – Business to Consumer: A company that provides products direct to the end-user, eg. JD Sports sells direct to customers.
  • C2B – Consumer to Business: The rise of social media influencers, individuals with millions of followers, gave rise to a reverse B2C model in that consumers created the distribution value that they then provided access to, for a price of course. Another example is a reverse auction, where the buyer states a buy-price and sellers bid against each other to win the sale.
  • C2C – Consumer to Consumer: Also known as peer-to-peer (P2P) selling with secondhand sales often cited as a prime example. This market is set to explode and companies like Mercarto are enabling brands & retailers to participate in this market, rather than lose the opportunity to incumbents like eBay.
  • Wholesale: Manufacturers selling their goods B2B in large quantities and at low prices, which are then typically sold on to small retailers for a margin (10-15%).
  • Dropship: Another B2C example but one in which the retailer holds no stock, the order being fulfilled and dispatched by the brand or manufacturer.
  • Marketplace: This is where manufacturers distribute via online platforms, Amazon being the most common. There are two variations, the first being B2B in that the manufacturer sells direct to the marketplace provider, eg. Amazon, who in turn sells to the consumer and then a ‘D2C’ model where the manufacturer sells direct to consumers, albeit via the marketplace partner, who charges a commission on the transaction.

What is Direct-to-Consumer, D2C & DTC?

Let’s get the acronyms out of the way first, D2C & DTC are the same thing. The more common abbreviation when written seems to be D2C but it’s simply down to personal preference, and as you can see from this article, I prefer the former.

Direct-to-Consumer is as it suggests, manufacturers supplying their brands to customers, and end-users where the supply is for services rather than goods, without any middlemen, for example, wholesalers or retailers. As manufacturers move into supplying consumers direct, they effectively become B2C operators but as they are the originators of the products, they have their own distinct description, which is of course D2C.

Pure Play D2C companies have exploded into markets and have significantly disrupted retail sectors. Companies like Dollar Shave Club & Harry’s in shaving, Casper & EVE in mattresses and Glossier Cosmetics have all made incumbents think again.

But D2C in 2020 isn’t just about Pure Play, it’s something that has moved into core manufacturing and is very much an integral part of modern retailing, so much so that if your brand isn’t going direct today, you may find yourself left behind and your competitors moving ahead of you.

Why Are Brands Going Direct to Consumers?

Manufacturers are the proud custodians of their brands, and have absolute control until the moment of distribution. Whilst they carefully craft the supplier agreements, laying out detailed expectations for in-store displays and the online marketing & product presentation, the retail execution is often varied and rarely reflects the original expectations.

Historically, the supplier / retailer relationship has been dependent on the account managers’ ability to achieve the required expectations, sometimes through persuasion, other times via the contractual stick. But as retail margins continue to fall, retailers are constantly looking for ways to cut costs, resulting in fewer staff, less frequent store refits, lower stock cover and a whole host of other elements that increase the divide between brand expectations and reality.

A new retail report by Alvarez & Marsal, in partnership with Retail Economics, has found that store-based profit margins for the top 150 retailers in the UK have more than halved in the past eight years, dropping from 8.8 percent (2009/10) to 4.1 percent (2017/18).

“Darwin made it clear that to survive, one must adapt and that is what the major retail supplier brands are doing, with other manufacturers following fast. Retailers must also adapt, as they are fighting for survival too.”
- Mark Taylor & Charles Darwin

A recent Barclays survey highlighted that tech savvy manufacturers who had adopted a Direct-to-Consumer strategy, stand to gain £13bn in revenue in the next five years.

  • Three-quarters (73%) have already adopted this trend as part of their business strategy
  • Seven in ten (72%) believe selling D2C (DTC) is good news for both consumers and manufacturers
  • D2C accounts for 16% of all manufacturing sales in the UK

Benefits of a Direct to Consumer Strategy

There are numerous benefits of a direct-to-consumer strategy for brands, and also for customers.

