A Brand Manufacturer’s Guide to

Surviving the Retail Apocalypse.

Your Main Retail Channel Has Closed or Downsized — Now What?

As a brand manufacturer, you’re already reading the signs. Toys “R” Us files for bankruptcy. Sears shutters its doors after a century at the forefront of American retail. Macy’s, JCPenney, The Gap, and many more well-known retailers are closing up shops across the nation, or reducing their physical footprint by downsizing. Something is in trouble, but it’s not spending — retail overall is still growing steadily. 

No matter which lens you use to understand what’s going on, here’s the truth: Retail, as we know it, has changed. And the way you respond could very well determine your brand’s fate. 

We are here to help. It’s not too late or too difficult to expand your strategy. We’ve helped many brands in the same boat launch a direct to consumer eCommerce operation and see results quickly. If you’re ready to make a change, here’s what you need to know.

Key Differences to Consider

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Resources You’ll Need

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Why Not to Fear Channel Conflict

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How to Get Started

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$1.92 BILLION

Key Differences to Consider

Here’s an amazing stat for you: According to a recent study, 1.92 billion people will buy something online in 2019, proving that shoppers are increasingly going online for their purchases. Apart from being convenient, easy, and cheaper for the customer, eCommerce also gives brands access to new markets, allows them to have control of their brand messaging, and increases their bottom line without interfering with their traditional markets. 

We’ve seen time and time again that ignoring market trends can get businesses into trouble — and quickly. So while you may have invested many years and many dollars into building out a robust wholesale retail strategy, the fact is that this means nothing if you can no longer rely on these retail channels to continue growing. Instead, it’s important to consider new ways of reaching consumers where they are: online. 

To consider selling direct to consumer, manufacturers are required to both think and operate like retailers. By going straight to the consumer, there are many important distinctions to recognize. Here’s what brand manufacturers need to consider as they explore going direct to consumer:

Brands Have to Own the

Consumer Relationship.

As a brand manufacturer, you’re used to managing a retail partnership. But a direct to consumer (DTC) relationship means dealing directly with consumers — and it’s significantly different.

Not only do individual consumers have a different approach to buying, but they also have a very different buyer journey. For brands that have never worked with consumers, these distinctions can be completely foreign.

PRO TIP

Want more resources on how to understand how consumers are shaping the DTC market and what it means for brand manufacturers? Here’s the latest on how a majority of manufacturers are now embracing DTC models

ONE

Consumer Journey

First of all, DTC relationships require a consumer journey, including everything from a website and/or apps to customer service departments to methods for accepting payment. If this sounds familiar, it should. After all, selling DTC as a brand isn’t just incredibly similar to operating as a retailer, it IS assuming that retailer role for your own brand. Rather than dealing with distributors, brands selling DTC work directly with consumers and must answer the needs of the individual customer.

TWO

Consumer Experience

Next, brands that successfully sell DTC are owning their consumer experience from the first moment their product hits the metaphorical, digital shelves. Where traditional retail outlets give manufacturers very little control over their own messaging, placement of products, or how their product is sold, selling DTC allows for brands to control each part of the relationship — from the first touch to the final button. This means understanding what messaging and placement works best for your product, but also how to market these assets.

THREE

Data Driven Product Choice

Finally, in DTC experiences, the consumer journey is often informed by hard data about a brand’s specific product — not the trend of a product category. Take Casper for example, one of the leading brands selling DTC, and their business model of selling one style of a mattress to the tune of $100 million in profits. How did they do it? By conducting their own research into what people really need when they’re asleep and then building just one, perfect product in the beginning, instead of making a product based on what people have been saying about sleepers for years. By basing their product off of data — and then having the agility to make the changes quickly — they won the market.

Technology Is a Game Changer.

Brands that are successfully selling DTC are not like traditional retailers — their success was not built on a strong brand alone, but by considering the deep and significant impact of how technology is affecting the buying process. For example, mobile is on the rise, with more than $1 trillion of total U.S retail sales relying on the smartphone at some point in the buying process in 2018, including research. For brands selling DTC, acknowledging the significance of smartphones, social media like Facebook and Instagram, and more can be the difference between making it or completely failing. With mobile commerce, the barrier to entry is reduced, giving brands new channels to pursue, as well as additional opportunities to interact with customers where they are.

RESOURCE

Not sure how technology and eCommerce is shaping the market as manufacturers move beyond traditional distribution channels? Check out our blog post, What is eCommerce as a Service?, for the details on how an end-to-end solution could fast-track your brand’s growth. 

