Breaking into D2C Sales While Keeping Retail Partners Happy
In this article Mel Tymm, Industry Principal at Naveo Commerce, discusses the importance of a solid marketing strategy for brands looking to reach a new channel, moving from B2B sales into the world of D2C. While branching out to another market can be promising commercially, maintaining strong relationships with retailers will be integral to brand success.
The pandemic has seen unprecedented change for the retail industry. The decline over the past year, with 80% of traditional retailers noticing a drop in sales, has incentivised business-to-business (B2B) companies to break into the direct-to-consumer (D2C) market.
What’s more, with the possibility of establishing a direct supply chain and gaining full visibility into the end-to-end customer experience, D2C is becoming an increasingly attractive business model.
However, while expanding into D2C sales alongside the B2B market appears to be a smart move, there are plenty of factors that need to be considered, from marketing decisions to operations strategies. It is vital for a company to strike the right balance between continuing to please their B2B partners whilst also communicating their brand identity directly to consumers.
The mismanagement of this transformation can carry significant consequences for business, and damaging a company’s relationship with its retailers can in turn harm profits and hinder commercial success.
Targeting a New Channel
Organisations targeting a D2C audience will be required to formulate a marketing strategy different to what they leverage within their B2B sales. Identifying their ideal consumer demographic for a product is vital.
To successfully target a new channel, the organisation’s marketing team will need to embark on detailed research projects to pinpoint the most efficient way of communicating with their new target customer and ensure that the messaging resonates.
While retail partners are easier to reach via LinkedIn – the perfect platform for B2B targeting – the consumer more commonly interacts with brands through social media, such as Instagram, Facebook and TikTok.
Therefore, organisations will need to broaden their scope on these social media platforms. The introduction of the consumer audience will inevitably create a new focus and difficult balance for the marketing team; it will require them to develop and manage completely different messaging and fresh campaigns.
Brands must get to grips with a new audience and their preferences, simultaneously managing D2C marketing activities alongside the existing B2B programme.
Warehouse and delivery logistics are an important consideration and decision-makers must understand the often-opposing expectations from D2C and B2B markets regarding delivery and customer service. For example, some consumers may demand a more sustainable method of delivery, which may not be as high of a priority for certain retail partners.
Although B2B sales are primarily driven by price margin, D2C success is based on many variables, including product quality and consumer values.
Therefore, it is important that in the early days of the transition into the D2C market, the workforce is prepared for an increase in workload as well as a change in the dynamic of order fulfilment workflows which vary for B2B and D2C; it may be smaller orders, but these will be in far larger volumes.
Just as within marketing strategy, it is advisable to split the two sides of business into separate functions to avoid confusion and logistical setbacks with delivery fleets and product volume. By implementing different operations, it will highlight the brand’s continued loyalty to their retail partners and avoid harming relationships, whilst also enhancing the direct customer experience.
Product Release Strategies
A final important factor to consider when expanding into the D2C market is the product release strategy. Releases are crucial to a product’s lifecycle, helping to acquire customers and generate interest.
There are three prevailing retail launch formats; the first is the staged release, which focuses on the launch of the brand’s products over a range of different channels at different times, allowing direct consumers access to the product before the retailer. This model allows brands to gain valuable feedback on their products and make any necessary adjustments prior to the next release phase.
The second option is the partial release, where the organisation will have a direct consumer and retail release simultaneously, although exclusive products (such as limited-edition ranges) will be made available at a later date or distributed to consumers only.
The final strategy is the exclusive release, which prioritises the D2C market, allowing direct consumers access to specific product lines but disregarding retail partners. These product release strategies can also be reversed should a company want to adopt a softer approach towards D2C expansion and continue to prioritise their retail partners.
For example, a staged release could involve supporting and launching the product to your retailers first, and then releasing the product to the D2C market afterwards – highlighting a commitment to the B2B market, yet still serving the consumer.
The introduction, and follow through, of an effective product release strategy is a vital element of the internal and external marketing strategy – it enables companies to have a clear plan and manage their relationship with retail partners, while also infiltrating the D2C environment.
To successfully reach the D2C channel without disenfranchising retail partners, marketing strategy is king. It should include establishing product release strategies and implementing separate operations planning for the two markets.
However, the most important factor for any brand should be ensuring the customer or client receives an optimised and seamless retail experience. By prioritising satisfaction for buyers and partners simultaneously, brand success in all markets will ultimately become a much smoother journey.