  1. Better Brand Experience: Owning the entire distribution stream from end-to-end enables manufacturers to deliver the ultimate brand experience.
  2. Better Customer Experience: Consumers are demanding an ever-improving shopping experience and brands that focus on the whole customer experience, rather than simply the product, will meet, and perhaps surpass, customer expectations.
  3. Direct Brand Relationships: Knowing your customer is the first step to satisfying them, both today and each opportunity thereafter.
  4. Brand Vision: Realising the original brand vision can only be achieved when you manage every aspect of the brand. Selling direct avoid brand dilution.
  5. Consumer Data & Insights: Having direct access to customer data is more valuable than oil. In light of GDPR, customers’ data is protected and access can only be obtained with permission.
  6. Direct Access to Consumers: Companies with direct access to customers allows agile tactics, eg. launching new products, promotions etc.
  7. Direct Access to Brands: Customers with direct access to the manufacturer facilitates unfiltered and uncensored feedback.
  8. Sales Protection: Footfall on high streets is declining and the number of retailers failing is increasing, giving brands a sales challenge. Having a D2C strategy gives brands an opportunity to replace lost sales.
  9. Increased Sales: Brands that get the selling tactics right, will reap the reward of increased sales, probably at the expense of their competitors.
  10. Improved Margins: A direct strategy allows manufacturers to bypass their traditional retail distribution partners, saving around 10-15% from wholesale distribution and 15-40% from retailers.
  11. Speed to Market: A D2C strategy gives brands immediate access to selling opportunities for new products, promotions, trials and customer feedback on a wide range of brand insights.
  12. Full Product Range: NIKE’s largest UK customer JD Sports, who have an enormous product range, offering their customers a staggering 1,700 NIKE products online. However, this is dwarfed by the UK NIKE website listing of over 5,600 products, a three-fold increase on the JD Sports offer.
  13. Dedicated Shopping Environments: Many brands insist on retail partners delivering a dedicated shopping experience and whilst ever effort is made, it’s still a shop-within-a-shop and falls far short of the dedicated brand experience of an Apple, Adidas or NIKE shop.
“NIKE UK sales over the past five years increased by +23% (May-14 to May-19). In the same period, Operating Profit margins grew from 15.5% (May-14) to 25.7% (May-19) as a consequence of their move to a Direct to Consumer strategy, doubling profits to £21m.”
- NIKE (UK) Ltd

[source: companies house]

Considerations Before Implementing a D2C Strategy

Manufacturers who have previously focused their attention and resources on developing their products and building their brands, moving from their traditional sales distribution channels to D2C is going to be quite monumental and needs careful planning.

There are a number of things you should consider before embarking on a D2C strategy, in short, are your staff & partners ready, and is your infrastructure capable of supporting the strategy change?

  • Is your business plan complete?
  • Are your staff ready and on-board?
  • Are your business partners ready and understand your strategy?
  • Are your IT systems & operational procedures aligned and able to support your plans?
  • How is your marketing plan going to support the initial launch to customers?

Systems & operations need to be focused on order management, and whilst they are no doubt already doing this for B2B customers, D2C operations have additional requirements; payment options, payment gateways, sales taxes, single item order dispatch, individual item returns and so on. These are all elements that need careful planning and then clear communication to staff.

Once your strategy is ready and the support infrastructure aligned to effective implementation of the plan, you will need to ensure your existing retail partners are also prepared.

Are you going to soft launch the strategy and try to compliment the existing sales channels, will this work, would your customers believe you? Or are you going to follow the NIKE approach and make it clear that your Direct to Consumer strategy is your primary goal and current operations are secondary to it? This is brave, and may have risks associated with it but one assumes you’ve factored this into the plan.

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.”
- Sun Tzu

Direct to Consumer Strategy (D2C): A Guide to Strategy & Tactics

This guide is intended to give suggestions, tips & advice on the broad range of considerations when embarking on a direct to consumer strategy. It’s based on my retail experience over many years, in multiple companies, industries and sales channels.

Building a D2C strategy can be quite daunting, and there are numerous elements that need to be addressed but they fall into six core categories;

  • Product Strategy
  • Sales Channel Strategy
  • Customer Support
  • Operational Support
  • Marketing Strategy
  • Technical Support

Whilst its intent is to be a definitive guide, there will be elements that may require you to ask for more information and I’d encourage you to get in touch or leave a comment below.

Product Strategy

1. Full Product Range

Even the largest stores have space limitations and can’t therefore display a brands full product range. Customers websites may seem to be the solution but as we saw earlier, NIKE’s largest UK customer, JD Sports, only display 1,700 of NIKE’s 5,600 products on their website.

