Manufacturers and distributors had clearly agreed-upon rules – Manufacturers made products, distributors/retailers bought it in large volumes and sold it to end customers at a higher price.

But that was the case only till eCommerce technologies intervened and changed things for good. Handling end customers is no more complicated, thanks to eCommerce platforms and operational tools that have given the power for D2C brands (Manufacturers) to reach customers directly.

Online spending by “DTC enthusiasts” will increase by 18% year over year – Forrester.

Brands like Warby Parker, Dollar Shave Club, BarkBox, Casper, and HIMs are a few among the brands that brought D2C to the spotlight.

Though smitten by the D2C bug, as a manufacturer still relying on traditional methods, you might be doubtful of whether the approach is necessary. Our blog explains 6 reasons why brands like yours should consider moving to the Direct-To-Consumer eCommerce model.

WHY BRANDS SHOULD ADOPT A DIRECT-TO-CONSUMER (D2C) E-COMMERCE

1. NO MIDDLEMEN MEANS BETTER MARGINS

The D2C model surpasses the middleman – distributors and retailers. As we’ve discussed earlier, manufacturers depend on distributors to sell their products from whom end consumers procure it for a higher price. The price increases at each level, but manufacturers end up getting only a small portion of the bigger pie.

In a D2C model, there’s no such thing as revenue share though the expenses for customer acquisition cost are involved. The markups that once went to the wholesalers and retailers will now be all yours. Depending on the product category, the net margin per unit could double in a D2C model.

Another encouraging factor is the consumer’s intent to buy directly from manufacturers. Interacting with a manufacturer makes them feel like talking to an expert who thoroughly knows the product they are about to buy.

“52% of consumers are already visiting manufacturers’ websites intending to make a purchase, and a third of those actually would prefer to buy from the manufacturer”. – Forrester Research study on behalf of Digital River.

On the whole, the D2C approach allows you to have better control over your profit margins by reducing dependency over distributors and cash in on customer intent to buy directly from you.

2. ACCESS CUSTOMER INSIGHTS – A MANUFACTURER’S TREASURE THAT’S OWNED BY RETAILERS

As you control every step in reaching end customers in a D2C approach, you get access to a huge amount of third-party data. Earlier, manufacturers selling via third-party vendors have no idea of why consumers are buying your products.

According to a 2019 Deloitte report in collaboration with Google, “Retailers use data to fulfill objectives which include improving user experience, enhancing core sales activities and engaging in emerging monetization opportunities”.

Questions like what they like the most about your products, where they expect you to improve, remain unanswered. In other words, to enhance product quality or roll out new products, you depend on the distributor’s / wholesalers’ feedback gathered from customers, which is often not disclosed.

When customers directly buy from your website, you’ll gain insights on their buying patterns, preferences, seasonal spikes, and granular level data like geography and socio-economic data. The insight you receive from being in charge of the analytics will reduce customer acquisition costs and shorten the lead-to-purchase cycle.

3. COMPETITIVE ADVANTAGE AND WIDER PRODUCT RANGE

Retailers showcase a limited quantity of products from multiple brands in order to provide surplus brand options for consumers and compete with large retail rivals. Limited shelf space means consumers get access only to a fraction of your product portfolio.

D2C approach overcomes this shortcoming by allowing you to showcase your length and breadth of products in your exclusive eCommerce store. Brands can flaunt patterns, style, color options, multiple variants across a single product without limits. You are no more constrained to carefully assort a limited number of products to sell on a third-party retailer website.

On the flip side, you don’t compete with other brands’ products that would be accompanying yours on a retailer’s website, narrowing down the competition to zero. In the case of a retail brick and mortar store, there’s no risk of a salesperson favoring your competitor’s brand for any reason.

4. INCREASED CUSTOMER ENGAGEMENT AND LOYALTY

“One-third of consumers visiting a manufacturers’ website with the intent to make a purchase prefer to buy from the manufacturer,” says Forrester. Apart from the fact that consumers love to hear directly from a manufacturing brand, a D2C store is also a place where they can find better prices than those marked-up prices provided by retailers.

This self-volunteered consumers’ attitude also means that they expect a great customer experience from the brand’s manufacturer. By leveraging the valuable data that customers provide, brands can delight customers at every interaction.

According to the study, 82% of manufacturers selling directly to consumers improved their customer relationships, and 76% improved customer experience.

Providing a memorable experience could be an after-sales email thanking for purchase along with discounts for the next one or a quick response to an inquiry in customer support. Providing such experiences can build a positive personal connection, which would encourage customers to turn into your brand evangelists.

