How distributors can remain relevant in a direct-to-consumer world
Tesla Motors. Inc has evolved from car manufacturer to technology company with its inspired direct-to-consumer approach (DTC).
Customers can order the luxury electric cars through their phones or from Tesla-owned showrooms, cutting out the franchised dealerships that other automobile companies use. That means better customer experience, no costly dealer mark-ups, and product, service and brand standards are controlled in-house. What’s not to like?
As a wholesale distributor, that’s not exactly music to your ears.
Traditionally, your bread and butter is working with manufacturers in the supply chain, managing logistics, warehousing and sales, to sell to retailers in bulk.
But in recent times, a network of distributors is no longer the simplest and most straightforward way for manufacturers to get their products to customers. Manufacturers and brands like Tesla are instead using DTC business models, in the pursuit of bigger margins, more efficiency, and better customer service.
This is actually, an opportunity for distributors; to modernize your processes and become a more exciting proposition to customers in your own right.
From personalised, omnichannel customer offerings to value-added services, here are the things a checklist of things you need to do to be a valued partner in this new DTC landscape.
Improve your customer experience
Implement an effective e-commerce presence and seamless customer experience, just like an online retailer would do. Customers no longer expect (or want) sales calls, meetings and other types of offline transaction. They want to find what they want quickly – give them the tools to research and purchase from your inventory quickly.
Through selling directly to customers, you can capture and analyse their data. This immediately puts you in an excellent position to meet the modern demand for a more tailored and personalized experience. What are your best and worst sellers? Who is your best recurring customer? What are their sales buying habits? Already, you are learning about what inventory to restock or edit away, and how to give customers what they want more or less of.
Make sure you promote your service as directly linked to the behind-the-scenes and real-time distribution information that may give an improved customer support and service function. Ensure the chain of communication is short, so it is easier to handle service delays and returns, and make sure that your approach is customer friendly.
Add more value through services
Based on the strength of your customer experience, customers will want to work with you again and again. The power of your brand will depend more on above-and-beyond customer care and service.
You may already simple value-added services such as product selection, picking, packing and shipping. However, digital transformation offers you ways to differentiate your business from the competition by providing services that add value and which you can charge extra for such as:
- Product installation and component assembly
- Product customization
- Field service, maintenance and quality inspection
- In-house repair
- Just-in-time delivery
- Training and education
Although there will be an understandable focus on e-commerce, it is essential to note that there are other ways that you can reach customers, which means you need an omnichannel mindset across all the touchpoints you have with your customer.
Take advantage of customer data with the right infrastructure
Moving towards a DTC strategy means you need to scale your operation to support these additional responsibilities. It may be necessary to update your data and analytics software to centralize your information so you can manage end-to-end distribution processes effectively.
With effective software, predictive sales and accuracy patterns help plan when you need to build up inventory or scale down and run on less inventory, depending on demand. You can make commitments or allocations based on supply since you know where and when inventory will be available.
Better product knowledge and analysis of customer data will give market insights that help you answer questions like:
- What products sell and don’t sell in which markets?
- Which international markets should you focus your attention?
- Which customers should you focus on to make the best profits?
- How are the interests and needs of your customers evolving?
Finally, get people on board
Going DTC is not merely a case of creating a fancy looking e-commerce website. Working to integrate direct-to-consumer processes may require considerable shifts in the way you work and stakeholder buy-in. It may require restructuring, additional investment, new staff, and new ways of working, alongside requirements for training.
Remember that managing a move towards DTC is likely to require a significant change in your business culture. Setting up an e-commerce strategy may affect the sales arm of your business, and you will need the investment and safeguards in place to make sure your digital strategy wins the required return on investment.
Sage X3: Distribution at scale – and adapting to change
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