Establishing a direct approach, ensures that your entire product range is made available for customers via your own website. This may also provide a showcase for B2C customers and if appropriate, replace any business portals previously used for product information, technical specifications, images, videos and RRP prices.

2. Extended Product Range

Not every business has a product range the size of NIKE and nor does every company embarking on a D2C strategy have products to sell, service companies may also select this route to market, travel, finance & insurance companies for example.

For those with physical products, D2C gives an opportunity to offer an extended product range, which could include exclusive products, giving the brand website something not found elsewhere and a reason for customers to return. The marketing teams will be happy about this too as it’s valuable content for them to promote.

3. Product Trials

Direct access to customers is invaluable for a whole host of reasons, one of which is the opportunity to present trial products, perhaps pre-production design concepts that you are looking for feedback on or limited production items that you are seeking to gauge size or colour ratios, and a whole host of other intricacies.

An established website allows manufacturers to test new retail segments, for example, I’m sure River Island ran a limited trial on their childrenswear range before fully committing to it in all stores and whilst Wiggle is known for it’s cycling products, it probably tested rowing machines on a limited basis.

Product trials don’t just include the garments themselves, they can also include new services, for example, click & collect, loyalty programs or free delivery. Tests can also be conducted on the effects of promotions; 3 for 2, buy this get that, free stuff and of course the effect of price changes themselves. Just imagine the sales volume data that could be collected by trialing pre-production items.

4. Product Prices

Manufacturers that have not previously had a D2C strategy may not realise that there are specific laws relating to selling & advertising prices that are now applicable. They have moved from just being the supplier to also being the retailer, and must therefore adhere to retail laws in regard to prices. This is somewhat complicated when they retain a retail distribution channel and provide recommended retail prices (RRP). In short, you may want to take legal advice.

From a commercial perspective, you are in control of your own selling prices and are therefore able to set them at levels to reflect your company’s view of the products’ value, along with the opportunity to maximise margins. For slow selling items, prices can be adjusted to quickly turn stock into cash.

5. Product Information

Traditional manufacturers approach to product information is to create a SKU and a brief, often abbreviated, product name and number. Brands moving into their own eCommerce sales channel must ensure they enrich the product data.

  • Use clear product names
  • No abbreviations
  • Unique product descriptions
  • Add rich content
  • Include specifications
  • Add delivery & return information

Product names should broadly match what people are searching for. For example, use the word ‘car’ rather than ‘automobile’ if targeting UK customers and avoid abbreviations, unless that’s what people search for.

Product descriptions should be unique to your website, it’s best practice for search engine optimisation (SEO) but is also important for customers. We’ll come onto eCommerce techniques in the Sales Channel section.

Adding rich content, like images & videos gives visitors more information and helps with order conversation. Wider product information could also help convert sales, especially for customers looking for ethical purchases; recyclable, sustainability, fair trade, organic etc.

Specifications may not be the first thing customers seek but weights, dimensions, fabrics & technical specifications are important to include on product pages.

Proving provenance is becoming important in managing anti-counterfeiting, not only in production but also the extended supply chain; raw material supply and secondhand resale. Blockchain is an effective solution to this problem and this article looks at blockchain in the retail supply chain.

Sales Channel Strategy

In the Retail Distribution Model section above, we saw a range of channels to market, one of which was business-to-consumer. However, B2C has many variations, which as brands move into selling direct, are now widely available to them. Here we list some of the best options for manufacturers to supply direct.

1. eCommerce

Online sales in the UK equate to 20% of the total retail market, with analysts predicting this could reach 25% by 2025. The current revenue value is approximately £75 billions, meaning it’ll surpass £100 billions within the next five years.

Manufacturers who have established brands, already have a significant share of this market. However, as current retail models decline, they are at risk of losing sales unless they offset this, with direct to consumer tactics well-placed to deliver on this objective. On the other hand, manufacturers who focus solely on producing & supplying products to wholesale & retail customers (B2B) must embrace D2C as soon as possible.

Whether you are launching your eCommerce business from scratch or already have a website, it is imperative that you deliver a good customer experience and technical competence. I will cover the technical aspects of eCommerce in the Technical Support section, focusing on the customer (CX) & user experience (UX) here.

