Growth & Customers
Direct-to-consumer distribution: Is it right for your business?
With its innovative direct-to-consumer (DTC) model, Tesla Motors has changed from a car company to a tech company.
Tesla doesn’t use franchised dealerships as other car companies do. Instead, customers can order high-end electric cars from their phones or from showrooms that Tesla owns.
This means that customers will have a better experience, there won’t be any expensive markups from dealers, and product, service, and brand standards will be set in-house.
What’s not to like?
As a wholesale distributor, that’s not exactly music to your ears.
Traditionally, your main job was to work with manufacturers in the supply chain and manage logistics, storage, and sales in order to sell in bulk to retailers.
But in recent years, a network of distributors is no longer the easiest and most direct way for companies to get their products to customers.
Instead, companies like Tesla are using DTC business models to make more money, be more efficient, and give better customer service.
This is actually a chance for distributors to update their processes and offer something more interesting to customers.
Here is a list of what you need to do to be a valued partner in this new direct-to-consumer landscape, from personalised, omnichannel customer offerings to value-added services.
In this article, we cover:
- Enhance your customer experience
- Offer more value-adding services
- Use the right infrastructure to take advantage of customer data
- Get everyone on board
Enhance 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 offline transactions.
They want to get what they are looking for. Quickly.
Give them the tools they need to easily do research and buy directly from you.
If you sell directly to customers, you can gather their information and analyse it. This puts you in a great position right away to meet the demand for a more tailored and personalised experience in the modern world.
Use your data to answer these questions:
- What are your best- and worst-selling items?
- Who is your most loyal customer?
- What are their sales buying habits?
Already, you are learning which items to restock or get rid of, and how to give customers more or less of what they want.
Make sure you tell people that your service is directly linked to behind-the-scenes and real-time information about distribution, which could give you better customer service and support.
Also, ensure the line of communication is short so that service delays and returns are easier to deal with.
And make sure that your approach is friendly to customers.
Offer more value-adding services
Depending on how well you treat your customers, they will want to do business with you again and again.
More than ever, the strength of your brand will depend on how well you care for and serve your customers.
You may already offer simple services that add value, such as choosing products, picking them up, packing them, and sending them.
But digital transformation gives you new ways to set your business apart from the competition by offering services that add value and for which you can charge more, such as:
- Product installation and component assembly
- Product customisation
- Field service, maintenance, and quality inspection
- In-house repair
- Just-in-time delivery
- Training and education
Even though e-commerce will get a lot of attention, it’s important to remember that there are other ways to reach customers. This means that you need to have an omnichannel mindset in all the ways you interact with the customer.
Use the right infrastructure to take advantage of customer data
If you want to move towards a DTC strategy, you’ll need to grow your business to take on these new responsibilities.
You may need to update your data and analytics software to put all of your information in one place. This helps you manage distribution processes efficiently from beginning to end.
With the right software, you can plan when you need to build up inventory or scale down and run with less inventory, depending on how much demand there is.
Since you know where and when inventory will be available, you can make commitments or give people what they want.
Better product knowledge and customer data analysis will give you market insights that will help you answer questions like:
- What products sell and which do not in which markets?
- Which international markets should you concentrate your efforts on?
- Which customers should you prioritise in order to maximise profits?
- How are your customers’ interests and needs changing?
Lastly, get everyone on board
Going direct-to-consumer is more than just making a fancy e-commerce site and is likely to require a big change in how you do business.
Working to integrate DTC processes could mean making big changes to how you work and getting buy-in from key stakeholders.
It might need reorganising, more money, new staff, and different ways of doing things, as well as training.
Setting up an e-commerce strategy may affect the sales side of your business, and you’ll need to invest and put safeguards in place to make sure your digital strategy gets the required return on investment.
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