Is going direct to consumers an opportunity or a threat for your business?
The continued expansion of e-commerce and the relative low cost of online technology have made selling directly to consumers an increasingly viable option for both new entrants and established brands. The implications across existing manufacturers, start-up brands and retailers themselves can be enormous, altering the competitive landscape in significant ways. The decision to go direct has traditionally been framed in terms of the opportunity to bypass intermediaries (and associated costs) and the ability to control the selling process against the distribution and awareness support that retail partners provide. But it’s not a simple matter of operational costs versus wider distribution; going direct also needs to fit with the brand’s values, positioning and relationship with consumers. In this paper, we’ll discuss the considerations related to going direct to consumers (DTC) for both established brands and start-ups. For many (if not most), DTC may not be the most appropriate approach. But it’s almost certain that existing and/or new competitors have considered it. We’ll discuss the example of the razor blade industry, where newer entrants utilizing DTC approaches have shaken up the industry, and we’ll ask you to consider: how much of an opportunity or threat is DTC for your business?
It’s not just about value. It’s about values.
The direct channel can significantly strengthen the brand and its relationship with its consumers in a number of ways, including: the avoidance of intermediary costs and requirements, providing greater flexibility and potential savings that can be passed on to consumers; increased control over every aspect of the consumer experience, from pricing to presentation to product explanation; access to highly granular sales data that can be aggregated to understand consumer purchasing patterns; and the ability to respond immediately to and incorporate consumer feedback around both the product and the purchasing experience. These work if and only if the brand story is strong. And only if the brand understands that the value of DTC is about brand values and their communication to the consumer. Consumers are looking for value, but the value they are looking for isn’t only about cost; it’s about what the brand stands for.