  • Customer First: Maintain a strong sense of customer first in your approach.
  • Best eCommerce Platform: There are plenty of platforms to choose from, Magento being the most popular. Whilst some licence fees appear expensive, don’t be tempted to go for the cheapest solution as you will get what you pay for. If you are looking to generate above £10m online, you’ll probably be looking at Magento, with Shopify, Big Commerce & WooCommerce considerations for smaller sites.
  • Clear Navigation: Ensure the navigation structure is what customers want rather than your own internal perceptions or product segmentation, displaying categories & sub-categories based on revenues.
  • Landing Pages: Dedicated category, brand & seasonal promotion pages are a great way to showcase specific products, allowing key items to be grouped together. Marketing teams are then able to create target campaigns, with well-executed promotions seeing increased website traffic, higher conversion rates and bigger basket sizes.
  • Search Tools: Most eCommerce platforms in-built search functionality is poor, so you should consider enhanced search tools. These significantly improve the relevance & speed of search results, alongside the ability to add auto-complete, misspellings and targeted landing pages. Companies with good eCommerce Managers fully utilise the customers search history to identify commercial opportunities.
  • Sales Tools: Anything that can help increase average order values (AOV) are invaluable, with a number of eCommerce tools being available to manage cross-sells, up-sells & alternative products. This is another key tool for the eCommerce Manager to use and maximise sales opportunities.
  • Merchandising Tools: Automated product management tools significantly reduce the amount of administrative time spent on basic tasks, releasing eCommerce teams to focus on higher quality work. These tools look at best sellers, slow sellers, stock availability, estimated delivery dates for out-of-stock items and much more.
  • Homepage: A website’s homepage is effectively the shop window and serves as an introduction to the online store. It’s somewhere to inspire customers, highlight key products and showcase promotions. However, for the majority of your visitors (probably 95%), it’s not a landing page. Most customers will arrive at your eCommerce site via a product page, only visiting the homepage after that.
  • Product Page: Make your product page the most authoritative & exciting place on the Internet for that particular product, then you’ll not only rank number one in the search engines but you’ll also maximise the conversion rate. Some things to consider for delivering outstanding product pages; multiple product images, basic product video, enhanced product video showcasing key features or how-to style videos, customer reviews, customer service contact info, live chat, warranty info, technical specifications.
  • Stock Availability: Product data should be live and updated immediately, both in regard to stock availability, quantity, in-stock dates for out-of-stock items and dispatch dates for in-stock items (unless next day delivery is guaranteed). Don’t forget that scarcity sells, ‘only 2 left’ encourages customers to buy that day rather than wait.
  • Service Options: Customer expectations when shopping online has grown significantly in recent years, so it is essential to include; delivery & returns info clearly visible, collect in-store (click & collect), option to have goods delivered to collection points, free delivery, same day dispatch, next day delivery, nominated delivery times & days plus an ever-increasing list of other options.

2. Apps

It’s said that we only use a handful of Apps on a regular basis but why not make one of those yours? Apps with push notifications enabled are a great way to inform customers of new products, promotions and events but also a great way to annoy them if you get it wrong.

3. Retail Stores

Whilst 20% of retail sales are online, the remaining 80% predominantly come from High St stores, so news of its death are greatly exaggerated. A carefully considered retail strategy could compliment online sales channels.

For some this may mean City Centre stores, which are expensive to rent & operate but offer higher customer footfall. For others, this may be a focus on Town Centres, Hobbycraft for example focus on regional towns rather than cities, and surf brands focus on seaside towns for obvious reasons.

Retail shops come in a variety of flavours;

  • Franchises: An opportunity for suppliers to work with carefully selected partners but one that may too closely resemble their current B2C partners.
  • Concessions: Usually dedicated selling space within Dept Stores but in the current retail climate, this may not be suitable for everyone.
  • In-Store Kiosks: Effectively a customer-facing laptop or tablet situated in-store for customers and/or staff to use to order online, with goods dispatched to customers homes.
  • Trade Counters: Common in the DIY trade but something that may work for other products.
  • Pop-Up Shops: As shops become vacant, retail landlords are offering empty units on very short leases, allowing brands to test specific locations.
  • Partners: Working with related partners, for example, selling sports clothing in Gyms.