5. PANDEMIC-FORCED RISE IN DIGITAL BUYING

eCommerce growth statistics YoY is on the rise since its inception, but the COVID-19 pandemic has further fueled the acceleration.

Online sales increased by 76% due to the pandemic – DigitalCommerce 360, July 2020 report.

Digital buying will continue to rise as it is the best alternative for consumers to get the products delivered at the safety of their household. Consumers have started preferring brands that offer additional conveniences like curbside pickup, in-car, and in-garage delivery. More consumers, even those who have relied on in-store shopping, have started preferring digital buying.

The more consumers get accustomed to conveniences offered in online buying, the eCommerce growth graph will continue its upward trajectory. For manufacturers eying DTC models, the time is ripe, and so is the foreseeable future.

As times change, more B2B businesses are moving towards D2C e-commerce strategies.

What is D2C e-commerce?

Direct-to-consumer e-commerce, popularly known as D2C or DTC e-commerce, is a term for an e-commerce model where traditional B2B businesses start selling directly to end-consumers. Like for example, farmers selling directly to a customer who will consume their produce.

Difference between D2C e-commerce and a traditional retailer business model?

D2C e-commerce is where the manufacturer sells its products directly to end consumers from their e-commerce store. A more traditional retailer business model goes from the manufacturer > wholesaler > distributor > retailers > and then finally to a consumer.

The D2C e-commerce business model literally “cuts out” the middlemen. Research has shown that 55% of consumers prefer to shop directly with the brand manufacturer over retailers.

The traditional retailer model deals with bulk purchases, so for a manufacturer to start selling direct-to-consumer they’d have to start selling individual items. This essentially is why most manufacturers have not yet switched to a D2C strategy, as their entire business revolves around selling products in bulk.

What are the benefits of D2C e-commerce?

An omnichannel experience

One of the major benefits of having D2C e-commerce is that manufacturers get full control of all their activities, from packaging to marketing, which means they can create a true omnichannel experience for their consumers.

Control over brand reputation

In a traditional business model, a manufacturer has little control when their products are being sold by retailers. A D2C e-commerce strategy gives a manufacturer back control over its marketing efforts and sales strategies, and it puts the D2C brand directly in contact with the end-consumer. This gives a manufacturer total control of its customers’ experience over the entire purchase funnel.

Understanding the customers

Manufacturers who follow a traditional retailer model rarely interact with the end consumers who have purchased their products. So, they don’t have many opportunities to get to know their end-consumers, other than by conducting target market research to try to gain a better understanding of their likes and dislikes.

What are the challenges of D2C e-commerce?

Competing with retailers

With a D2C e-commerce strategy, the biggest challenge for manufacturers is having to compete with big retailers. Retailers already have experience in selling to consumers and a good understanding of their clients and the market.

Order fulfillment

Newly formed D2C companies often struggle with order fulfillment. Not only does a manufacturer have to ship their products, but they also need to compete with the likes of Amazon and other online retailers with one-day or two-day shipping.

Marketing, sales, and customer service

D2C e-commerce also means that manufacturers need to start looking after their marketing strategies and sales strategies. This often requires hiring a new marketing and sales team.

What does the future of D2C e-commerce look like?

D2C is the future of e-commerce. Especially during the pandemic. More and more manufacturers are turning to D2C e-commerce to sell to end-consumers directly.

You can check any online source and they’ll all tell you the same thing – SMS marketing for eCommerce simply works.

It’s not only a great marketing tool for you to market your brand to customers but also to interact with employees and other stakeholders.

But what makes it so great?

• Speed: 90% of text messages are read within the first 3 minutes
• Convenience: Not everyone has access to a smartphone, but 5 billion people in the world can send and receive texts
• Personalisation: 48.7 billion consumers choose to receive business text messages
• Customer data analytics: Helps in analyzing who reacts back

These are only 3 among many other benefits of text messaging for ecommerce, and all statistics point towards the fact that text messaging is the preferred form of communication for consumers – which makes it essential for any business’s marketing strategy.

SMS Marketing for ecommerce Customers

1. Creating brand awareness

Creating product or brand awareness requires a huge investment because, at the introduction stage, you need aggressive advertising on multiple platforms to ensure that people get to know your brand.

Well established companies can get really creative when they want to get consumer attention.

In my childhood, I’ve seen huge banners in the sky behind planes for an icecream brand.

But that’s exactly the problem.

Brands throw so much money into advertising that they become bankrupt and fail within the first 5 years.

Text messaging is the perfect solution for this: it’s great for small businesses that don’t have the resources to get creative and it’s a great way for larger businesses to save money that can be better utilised in other departments like R&D.

You can send out thousands of text messages in under $150! And for every dollar that you spend on text message marketing, you’ll receive a $30 return on average.