To manage customers’ new comfortability with mobile purchases, brands selling DTC are required to have state-of-the-art mobile and/or app experiences for fear of losing the sale to a competitor who meets these shopping expectations. Managing these expectations, and providing exemplary services as a manufacturer facing these challenges for the first time requires a significant shift not only in focus but in resources. It comes down to building a personalized, quick experience with consumers, and ultimately creating brand loyalty and increasing sales.

RESOURCE

Ready to go direct to consumer but want more insight into “how”? Download our free ebook “Harnessing the Power of Going Direct” here.

Fulfillment and Operations Are

the Keys to Success.

As a manufacturer, you’re comfortable with the “big pallet process” and everything it entails. As a company considering DTC, you have to think about fulfillment and operations in different terms. Now you will be in charge of unpacking those pallets and ensuring the correct order is delivered to individual consumers on a large scale. This means preparing for shipping and returns and managing a much larger operations staff than you’re probably used to.

Instead of managing deliveries and drop-off points, you’ll need to face the reality of stocking items in-house, maximizing warehouse space for easy access, and building out an operations team for supply chain management and to provide a seamless flow from ordering to delivery. With a negative shipping experience discouraging over 50% of online shoppers from making a purchase in the future, this is not just a suggestion — a streamlined, reliable, and efficient process is absolutely vital to the success of any DTC operation.

Resources You'll Need

DTC operations are significantly different in terms of resources and hiring, and it’s not merely a question of repurposing skills, but meeting the new challenges with the expertise needed to run a successful eCommerce business. From big hiring needs as it relates to customer service, merchandising, marketing and more, brands that are going DTC must focus on conversion and measuring end results. By taking on DTC, you’re managing the process end-to-end. This means refocusing your goal from providing the product to closing the consumer.  

To get started with DTC for the first time and manage your new expectations, there are three areas that will require additional infrastructure planning and budgeting:

1. Technology

As previously stated, a winning DTC strategy is completely dependent on technology. To get started with the strongest approach from the beginning, there are two main focus areas for getting what you need: 

  1. Acquiring a consumer-facing eCommerce platform, and 
  2. Backend order management, including fulfillment, shipping management, tax management and customer service.

The right platform will incorporate both, enabling your customers to not only begin their journey but also complete the buying cycle. With the right platform, you should be able to connect with your consumers, build loyalty, and see increased visibility for your brand and products. Here’s what an eCommerce platform should include to accomplish the two objectives you can’t ignore: 

  • Showcase a comprehensive view of your products. To build loyalty with your customer base, you need to not only provide a consistent experience, but you also need insight into how all points of your message, product information, and customer journeys intersect. With an integrated eCommerce solution, your business can gain total visibility into your consumer to better meet your market’s demands. 
  • Support continued expansion and updates. In eCommerce, agility is everything. A traditional brand selling DTC hoping to keep up must not only be receptive to changes in the market but also be prepared to effectively and quickly realign their goals and web presence to reflect those changes. 
  • Deliver analytics and reporting, inventory management, and customer support. Core business functions are a requirement of an effective eCommerce platform, and when it’s integrated into a single solution can improve processes, align your organization, and provide real-time insight into the sales cycle of your products and your customer’s journey. With Ally, we provide the whole package — from warehouse storage to customer service representatives — so that you can pass off the difficult parts of going DTC and get back to what you really care about: making better products. 
  • Provide a unique consumer experience. Marketing your products with a personalized message is one of the most important things a brand selling DTC can do to separate their product from the pack. A platform should provide a seamless experience tailored to the needs and wants of your consumer while being effective across desktop and mobile and exceeding your expectations.

2. People

A good rule of thumb to remember with DTC eCommerce is that you’re only as good as your team. Investing in people, particularly leaders, who have successfully managed a retail experience will NOT prepare you for success in managing a DTC operation. In fact, ignoring the difference in skills and know-how between selling to traditional retailers and digital selling will have a huge negative impact on how successful you are as a brand selling DTC. 

Instead, you need someone who has successfully run an eCommerce business, with experience in how to approach everything from marketing management and brand awareness to customer service and merchandising positions.

3. Marketing & Sales

How you approach marketing management and how you build brand awareness will define who you are as a brand, and how successful you can be moving forward. By focusing on converting the consumer to a buyer, you need to rely on a strong strategy that is constantly evolving and presenting fresh and creative ways for your customers to interact with your brand and your product. 

But more than just managing your brand awareness, you need to consider what is going to be most effective for pushing your brand the extra mile. By getting insight into your customer’s buying patterns, you can build more informed strategies, estimate real-life cost and profit growth, and more.

If you’re interested in learning more about this topic, we encourage you to check out our eBook: The Economics Behind a Profitable Direct to Consumer Sales Engine.

