Is D2C eCommerce right for your manufacturing company? Here are key benefits, challenges and considerations
Are you a manufacturer interested in exploring a D2C eCommerce model? This article is for you. Read on for some helpful information that will help you consider your options and choose the right ecommerce strategy and approach for your manufacturing company.
What is D2C?
The direct-to-consumer (D2C) eCommerce business model enables manufacturers to sell their products and services directly to consumers without the assistance of a middle channel such as distributors and retailers. The good news? You get more control over your brand and a closer relationship with your end customer. The bad news? You must be ready to take on new retail functions in addition to your traditional manufacturing responsibilities.
How can D2C eCommerce benefit your company?
A primary and obvious benefit is higher profit margins by selling directly to customers at closer to retail prices. That is certainly a great motivator on its own, but there are even more reasons for manufacturers to adopt D2C eCommerce.
- Increase customer loyalty: Manufacturers that are considering D2C have the opportunity to offer customers more competitive prices than retailers, while still maintaining larger profit margins than in wholesale. This is a win-win for both customers and manufacturers.
- Deeper customer insights: By having a direct relationship with your customers, you can capture extensive data and gain insights you didn’t have access to without D2C. By controlling the full online customer experience, you get to see first-hand what works and how to innovate for the future.
- Promote your brand: Gain full control over your brand and deliver the types of customer experiences that keep customers coming back – like personalized promotions and helpful content. Expand your brand awareness and sales reach with better online visibility and SEO.
- Increase sales: With closer customer relationships, you can personalize and target your marketing activities. This enables you to fine-tune your conversion funnel, drive more sales, and achieve revenue growth.
What are the top challenges of D2C?
Thanks in large part to retailing giants like Amazon, today’s consumers have very high expectations when it comes to online experiences. Not only do customers want high quality products at affordable prices, but they want to browse and buy products in a way that’s familiar and reliable for them . For a manufacturer looking to adopt D2C eCommerce, the bar has been set very high and the pressures are equally high.
Do you have the right technology? A mature and comprehensive eCommerce solution that is designed to support manufacturers is a must. In order to reduce eCommerce complexity, you’ll want to consider a solution that can cater to both a typical retail scenario, as well as B2B wholesale scenario with more complex requirements, to keep the management of your solution and integrations reasonable. In the end, your manufacturing company will benefit from both end-consumers and B2B wholesale buyers placing orders through your eCommerce platform.
Are you prepared to expand and enhance your services? To get the full benefits of D2C, you need to retool and rethink your sales, marketing, and service resources. For example, you will want to launch customer-centric digital marketing initiatives and a unified experience across all channels. Your sales department will now need to be oriented towards end users and your brand experience, and your service department will need to manage customer support.
Can you compete with new players and markets? D2C creates new battlefields for winning customers. Some of your prior channel partners may now become competitors. An expanded online presence also means access to new marketplaces and new competition.
Top 5 D2C Manufacturing Considerations
Now that you understand the biggest D2C eCommerce benefits and challenges, what else do you as a manufacturer need to think about?
Moving from a traditional manufacturing business to a D2C business model is a big change and requires careful planning. Before starting your digital transformation, you must consider these five critical elements.
1. Invest in technology
D2C requires a significant technical infrastructure including an eCommerce solution designed for the end customer and your sales model. In addition, you will need to integrate a customer data platform that supports the entire customer experience.
2. Identify potential channel conflict
When opening a D2C sales channel in addition to your traditional distribution channels, you’ll be competing with the retailers and distributors that already have experience selling your products to end consumers. You’ll need to invest in additional sales and marketing strategies to gain visibility over established channels like brick-and-mortar stores and online marketplaces.
3. Rise to meet customer expectations
Customers expect an elegant web presence and a well-designed buying process. Oh, and they also expect you to have a deep understanding of their needs, high quality products, and short delivery times. This puts pressure on the seller, in this case the manufacturer, to not only create great products, but to create great experiences.
4. Plan to integrate
If you are looking for D2C eCommerce for Microsoft Dynamics or other ERP, CRM, or WMS systems, be sure the vendor provides seamless integration. You will want your eCommerce transactions and customer data to automatically flow through to your ERP orders, payments, inventory and warehouse systems. Fulfilling orders for customers directly will change your focus and your technology needs.
5. Implement for success
Selecting the right eCommerce solution for your D2C goals is important but meaningless unless your eCommerce partner can get you up and running successfully. Invest in technology backed by a team with expertise in the unique requirements of manufacturing.
How to Get Started
For more information on the benefits and challenges of D2C eCommerce for manufacturers, download our white paper, D2C eCommerce in Manufacturing: How a Direct-to-Consumer model powers manufacturing. At Dynamicweb, we understand that transitioning to a D2C model is a big change and comes with a lot of questions. We are here to help you get answers and explore your options. Contact us any time to start the conversation.