How do direct sales work?
What do you stand to lose if you don’t sell directly?
What can you infer about brands that are only direct-to-consumer (D2C)?
Channel conflict: What is it?
How do businesses transition to direct sales? Examples
The key changes in retail and e-commerce that were observed in the market in March 2020 are highlighted in this blog article. We will emphasise the benefits of launching direct-to-consumer internet sales for manufacturers in the current coronavirus-affected economic climate. We will discuss the approaches to take if you intend to sell direct-to-consumer (DTC) or if you already do so but are new to it in order to increase traffic to your e-commerce site and reduce your cost of acquisition without engaging in a bidding war.
The financial climate in light of the coronavirus outbreak
April 2020 – five months have passed since the outbreak of the coronavirus (COVID-19) in China and approximately two months have passed after the epidemic in Europe and the USA. 1.5 million cases (registered) worldwide have already been reported. The epidemic has had a significant impact on the world economy. According to Bloomberg, the world economy could lose $2.7 trillion as a result of the coronavirus. They predicted that, under the worst-case scenario, this year’s global GDP would decrease by 3%.
Online sales are increasing:
Online transactions are at an all-time high as more and more individuals make purchases online. According to the U.S. Department of Commerce, internet sales rose 11.9% during the first quarter of 2019. Since the COVID-19 outbreak, the percentage of consumers in France, Germany, and the UK who make more than half of all of their purchases online has climbed by 25 to 80 percent (Kantar). Consumers are already returning to their regular purchasing habits, only this time they are doing it online, starting with food and health products before moving on to home offices and fitness equipment. After the outbreak, even the older age groups claim they plan to continue their new internet purchasing habits (Kantar).
The focus during a lockdown is on the absolute necessities, but this analysis suggests that once the epidemic is over, all the major e-commerce categories will rebound to even higher levels. And when they do, brand owners must have the absolute necessities ready to match the demand. ‘Are my products visible when consumers search for them at online retailers’, is a question all brands should ask themselves right now,” — Joakim Gavelin, creator of Detail Online.
Increasingly, retailers are making direct internet sales.
There is no justification for opening stores that the public cannot access. – Seth Basham, Wedbush analyst
“Right present, brand owners have a great opportunity to boost online sales in 2020. (…) Instead of taking three to four years as many had predicted, the shift in consumer behaviour is occurring now. — Joakim Gavelin, creator of Detail Online.
European conventional retailers have been heavily damaged by the Corona outbreak. Shopping at stores or supermarkets has been made more difficult or occasionally impossible due to social exclusion, lockdowns, and other control measures. Online shopping is required of customers. According to Shopify, during each of the final two weeks of March, the number of new online stores on its platform climbed 20% week over week. Customers will prefer to shop online because the pandemic may linger for months or even years, even if stores are allowed to reopen. Your company needs to be ready for this change in behaviour because it could have long-lasting implications. If you don’t already have an established internet store, it’s time to start one.
How come manufacturers should start DTC sales?
Why should manufacturers begin using the DTC (direct-to-customer) sales model today when retailers are working so hard to move their sales online? Why not take a seat back, unwind, and let the merchants fight to sell your goods?
As we previously stated in our post about switching to DTC sales, the key advantages of doing so and eschewing retailers (or maintaining both direct and through a retailer sales channels) are:
Direct access to your customer’s info.
higher rate of retention.
Consistent customer experience that is entirely within your control.
A/B testing capability to enhance your pricing and advertising plan
Possibly, it will be less expensive than selling to stores.
Starting online sales is crucial in the current economic climate, as you are probably aware. Many of the retailers must start from scratch to establish an online presence. You are losing money if your stores do not already have an online sales channel. Yes, you can wait till they open their online store, but you’ll never know when they’ll be ready or whether they’ll be effective in marketing it. Even if they are successful in launching their online store quickly and drawing a sizable amount of client traffic, your products will get lost in the sea of what they have to offer, necessitating the purchase of incentives to make them more visible. Online, shoppers may compare products even more easily.
Customers are doing more of their purchasing online as a result of the coronavirus outbreak. It is anticipated to have long-lasting effects on consumer behaviour across all age groups and post-pandemic. Within a few months, the digital transformation that was expected to occur within the following five years will have occurred. Brick and mortar establishments are disappearing or earning significantly less money as a result of governmental rules and consumer preferences.
Developing e-commerce capabilities became essential for manufacturers and retailers alike. Manufacturers who don’t already have a portfolio of only online retailers should seriously consider establishing DTC sales. Due to the benefits of selling directly and to create a sustainable competitive edge, those that sell through online merchants should give it some thought as well.