Why You Shouldn’t Be Afraid

of Channel Conflict

The number one concern brands have when considering selling DTC is that they’ll cause tension with their channel partners. And since your main channel partner has probably already closed or downsized, you don’t want to risk burning bridges with your others. 

We get it, but here’s the good news: Channel conflict is a myth. 

When asked how direct to consumer affected other channel relationships, 55% of brands reported positive, 36% reported neutral and, most tellingly, just 9% reported negative.

In fact, what we’ve seen and what the data has shown is that selling DTC actually has a “halo effect” — meaning, by investing in a DTC operation, the brand sees incremental growth across all channels.

Before DTC

After DTC

There’s not a finite “pie” which various channels have to share. Rather, adding direct to consumer to your strategy increases the size of the pie as a whole instead of cannibalizing sales from your existing channels.

Here at Ally, we’ve seen our clients consistently experience increased sales across the board, proving that there’s a lot to gain from going direct to consumer, and no risk of losing the relationships that have helped build, shape, and grow your business into what it is today.

RESOURCE

Interested to learn more about how Amazon and Walmart compete in the eCommerce world? As these retail giants continue to make headlines for competing over customer loyalty, here’s what you can learn from their tactics.

How to Get Started

Now that you know about what it takes to build a robust, effective DTC strategy for your business, it’s time to break down the process into manageable parts.

While it may be daunting to consider the sheer number of things to consider on a DTC to-do list, we’ve broken down the primary tasks you need to prioritize now, and what you need to consider further down the road.

DTC Checklist

First steps: Own your consumer relationship

  • Understand your buyer’s journey, and pinpoint stress areas. 
  • Outline each step of your consumers digital experience, starting with the first click. 
  • Conduct research on your client needs, then use the data to inform your DTC product strategy.

Second steps: Consider your internal structure

  • Acquire a consumer-facing eCommerce platform.
  • Manage build out for the following: backend fulfillment, shipping management, tax management, production team and supply chain management. 
  • Craft brand messaging using data results to go along with each step of the consumer experience.
  • Invest in teams and leaders with DTC experience in the following: marketing management, brand awareness, customer service, merchandising.

Third steps: Implement a total DTC fulfillment solution

DTC Strategy Checklist

  • Prepare for shipping and returns.
  • Manage warehouse facilities, including stocking items in-house. 
  • Set-up analytics and reporting, inventory management, and customer support.

Once you get rolling, your checklist will expand — but organizing what needs to be considered on the outset, and what you’ll need down the road, will help make it easier to outline and prioritize tasks. 

For larger, established businesses wanting to make the leap to a DTC strategy, building your own process like this could take anywhere from 12-18 months for integrations and team build-outs. With Ally, we get you up and running on 3rd party marketplaces in 30 days and on your own site in 60 days. You can significantly decrease that time by relying on our expertise for delivering true value within a short amount of time. This expertise translates directly into dollars, with an average incremental rise in total sales at 1-3% in the first year, and upwards of 20% within three years of launching.

Here’s How it Works:

First, we analyze your brand, your offerings, and your scale. An integral part of building the right platform from the beginning is determining what type of products, scope, inventory values, and strategy will be most effective for your eCommerce presence.

Then we start with best practices. We’ve learned over time how things should be arranged to optimize conversion — which is a good thing. It means we’ve done the research, the testing, and the risky moves to build a framework to help all of our brands get started from a solid place. Then we build out custom additions, messaging, and functionality to give you the unique touch you need to succeed.

Next, we go back to the finances. Helping brands determine their pricing strategy is a big undertaking, involving pricing, shipping and return rates, and promotions to deliver the optimal turnaround, and also includes understanding how broader distribution and inventory allocation will affect your company’s bottom line. We work with you as you determine your strategic value, and guide you through the financial decisions that will make you successful from the start.

And the results? Better margins, an incremental increase in sales, and a customer base that not only is engaged but spending.

Here’s to the future.

More and more companies are going direct to consumer with two-thirds of consumers today expecting to connect directly with brands. Are you ready to explore the benefits of eCommerce and answer consumer demand? 

No matter if you’re looking to gain a financial edge or if you’re feeling the pressure of retail closures, direct to consumer is the next frontier to conquer, and you need to not only be competitive in a market that is rapidly evolving, but you need to do it in a way that ensures your brand, and your platform, is not obsolete as the trends change and shift. 

With Ally, there is opportunity in pursuing direct to consumer eCommerce, and we’re excited to help you establish a DTC strategy or improve your existing one. To get started, contact us to learn more.

Have questions about what you read or want to discuss further?