There have been many ideas, good & bad, on how to implement programs that keep consumers happy, but even the greatest ideas have trouble surviving due to the processes & people involved. In the end, the consumer is the one being affected.
There are two main types of D2C with each of those having several variations. Those with exclusive retailers involved in the process, and those without. I guess there is a sort of 3rd one that partners with local retailers to provide support to consumers who purchase directly from the manufacturer, but for the sake of not overcomplicating things, I am going to draw a line based on where the D2C purchase originates. As in, whose website did they purchase it from? Why am I drawing the line there? Keep reading!
I think this is a great metric. Without torturing you with my overly complicated & meandering thought process, I’m treating purchases that come (or appear to come from), a retailer’s own website just like a walk-in purchase. Even if it ships from elsewhere directly to the customer, from the very beginning, that consumer sees their purchase as one that comes with that traditional security based on a local business. If the consumer purchases directly from a supplier’s site (without being redirected to a local retailer), even if it ships to the shop for the customer to pick up, the consumer knows deep down that the shop is nothing more than contracted support with limited powers.
I know I know… depending on the products involved, there are several versions of this that may or may not wiggle its way into my generalized containers of definition, but let’s not focus on that. We’re here so everyone can gain a better understanding of each other’s perspectives, abilities, and expectations so we can better serve our consumers.
Almost 20 years ago, I worked for a large manufacturer that sold to distributors, retailers, & consumers. By far, we sold more to distributors, because we knew that dealing with the general public was a pain in the ass. Of course, we made more per product by essentially cutting out not one, but TWO middle persons, but the truth was, the consumer preferred buying through shops because, if there was a problem, calling a 1-800 number for support strikes fear into people. Of course, while we sold to shops, they were a pain as well… but not in the same sense. Having to internally figure out all of our logistics of ordering (several months ahead of time), stocking, warehousing, shipping, and the customer service processes wasn’t to be taken lightly. However, selling to a distribution network was a walk in the park. Distributors have assigned buyers, usually in specific categories, who commit to purchases before manufacturers even start the manufacturing process. While we made a lot less per product (the margin distance between landed, wholesale, and retail vary, but not by anything crazy), the risks & responsibilities were reduced astronomically. Plus, we knew we would make better products, thus maintaining demand, by putting as many resources towards that rather than ‘sale sell sail’! Despite the changes in consumer behavior & growth of eCommerce, I believe this theology is still (should be) true today.
D2C in our industry is not natural… but it is essential. Too often I have seen it used as a crutch more so than a long-term solution and I don’t think consumers see it much differently. So what are the problems? Without sounding too obvious, it comes from poor communication, feedback, and consideration with expectations set too high… by everybody. Let’s look at it from the bottom up:
- Consumers are confused as they now (think they) know everything and it’s become gray as to who has their back
- Retailers, many who are already struggling, don’t have the resources (people, time, & capital), to properly manage even the best D2C programs due to having to consider & manage several variations of them at once.
- Suppliers, just like shops, have similar problems and base too many decisions based on too little feedback, hence making it harder for retailers to manage.
For the same reasons manufacturers value distributors, (low risk & responsibility), the supply channels need an improved level of feedback & forecasting. I’ve said this many times to people in discussions, but forecasting is should be more important than sales to the supply channel. I was initially shocked to see how poorly supply management was handled during & immediately after the COVID boom, but realized, this is an industry that too often doesn’t have a 2, 3, 5, much less a 10-year plan. Even the few who do struggle because no amount of forecasting can be effective swimming in a sea of guesses.
Let’s Discuss!
What are some of the things that would make D2C more manageable?
What would make consumers happy?
How can we reduce & manage the risks to both our businesses and the consumer?
What kind of programs do you steer away from even though you love their products?
What kind’s of programs seem to work and you wished others would do?
I know it may feel like I’m twisting the knife by stirring this up, but honestly, I wish I had done this almost 20 years ago once I began to understand what the various sides of our industry valued.