It’s best to keep your text messages short and to the point to ensure that readers remain engaged.

There’s just one thing to remember.

Text messaging is a permission-based marketing channel so you’ll have to ask customers to opt into your campaign before sending them any promotional offers.

Here’s what your first conversation should look like:

Worried about the technical details on the side?

That’s what SMS platforms are for.

All you have to do is sign up with a platform of your choice, upload your contact list, choose a payment plan and you’re good to go.

Your platform will provide you with the keywords that customers use to opt-in to your campaign, a registered number for your business and an entire database that records all details about your subscribers.

2. Discount offers

This is by far the most commonly used feature of business text messaging.

75% of millennials prefer text message communication for deliveries, promotions and surveys (and that’s basically everything) which makes SMS the perfect medium to promote discount offers.

I specifically chose this text because it has all the important elements that a promotional text should contain:

• Catchy heading

Most of your recipients are going to decide whether your text is interesting enough or not based on the notification preview.

That means that the first line of your text should be captivating enough for the reader to know more.

In this example, the word VIP sounds exclusive which intrigues consumers to know more.

• Complete information

Usually, hyperlinks are a great addition to business text messages so that users can view details and avail offers.

The idea is to keep texts as short as possible and hyperlinks aid in doing that, but Tommy has efficiently provided all the relevant information for customers to avail the offer without being redirected to another page.

Note that grammar and full sentences aren’t a requirement in text messages because the platform is so personal and direct, and if used right, it can make texts a lot more engaging:

• Sense of urgency

This is something most businesses don’t realise, but adding an end date creates a sense of urgency because customers know that they need to avail the offer before a certain time period.

• Follows legal guidelines

In the US and most other countries, the law states that businesses cannot send promotional messages to consumers without their consent.

Along with this, businesses are required to clearly state instructions on how consumers can opt-out (since it is a permission-based platform) and Tommy is clearly doing that by adding instructions at the end of the text.

It’s best if you add opt-out instructions at the end of each text that you send to your consumers which ensures that they voluntarily remain subscribed to the SMS marketing campaign.

3. Integration with other apps

This is one of the biggest reasons why business text messaging hasn’t died down and survived up till now.

Why? Because there are a lot of social media platforms that are effective for marketing or brand awareness, but nothing beats the speed of SMS which makes it essential for integration with other apps:

• Tracking orders

Email  and SMS are the two most common ways to track online orders.

Plus, SMS acts as a double confirmation when you make a purchase online so that you know the payment went through without any issues.

Courier companies also allow you to track orders.

Usually, you text your order to the company’s dedicated shortcode and they’ll give you an update on the current status of your order.

Plus, if you order food, your rider can text you in advance to let you know that your order will arrive soon so that you can keep the payment ready and receive it as soon as it arrives; thus, saving time.

I know I would love to see more companies doing this because I’m always running around last minute looking for cash when the delivery person arrives, and I’m not alone because 64% of consumers believe that businesses should contact them via text more often:

• Wallet apps

Financial transactions are the most sensitive type of information obviously because of their monetary value, so a confirmation for them is vital.

Despite safety checks in place, bank theft continues to be an ongoing problem globally as digital transactions make financial information more vulnerable.

If you sign up for text notifications with your bank or financial institution, they’ll update you every time a transaction is made from your account.

This way, you’ll be notified immediately of any unusual activity on your account that you have not made; thus, being able to protect your financial belongings quicker and reducing the likelihood of online hackers getting access to your financial information.

• Confirmations

Every time you download an app or turn on double login confirmation for websites, you’ll receive a code via text so that the device can confirm that only the authorised person has access.

It’s a great way to protect information because it’s much harder to hack into someone’s phone instead of an online account.

The security of text message, as opposed to internet-based platforms, is yet another advantage which is why it is used frequently to make confirmations.

4. Invitations

Sure, the personalised ecommerce invitations are nice for really formal and fancy events, but in most situations, you or your consumers don’t have the time for sending and receiving invites the traditional way.

With text, you could send out invitations at the last minute and still get a good turnout because it’s so fast.

It’s great for casual events like gig nights or night-club parties to create brand awareness and recognition.

Plus, if it’s a formal event you can always ask your consumers to RSVP by replying via text or confirming online (use a hyperlink to direct them to the specified web page).

This will help you estimate the predicted turnout so that you can make arrangements accordingly.

However, what do you do when it’s an exclusive event? Use MMS to send your invitees a QR code that they can scan and enter the event:

I personally love this as a consumer because I don’t have to fret over where I put my ticket and going home each time when I realise I’ve forgotten it at home, or worse, lost it!