4. Online Marketplace

With annual revenues of $280bn, a $940bn market cap and 49% of the total US retail market, you simply cannot afford to ignore Amazon. Other online marketplaces include eBay & Alibaba. Manufacturers have two options when selling via online marketplaces, the first option is to sell direct to them on a B2B basis but this puts your brand in their hands but without the inconvenience of selling direct. The second option is to become a marketplace reseller, and sell direct.

Don’t be fooled into thinking that selling via Amazon, et al, is just about listing your products via a data feed and then walking away. Like so much in eCommerce, there is an art to optimising listings to ensure they appear first, second or third in the search results. Amazon will of course always favour their own listings but if you choose not to supply them, and are the sole reseller of the products, you’ll have nobody to compete with.

5. Subscription Model

Favoured among millenniums, subscription retail models allow customers to purchase products & services on a regular basis but without the hassle of placing an order after the first one. Companies like Harry’s, Dollar Shave Club and Honest Company provide subscription models and have seen significant sales increases.

Customer retention rates month-to-month are higher than traditional retail models but this isn’t suitable for all manufacturers. Retention numbers will fall-off after a year or so but still remain higher than without a subscription.

6. International

Whilst the UK retail market is one of the largest in Europe, it’s around £100bn smaller than the German market and a small percentage of the total European market, not to mention the rest of the World.

This means there is a huge potential for UK manufacturers to expand beyond this country. There are of course numerous localised considerations when looking Internationally;

  • Language
  • Laws & Legislation
  • Sales & Company Taxation
  • Customs & Cultures
  • Currency

In addition, there are logistics challenges of transporting & storing goods Internationally plus the associated costs. One option is to utilise the Fulfilled by Amazon service, which allows companies to test new locations before making a full commitment.

Customer Support

Whilst most manufacturers will have some form of customer support, it’s often based around Finance teams, order / invoice management for example. D2C customer support is very different and requires an organisation to focus on the consumer of the product, which isn’t the same relationship as B2B customers.

1. Customer FAQs

Not necessarily the first element to execute but creating a FAQ list will help you to identify the customers’ requirements, which will help you to prepare your internal support structure. Typical customer questions fall around product, payment, delivery & returns.

  • Product FAQs: These should primarily be published on the product page but there may be some generic questions around your ethical stance on sustainability, recycling, product disposal, organic sourcing, fair trade etc.
  • Payment FAQs: This includes payment options, credit/debit cards, consumer finance options and less traditional ways to pay like ApplePay & Klarna.
  • Delivery FAQs: Questions are usually based around estimated time of delivery, alternative delivery locations (eg. work) and other options such as collection points and click & collect.
  • Returns FAQs: Focus tends to be on your returns policy, bearing in mind that D2C includes a requirement to adhere to consumer legislation, such as the Distance Selling Regulations, allowing customer upto 30 days to return items.

2. Customer Support Staff

Moving towards D2C will require you to increase the number of customer support staff. As mentioned earlier, the support questions from consumers is likely to be very different from your existing customers and so choosing the right staff is important, from both a pre & post sale support perspective and also their style, for example, some companies look for a selling mindset, whereas others look for staff with technical knowledge of the product. Whichever you require, ensure they have plenty of relevant training and prepare them thoroughly.

3. Contact Details

Customers get frustrated if it’s difficult to find your contact details, so ensure they are easy to find, not just on your website but perhaps on Directories like Yell & Thomson Local. Tip: don’t forget to update your Google Local page with your customer service contact details via your Google My Business account and also remember to update your social media accounts.

Methods of contact aren’t just limited to address, telephone and email. You may also wish to consider Live Chat but staffing this beyond your core hours could prove to be expensive. AI based Live Chat is a viable option for most website platforms and even reduces the human staffing requirements.

4. Customer Reviews

As you journey through your D2C adventures, you will start to see more and more aspects of consumer based requirements, one of which is receiving customer feedback. In order to effectively manage this, ie. be able to respond quickly, you may want to consider setting up a TrustPilot account (there are others but this is one of the best) and a Support Ticket system for customer emails.

Before you establish systems and procedures for dealing with customer reviews, you need to have robust policies in place for responding to complaints. This ensures your customer service team delivers a consistent response to common questions.

