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Is direct-to-consumer right for your manufacturing business?

Aug 23, 2022 | Admin, Latest News, Manufacturing

An increasing number of manufacturers are considering adding a business-to-consumer (B2C) or direct-to-consumer (D2C) line of business to their traditionally very B2B organization—and not without good reason. The digital draw of an eCommerce experience can be very profitable when pulled off thoughtfully and strategically, with 2020 yielding $27.02 billion in US sales by digitally native brands and the forecast set for $44.65 billion by 2023. But it’s not necessarily the innovative answer for every manufacturer, and hastily jumping on the bandwagon of this trend, whether it’s a fit or not, is a sure-fire course to potentially detrimental growing pains.  

So before diving into D2C processes and completely overhauling your sales department, it’s critical your organization isn’t blind to any of the changes coming and is ready to make room for this new revenue stream. That’s why we’ve got four key steps for manufacturers to pause and consider before moving forward with D2C:

 

Have a clear objective

First things first: you must know exactly why you are pursuing a D2C line of business and what results will mean success to your team. For some manufacturers, D2C is purely a revenue move. For others, they may not be looking for a major revenue boost, but they want to build greater brand awareness with a niche D2C strategy. Is D2C applicable to all products? Or just a select few and for only some geographies? How will your company benefit from made-to-order or made-to-stock workflow operations? These are all questions that can and should be asked to fine-tune your objective for clear success with buy-in from the top down. 

 

Consider the potential for conflict

One of the greatest hesitations many manufacturers face when struggling with how to best incorporate D2C is not taking away from existing channels’ distribution and sales. But, it’s important to remember that a D2C strategy should be focused on opening net new revenue streams or brand loyalties, not exploiting or repeating established business from your traditional avenues. D2C is likely a very real possibility depending on your company’s channel partner structure. To keep existing partners on your side despite this major change, make sure your business is prepared for potential conflict and is transparent, trustworthy, and open with any exclusive supplier and retailer partners. This may also mean hiring new teams to manage the unique D2C logistics and marketing as distinct from B2B. 

 

Make operational preparations for the shift

Perhaps the most daunting step for D2C preparation in manufacturing is the sheer operational changes that must occur. Your traditional distributor/dealer model will still function, but it won’t serve your D2C line quite right. Manufacturers must make the foundational changes that make room for dedicated marketing, eCommerce, and shipping operations to meet and exceed D2C expectations. Rather than shipping large pallets of multiple products, you’ll likely be sending individual products to more customers in your address book. Additionally, you’ll need to meet the higher expectations of D2C consumers through the process: they want personalized and custom choices for selection on the eCommerce site or app, custom promotions, and branded packaging. Fortunately, you can use high-end commerce solutions attached to CRM to deliver on their expectations with ease. 

 

Include your marketing and business development teams

Finally, none of this will be truly successful without full interdepartmental collaboration, especially from your marketing and business development teams, who may be far closer to a D2C understanding than anyone else in your organization. D2C strategies require far more cross-channel knowledge, copious amounts of content, digital images and videos for a guided experience, etc. You’ll need fast, responsive content journeys and a constant pulse on the customer’s expectations—the specialties of solid marketing and business development teams, respectively. And be sure to allow your marketers the freedom to push the envelope with more creative strategies your organization may have never entertained before—fifty-one percent of manufacturing marketers say they struggle to overcome traditional sales and marketing mindsets. But these more innovative strategies are exactly what a D2C audience will be looking for. 

D2C is a hot new approach for many manufacturers, but that doesn’t automatically mean it’s the best strategy for every manufacturing organization. With this guide in mind, we hope you’ll have more direction and insights to navigate your next move and innovate within your organization appropriately. If you’re interested in more transformational guidance or support for adopting digital tools, reach out to Simplus for a conversation with our in-house experts. 

 

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Authors

David Rivas, SVP of North America, MFG and SURE
David Rivas
SVP of North America, MFG and SURE at | + posts

David is SVP of North America, MFG and SURE  at Simplus.