Top Challenges of Direct-to-Consumer eCommerce Revealed (and how to overcome them)
Higher margins, greater control, and better insights into your buyers don’t come without concerns.
While manufacturers and consumer brands are still selling through intermediaries, many of them are finding themselves considering adding a direct-to-consumer (DTC) channel. It’s hard to ignore the benefits DTC now offers, but even still most of them are still hesitant to take the plunge into exploring this channel's vast opportunities.
Here are several top DTC challenges executives are faced with and how your brand might approach them.
Biggest DTC Challenges When Starting Out
- Fulfillment issues leading to disappointed online shoppers
Disappointing online shoppers with a poor fulfillment experience is a valid concern and challenge for many going DTC. Shipping to one person a single item is a lot different than shipping pallets to large retail chains.
Because this type of logistics setup differs substantially from what most companies are used to, many will opt to (at least initially) outsource. This can remove some of the burdens of change while also guarantee quality, speed, and the flexibility to scale operations up or down as needed.
If you have your own retail network you could also establish your stores as eCommerce fulfillment centers.
As you work to optimize operations for the purchasing process, make sure to consider the entire customer journey itself- including the returns process. Surprisingly, a poor returns experience is more likely to drive away a shopper compared to an initial slow shipping experience.
- There are so many variables: payment, order tracking, delivery, etc. and we’ve never done it.
Through an experienced partner and investing in smart technology decisions, including connecting the back end of the eCommerce store with the rest of your IT architecture- such as warehouse management, inventory, and order handling, you can work to overcome these concerns. Based on your business’s digital maturity and available resources you can choose a shopping platform to suit your needs and adjust as you grow.
And while those variables are important, the most important consideration of all needs to be the overall front-end customer experience.
- I’m worried DTC will destroy my other channel relationships, potentially bringing down profitability.
As a general rule of thumb, just behave responsibly. The DTC channel is nothing new, and retailers across the globe are dealing with this. Brands are going direct but also respect the retail relationship.
In 2020, D2C e-commerce sales are projected to reach 17.75 billion U.S. dollars.
As a brand, DTC is an option you need to consider for your survival. Retailers can be protected with pricing protection if it is truly a concern and often premiums can be justified with DTC because the brand offers added benefits like free delivery, exclusive merchandise, product personalization that the retailer can not. Many brands also have encouraged subscription models (which has the great added benefit of engaging deeper with the customer and creating stronger loyalty).
- DTC eCommerce resources vs. revenue- will it add up?
When starting out, consider your revenue goals for DTC and this will help you devise a strategy to meet them. What role does DTC play for your brand? It could provide things like brand differentiation, insights generation, and yes- a way to generate revenue is a bonus.
Consider building out a strong agile operating model so you can manage resources better and keep up with customer demands. Cross-functional teams working in short sprints are able to adapt to rapidly changing customer preferences and allow the company to better manage the economics of DTC effectively across revenue and cost.
- We don’t really know where to start when it comes to DTC
This is the most common of all DTC challenges- simply not knowing where to start. It all begins with a clear strategy that qualifies the opportunity. From there, working towards execution that effectively converts customers.
When it comes to assortment, start small. Limiting the online products that offer you the best balance of revenue potential, customer benefit, and operational feasibility is a good place to start.
Also remember you don’t need to go at it alone. Consider a partner that has been in your shoes before and has the expertise to help guide you where you want to go and overcome DTC challenges.
At the end of the day, you don’t have to start your DTC in one certain way. Many DTC options are available- from marketplaces, utilizing already established apps, and yes- the eCommerce storefront. No matter what route your brand takes, it is important to move with urgency to protect future growth and sustainability. Start a conversation with Echidna today on how we can help your company expand its DTC channel.
Echidna is a leading digital commerce agency with capabilities including strategy, creative, marketing, systems integration, technology services, and managed services. Our goal continues to be to deliver top-notch quality on a predictable schedule and at an affordable rate that our clients recognize the real value in. We are dedicated to helping leaders continue with their growth and innovation well into the future.
