Are you rethinking the relationship between your manufacturing business and your wholesalers, distributors, and retailers?
Are you wondering how to meet the expectations of millennial B2B buyers and manage operational costs?
If you’re one of the growing band of savvy B2Bs considering the pros and cons of D2C here are some things to think about.
Firstly, let’s explore some facts you might not know about B2B...
- Bigger than B2C - Frost and Sullivan predict that global B2B ecommerce sales will reach over $6.6trillion in 2020; double business to consumer (B2C) sales, valued at $3.2trillion.
- Electronic sales are growing fast in a stalling market - in the US in 2019 all forms of electronic B2B sales channels grew by 10.9% to $9trillion from $8.1trillion in 2018. In comparison, total US manufacturing and distributor sales grew by just 1.75% to $17.5 trillion, from $17.1 trillion in 2018.
- Ecommerce is changing B2B - Forrester forecasts that US B2B ecommerce alone will reach $1.8 trillion and account for 17% of all B2B sales in the US by 2023. That means many businesses are already on their digital transformation journey, making D2C a strategic option for them.
- B2B buyers do business online - Google says that 67% of purchases for multiple industrial, manufacturing and pack-and-ship industries were influenced by digital channels. Forbes says that B2B buyers will be 70% through their decision-making process before they engage with a supplier. Much of this research will take place online where an effective D2C channel can improve and simplify the buying process.
- D2C sales are growing - according to the Direct-to-Consumer Purchase Intent Index, more than 80% of consumers are expected to make at least one purchase with a D2C brand within the next five years.
Can you meet B2B customer expectations?
Buyers’ expectations mean brands must deliver more than just a product or service. The relationship is becoming increasingly important and that’s something you will want to control.
What’s true of B2C customers can guide B2B companies:
- 61% would be willing to share more information with brands if it would provide a better shopping experience
- 54% expect to receive a personalized discount within 24 hours of the first contact with the brand
- 51% see personalized experiences as vital across a brand’s digital channels
- at least 22% say the option of same-day-delivery is an important part of the purchase decision.
Traditionally, manufacturers have relied on wholesalers to distribute products to retailers and end users. Now the power of ecommerce makes selling directly to consumers a practical and cost-effective option.
Barclays Corporate Banking says that the UK’s manufacturing sector could achieve £13.3bn of additional revenue and create over 30,000 new jobs in 2025 by taking a strategic approach to D2C sales.
If you take up the D2C challenge, you can streamline your sales, reduce overheads, and provide an engaging experience to help establish and build your brand name online.
Building direct relationships with users will help you to understand and respond quickly to their buying behaviour. You can build brand loyalty and become more competitive by bringing new products and services to market quickly.
Manufacturers also need to be aware that there are now plenty of new disruptive D2C-only brands. The Internet Advertising Bureau (IAB UK) says that over one-third of the UK’s online population have already bought from one or more of the leading 50 D2C businesses.
Who does D2C ecommerce?
Early adopters of D2C included the software industry, with digital products naturally suited to online purchasing. Online shoe retailer Zappos proved that not being able to try before buying wasn’t a barrier. Many other manufacturers have successfully started out with D2C ecommerce.
However, some industries have been hesitant about whether D2C would work for them. Consumer packaged goods (CPG) companies selling lower-margin household items, for example, have concerns about potential channel conflict.
Heavy industry businesses have also been wary, having traditionally depended on personal relationships in their sales channel and with direct sales partners.
While many businesses have been conducted in the same way for years or even decades, early D2C adopters have had success and overcome resistance.
In the current marketplace, the pressures now faced by many manufacturers are making even the most sceptical companies think about a D2C strategy.
Transforming your business with D2C
Are you saying to yourself “D2C will conflict with my retail sales and alienate my loyal distribution partners”?
Would you be surprised if I told you your retail partners might be onside with your D2C strategy if you execute it well?
Here are four top tips to maintain strong retail relationships and go D2C.
#1: Collecting customer data
Selling direct to your customers allows you to collect information you can use to personalize customer experiences and improve sales. Remember, that’s a priority for most buyers. Purchase patterns, buyer locations and preferences can help you to target audiences, tailor messages and offers, and communicate effectively.
Selling directly on your ecommerce platform allows you to connect digital marketing activities with historical customer behavior. This will help you to minimize returns and improve customer satisfaction by personalizing the end-to-end experience.
You’ll have more opportunities to upsell and cross-sell and, with first-hand knowledge of your buyers’ preferences, you can develop your product roadmap.
Importantly, you can also share what you learn with your distributors and retailers, to improve the overall customer experience.
#2: Building customer relationships
The relationship you have with your customers is becoming an important point of differentiation, whatever your market sector.
With a direct customer relationship, you can offer improved after sales service and support. You can also collaborate with your distribution and retail partners to protect and promote your brand.
However, to do this effectively your business outlook will change. Your sales, marketing and support teams will all need to become more customer centric, engaging in constant dialogue with your customers. As online presence becomes more important a headless ecommerce solution for manufacturers is becoming a popular choice. It allows priority to be given to great customer experiences, regardless of other business systems and processes.
Your customers will also want to know more about who you are and how you work, so your brand values will become increasingly relevant. Buyers are looking for long-term partners that act as good citizens, taking a stand about issues that are important to them such as green manufacturing, ethically sourced goods, and fair employment practices.
Importantly, your buyers will probably be willing to pay a premium for goods and services they believe have been produced ethically and sustainably. This will be good for you and your distributors and retailers.
Selling directly means you can personalize your marketing and even your products and services. You can go much further than simply adding your customer’s name to their login page. You can create menus and buying journeys tailored to their industry sector, company, previous buying history, or even the latest buying trends. You can offer them customized design and packaging and create bespoke product bundles, making your offer unique.
You can extend the offer to your distributors and retailers, allowing them to offer an added value service.
There’s no doubt that there are disruptive, agile newcomers in every market sector. Often, rather than creating something completely new, they have found a better, more cost-effective way to deliver something an established business already offers.
To remain competitive in this environment a closer relationship with your customers will keep you in touch with their buying habits, expectations and challenges. Turning information from every transaction into actionable insights will put you in a strong position to anticipate and respond to a changing market.
Share your roadmap with your distributors and retailers to give them confidence that your products and services continue to evolve and deserve a place in their business plans.
Are you ready to take up the D2C challenge for your business?