Direct-To-Consumer Strategy Offers Stability For Manufacturers
The past few weeks have been a doozy for home furnishings players. Art Van is considering a sale or filing for bankruptcy. Pier 1 has filed for bankruptcy and will shutter 450 stores. Casper saw a major devaluation of its IPO based on fears that the mattress-in-a-box market is oversaturated. Wayfair is laying off 3% of its global workforce in an attempt to streamline operations and become profitable.
Commenting on the impending bankruptcy, Pier 1 CEO Robert Riesbeck said, “The so-called ‘retail apocalypse’ has truly taken on a life of its own,” he then added that this is “simply a fancy way of saying the American consumer has adjusted its consumption habits.”
As the American consumer continues to adjust their consumption habits, leading to large retailer bankruptcies and the disruption of payments and planned inventory movement, what can vendors and manufacturers do that will offer greater stability?
Many manufacturers are looking to refresh their product distribution strategy and are increasingly looking at ways to diversify and complement traditional retailer chain distribution - this includes adding a direct-to-consumer (DTC) sales route to better control their own destiny.
Selling direct-to-consumers gives manufacturers greater control over the development of retail experiences and the customer relationship. It bypasses intermediaries, brings control of supply chain in-house, and offers the ability to collect powerful data on buyer behavior.
However, DTC is more than just setting up an ecommerce website - manufacturers must embrace a direct-to-consumer mindset across all three stages of the customer lifecycle: acquisition, sales and engagement.
According to an article by RetailTouchPoints, the first step in a successful “Total DTC” strategy is customer acquisition. Brands must understand customer identity and practice effective segmentation. Equally essential is a seamless shopping experience on every sales channel.
In modern commerce, selling direct-to-consumer requires that manufacturers take on the added responsibility of being custodians of their product-related information. If you have thousands of SKUs going to marketplaces like Amazon or Wayfair, exporting that data so it matches the specific demands of each retailer is fraught with difficulty. Marketplace and ecommerce templates vary widely from retailer to retailer. Duplication of SKUs and their dependent assets is a problem. Incomplete or incorrect dimensions and descriptions abound. This is where PIM becomes essential to any DTC strategy.
When customers encounter missing images or outdated information on one or more of your channels, your brand credibility (and bottom line) can take a hit. Since selling direct-to-consumer is predicated on a seamless shopping experience beginning on the brand’s website - there won’t be another opportunity to correct the bad impression left by incomplete product information. If your product data is high-quality and consistent across channels, you’ll be able to improve your brand reputation, while increasing sales and market share.
Selling DTC offers manufacturers greater control over a number of important business areas but it also demands a significant shift in mindset for brands and manufacturers accustomed to selling through traditional retail channels.