Direct to Consumer Strategy (D2C): An Experts Guide

This article is intended to be a definitive guide to D2C Strategy, sourced from many years of retail experience and whilst some manufacturers are well-placed to adopt it’s suggestions, you may find yourself with more questions than when you first started reading it. If you require more information or would like to discuss how to implement your own D2C strategy, please get in touch.

Operational Support

As an established manufacturer, you will undoubtedly have an efficient operation in place. However, it’s likely that this is for your B2C customers and probably based around pallet-sized orders. D2C operations are different in that they are commonly single item dispatch.

1. Operations Procedures

Moving to a D2C operation will most likely mean changing your operational procedures. Single item order dispatch is completely different to bulk distribution and so warehouse layout, loading bay area management, outer wrapping materials etc will all need to be reviewed.

In addition to order dispatch, you will need to ensure your returns operation is capable of accepting packages in varying degrees of style (some customers do love brown parcel tape!). These orders will need to be processed, including receipting into your central stock management system.

2. Operations Support Staff & Systems

Staff that are used to pallet dispatch may need to be trained for D2C order management, which may include wrapping single items and systems training. Staff numbers are likely to increase, with flexibility important for both peak volume dispatch, often at Christmas, and peak return rates.

ERP and/or Warehouse Management Systems that are setup for manufacturers will need to be adapted for D2C operations so plan this far in advance of your launch.

3. Couriers

Companies like DPD, UPS & Yodel are often used for D2C operations and unlike bulk dispatch, they have much lower weight & dimension thresholds, commonly upto 30kg and 0.5m x 0.5m x 0.5m. Manufacturers that have two-man delivery requirements may have to choose an additional operator as many of the couriers don’t offer this service.

Choose your courier partner wisely as this is often the highest source of complaints from customers and can be an expensive on-cost, especially when Free Delivery is selected as a competitive consideration. Other factors include delivering to Highlands & Islands and outside of the UK. You may also wish your courier to be able to collect from customer locations.

4. D2C Operational Costs

Changing the company’s operation from manufacturing based B2B relationships to a D2C strategy will require investment, which should of course be offset by the additional income generated.

  • People: Additional staff will be required for the warehouse, order dispatch & returns management.
  • Warehouse: Additional warehouse space may be required.
  • Delivery: The price you charge customers for delivery should cover the cost of getting the items to them, however, like many eCommerce operations, you may have to consider offering free delivery. There are ways to structure this so careful planning should be put into this.

Marketing Strategy

Marketing is such a broad topic and established brands will already be doing a lot to increase their brand awareness. This section will therefore focus on digital marketing for manufacturers as part of their D2C strategy development.

Before we look at the specifics, it is worth taking time to consider the following;

  • Customer Acquisition Strategy: What is your strategy to acquire new customers?
  • Customer Retention Strategy: How are you going to retain newly acquired customers?
  • Customer Sales Strategy: Will you have an outbound direct selling approach or one that is more passive?
  • Customer Relationship Management: How will you use your customer data?

1. Natural Search

Natural search refers to the search engine results which are obtained without payment to Google, Bing et al, and is achieved through search engine optimisation (SEO). There are hundreds, nay thousands, of SEO companies that specialise in this and we are not going to delve into it here, other than to say, this SME Guide to Technical SEO may help those looking at this from a technical viewpoint.

2. Paid Search (PPC)

Search engine’s like Google have become extremely wealthy by companies paying them for advertising. PPC (pay-per-click) is the most common form of paid search and any D2C strategy must include this in today’s marketing plans.

If you are expecting to spend over £100,000 then I’d strongly recommend you consider employing a Paid Search specialist to manage this expense as their expertise will ensure you deliver a positive ROI. The cost-per-click (CPC) rates have risen significantly over the past 2/3 years and it is imperative that not a single penny is wasted on visitor traffic that doesn’t convert into a sale.

In addition to search engine PPC campaigns, social media paid search is becoming more popular and you may want to consider this alongside traditional routes (eg. Google).

3. Social Media

It is important that you create, manage and fully utilise the opportunities that social media networks offer brands. Whilst there are hundreds of options, the main channels remain facebook, twitter, instagram, youtube and linkedin. There are many others, which come and go, some of which are as big as those just mentioned (eg. WhatsApp) so choosing the right one for you may be as simple as testing them.

