Nearly three out of four companies now sell direct to consumers (73%) and over the last five years, (DTC) sales have soared by 55%. DTC now accounts for 16% of all manufacturing sales in the UK, an in-depth industry survey by Barclays of 500 manufacturing companies has found.
Direct to consumer ecommerce businesses build, market, sell, and ship their products themselves, without middlemen. The opportunity for manufacturers is huge. Selling directly to customers provides several benefits including owning the end-to-end brand experience and building closer relationships, as well as offering greater control of products. Access to a broader customer base and improved speed to market in turn drives revenue growth.
Companies who have embraced this strategy and are reaping the rewards include Eve Sleep, Nike, who recently launched Nike Direct, Harry’s Razors, acquired by Edgewell Personal Care earlier this year, and Dollar Shave Club. What these companies have in common is their focus on building an online brand that goes beyond the products to connect with consumers, as well as the digital infrastructure to gather consumer data to aid their growth strategy.
Eve Sleep describes its business as ‘sleep wellness’, selling premium mattresses and related products direct to consumers with the aim of becoming the leading pan-European sleep brand. Its success centres on its disruptive approach to a traditional and largely unchanged market, clear customer proposition, direct to consumer focused agile business model and strong brand ethos.
These businesses are transforming how we shop. According to the Barclays Corporate Manufacturing Report,
entrepreneurial British manufacturers are expected to benefit from a massive £13bn boost as they increasingly cut out retailers and wholesalers and sell their products direct to consumers in one of the biggest shake-ups the industry has seen in generations.
To do this, retailers need the ecommerce capabilities, digital maturity and understanding, to adjust their business model as consumers increasingly move online. There are significant differences between B2B selling and D2C selling.
Customer needs and expectations change a lot quicker than those of businesses. DTC companies will need to be agile in order to adapt and keep up.
According to the Barclays study, more than three quarters (77%) of all manufacturers plan to invest in the next year and 74% have already increased capital expenditure over the last 12 months.
The most common challenges identified by those using DTC include: building brand loyalty (41%), increased responsibility for every touch point within the supply chain (32%), managing customer interactions and differentiating the product offering (31%).
To overcome these challenges, manufacturers need a flexible ecommerce platform at the centre of their operations. 9xb has helped many leading brands and retailers transition into DTC selling and recently won an award for our work with English Cheesecake Company.
Our ecommerce platform, Peracto, bridges the gap between custom built technology written to meet a specific business need, and out of the box, mass produced platforms which constrain a business to fit existing configurations.
If you need help with eCommerce strategy and the technology and infrastructure to realise your business vision, get in touch. We love solving complex challenges and would be delighted to help. Take a look at some of our work.