In order to fully realise the benefits of a D2C channel, businesses need to ensure they have the correct internal skills and capacity to work directly with consumers, or partner with a third-party logistics company (3PL) that does. Those selling D2C must implement the technology to handle high order volumes while effectively meeting consumer demands and expectations. This includes the ability to offer fast and reliable delivery, and manage stock held in the warehouse, as well as allocating it efficiently to ensure smooth pick and pack, dispatch and returns. The most effective way to do this is to ensure that all operations are fully integrated by a reliable order management system (OMS). This would enable employees and customers to access a real-time view of a customer’s activity in one place, and allow self-service actions, such as returns.
The benefits of D2C are being realised by many businesses that once relied on retail partners to sell their products. Nike, for example, the #1 leading footwear and apparel brand in the market, recently announced their “Triple Double Strategy (2X)” – a strategic decision to double their focus on direct to consumer connections and speed to market.
According to Market Realist, the retailer plans to grow this part of its business by 250% in the next 5 years. In the company’s forecast, its D2C sales will reach $16 billion by 2020—a massive increase from the $6.6 billion this channel generated in 2015. They plan to focus on their own eCommerce website and distribution from their own stores – with an emphasis on 12 key cities, across 10 countries.
At a time, when most big companies would be doubling efforts on what has made them successful to date. Instead, Nike has proactively decided to disrupt themselves before the competition. This means they will be streamlining the number of distribution partners from a whopping 30,000 retailers and 110,000 distribution points, down to 40 key retail partners. Clearly such dramatic strategies are not for the faint hearted, one thing’s for sure, Nike have firmly taken back control and deciding to “just do it” rather than wait for their retail partners to catch up with market changes. For more insight into Nike’s double-down strategy download the full DTC eCommerce report.
In our recent DTC eCommerce report we explore other success stories, such as mattress brand, Casper, Dollar Shave Club, an innovative men’s shaving brand, along with other well-known names such as Glossier and Farrow & Ball.
So, we know that this shift in business model can allow manufacturers to reap huge rewards. However, what all these brands have in common is their fast-growth strategy. In order to stay ahead, manufacturers need to invest and be prepared to adapt to new technologies, processes and logistics partners to meet changing consumer expectations.
So, the question remains, as online evolves, will manufacturers take the opportunity to widen revenue opportunities, whilst they still can?
Every manufacturer needs to take a look at the financial case for Direct-to-Consumer eCommerce. Would creating an eCommerce channel create a better buying experience? Is there potential to make eCommerce a large percentage of your revenue? More importantly what’s the impact of staying still?
By understanding the current situation, your operational limitations and inefficiencies you’ll be able to find the right technology solutions to improve your customer experience and scale your business online. Almost half (48%) of manufacturers are now racing to build DTC channels, while the number of brands selling direct to consumers are expected to grow by 71% this year alone. The time is now, or you might be left behind.