If you’re a wholesale retailer or brand owner and you haven’t already launched a direct-to-consumer sales channel, you’d better be thinking about it. The global pandemic not only accelerated the growth in ecommerce, it highlighted the shortcomings of wholesale-only sales channels.
There are plenty of good reasons to sell direct, from higher margins to insulation from future pandemics, but succeeding at DTC requires a different set of skills than the B2B environment you’re used to. Whether you add these functions in-house or outsource them, you should have a clear understanding of the skills and infrastructure you’ll need, and how to get them.
Building an Online Presence
It’s one thing to attend trade shows and compete for buyers’ attention to get retail shelf space; it’s another to convince 230 million online shoppers in the U.S. to visit your website. To acquire customers, having an online presence is a must. The good news is that your wholesale brand may actually have an advantage here.
Unlike natively digital brands that start as complete unknowns, wholesale brands often already have some brand awareness thanks to their in-store presence. If they’re selling on Amazon or another retail marketplace, they may also have some level of online presence to leverage. Building an online presence starts with a well-designed website supported by an effective digital marketing plan.
Web Design & Development
The first thing you need is a really great face to the world. You can’t just repurpose your B2B website and add a shopping cart to turn it into a shopping platform. Fortunately, building an online store has never been easier. Anyone can launch a Shopify website, whether you sell one product or hundreds.
If you want your website to reflect your brand, there is no substitute for experienced web designers, developers and third-party software providers. You will need their talents when it comes to:
- Customer experience (CX)
- Search engine optimization (SEO)
- Web maintenance
- Customer engagement
- Product returns
While you are no doubt familiar with brand marketing, online customer acquisition is a whole different animal. Everything a retailer used to do for you, you now have to do for yourself. From paid online advertising to email campaigns, digital marketing is a sophisticated, rapidly changing area of expertise that most wholesale brands have only observed from afar.
The easiest solution is to partner with a third-party marketing agency that has a history of building successful online brands. Once you know exactly what you need, you can decide whether to bring the function in-house.
Building a Tech Stack
Compared to building your brand, building a tech stack is easy — and a lot faster. A tech stack is the ecosystem of hardware and software platforms needed to manage the DTC order fulfillment process from end to end. These systems have to integrate with your shopping platform on the front end, your fulfillment operations in the middle and your financials and supply chain operations (or ERP if applicable) on the back end. Here is a starter list of the technologies you’ll need:
- Shopping platform
- Inventory management system (IMS)
- Order management system (OMS)
- Warehouse management system (WMS)
- Payment gateway
- Return merchandise authorization (RMA) system
In addition to the must-haves above, there are plenty of other technologies, solutions and partners that can help you get the most from your DTC channel. Since your WMS must integrate with all of these systems, an experienced third party logistics (3PL) and fulfillment provider can help recommend the right components and partners for your type of business.
Fulfillment and Returns
Wholesalers are used to shipping pallets and containers from one warehouse to another. But picking, packing and delivering thousands of small parcels to customers’ doors on a daily basis is a whole different universe. Sure, you could build the infrastructure to handle DTC fulfillment yourself, but would the bump in revenue from those sales make it worth your while?
3PL providers have already made the investment in automation, technology integrations and warehouse space. Their operations are optimized for accuracy and efficiency in the picking and packing process, and they’ve got small parcel logistics down to a science to help save on shipping. They can also handle the physical process of returns (reverse logistics) according to your specifications. Your tech stack integrates with their warehouse management system to give you real-time visibility into every step of the fulfillment process.
A good fulfillment company will help build your brand by delivering the right product, on time, as promised. And unlike a retail marketplace, they may provide custom packaging and personalized inserts service to further enhance your brand.
Customer Relationship Management
One of the greatest benefits of DTC sales is gaining a list of customers you can call your own — something you will never get from selling on Amazon. These customers will tell you everything you need to know about your brand and ways to improve it. You will need systems in place to collect the data and people who know what to do with it. Opportunities include:
- Growing a list of customers you can communicate with directly
- Ability to gather data and analytics for business intelligence
- Controlling the customer journey
- Engaging with promotions and loyalty programs
- Identifying ambassadors or evangelists
- Testing new products
How will you fund this initiative? Whether you’re a huge CPG manufacturer or a medium-size brand with a few products on Amazon, you’ll need to run the numbers and sell the idea, whether to a board or to potential investors. How will you determine ROI? What are your true objectives for the initiative? Consider that in some cases sales volume may be far less important than the connection you form with your customers and the insights you gain into your brand.
Where do you Start?
Going DTC clearly represents a shift in mindset and resources, but it doesn’t mean abandoning your existing sales channels. You are simply adding a new channel that strengthens your business. It might not be the same people that take you there, but there is an enormous upside to taking the leap.
You’ll want to create a team of people and partners who have experience growing DTC brands. Outsourcing is a safe way to start, at least until you learn exactly what you need. A good 3PL can help you with fulfillment operations, technology and logistics. A web developer or digital marketing agency can help with your website, SEO and digital marketing.
While the process might seem intimidating, it’s actually never been easier. The technology and the expertise is out there. All you have to do is put them to work for your brand.
Esther Kestenbaum is President of Ruby Has Fulfillment. She has held leadership and C-suite roles within ecommerce and retail technology companies for 20 years. Prior to her role at Ruby Has, she was CEO of DayOne, a multichannel provider of baby and prenatal services. Prior to that she was founder and CEO of TheShops.TV, an ecommerce company leveraging QVC-style video.