One of the important aspects of delivering great social media accounts is regularly posting content that people want, not just what you think they want. Spend time looking at what your competitors are doing and using the insights data in each social platform. The key is engagement, not how many followers you have.

Social media influencers are the latest uber trend, ie. people with large (often millions) of followers that you may find like your brand and would be willing to promote it to their loyal followers.

4. Customer Relationship Management (CRM)

It is imperative that you have a Customer Relationship Management (CRM) strategy in-place to manage the customer data. A CRM system is a data-driven software solution that helps to maximise the profitability of each customer, based on how they interact with your brand. CRMs help you manage and maintain customer relationships, track sales leads, marketing options, interactions and insights, leading to deliver effective actionable data.

5. Customer Incentives

Whilst giving money away isn’t great business, spending money wisely which leads to a higher return, is good business. Remember that D2C is different to your traditional marketing approach so a few things to consider are; loyalty programs, rewards for social sharing, affiliate programs, friends & family.

6. Voice Search

Voice search is significantly increasing in popularity, with more than 100 million people around the World now owning a smart speaker. By 2021, 35 percent of web browsing will be without a screen and whilst this isn’t yet impacting significantly on eCommerce shopping, it’s probably only a matter of time. Voice search isn’t just about the immediate sales opportunity, it’s about driving brand awareness, locating stores and other indirect selling.

Technical Support

You will already have a systems infrastructure in-place but as you develop your D2C readiness, you will need to consider a few additional aspects to your overall system capabilities.

The basic transition from a B2B approach to D2C needs to reflect many of the elements noted in the Operational Support section. This is primarily changing emphasis from a business customer to a consumer. Simple things like how systems apply VAT may seem straightforward to the Finance team but some legacy systems built for manufacturers, may cause the IT team some headaches.

1. ERP Systems

Central ERP Systems are the beating-heart of most companies and must be capable of enabling staff to manage all aspects of D2C operations; invoice management, order dispatch, returns, part-shipments and so much more. A thorough review needs to take place well before you commit to a D2C strategy.

2. eCommerce Platform

For many manufacturers, eCommerce sales are either new or not yet established. The realm of online consumer interface, whether it be for information or direct selling, needs a website and if you are looking at selling online, one that enables a sale.

The main eCommerce platforms are Magento, Shopify & Big Commerce, the former being the leading choice for many companies. The choice of which platform will come down to several factors; expected sales & traffic volumes, size & complexity of product range, budget and features which are unique to your business. When you reach this point in your planning, you may want to bring in a Consultant before you commit to large sums of money and a cumbersome contract.

3. Systems Integration

To achieve operational & cost efficiency throughout the company, you will want to ensure that your systems are integrated and all talking to each other. The core ERP System must be connected to your eCommerce platform and the whole business operation managed systemically, including; stock control, customer orders, supplier orders, cash, invoices etc.

4. Stock Management

There may be some additional requirements from D2C that you hadn’t previously needed. For example, weights & dimensions will be required by the couriers and estimated delivery dates by customers, so these will need to be added into the stock management system.

5. eCommerce Features

Customer expectations online increases all the time and so it is important to keep pace with the latest developments, such as, live chat. This once was an electronic messaging system between customer and customer service assistant. Today it is more likely to be an assisted AI-based live chat with automated customer assisting bots doing the talking. These deliver much quicker response times to customers and releases staff for other tasks.

6. eCommerce Payment Options

It is important that your eCommerce platform accepts the range of payment options required by your customers. Debit cards are used much less online than their credit card cousin but both are expected, as are digital payment options like ApplePay, GooglePay & PayPal. In addition, consumer finance options like V12 Retail and Klarna offer customers the option to spread payments over several months.

These payment methods need to be facilitated via the eCommerce platform but also management though the central system too.

7. Shopping Feeds

Paid search marketing is likely to need stock feeds, primarily for Google Shopping, who have very specific requirements when it comes to their feeds. File types tend to be XML and these will also be required for any Amazon marketplace listings.

Direct to Consumer Strategy (D2C): An Experts Guide

This article is intended to be a definitive guide to D2C Strategy, sourced from many years of retail experience and whilst some manufacturers are well-placed to adopt it’s suggestions, you may find yourself with more questions than when you first started reading it. If you require more information or would like to discuss how to implement your own D2C strategy, please get in touch.