Digital Transformation & The Shift to D2C
If 2020 taught us anything, it’s that a well-thought-out digital-first strategy is essential for businesses to succeed in the current climate. Businesses should embrace digital transformation with open arms. Importantly, it’s also paved the way for many manufacturing businesses to shift to a D2C (direct to consumer) model.
The ONS reported that the proportion of retail sales in the UK via online channels pre-COVID was 22%. At the height of the national lockdown, this rose by 50% to 32%. This essentially means that £1 in every £3 was being spent online in the UK. This rises to nearly £1 in every £2 spent by UK consumers when we’re looking at non-food.
The already unstoppable “oil tanker” of Online Retail Sales has undeniably had a one-time boost due to COVID and evolving shopping habits. This huge shift has pushed this transition forward by at least five years. More consumers used online services for the very first time (banking, shopping, delivery, video streaming, health, video conferencing services, etc.) It goes without saying, buying online was the only option for everyone when bricks and mortar stores were closed.
If businesses weren’t previously thinking about eCommerce and digital transformation, they surely will be now. If they don’t seize the opportunity to go online, they’re putting themselves at a competitive disadvantage. The decline for them is very likely to be steeper now than ever before.
A changing landscape
Change was a huge factor for everyone in 2020. Leveraging digital technologies to remain agile was something that so many companies actively embraced. Consumer needs changed, their behavior changed, and providing a seamless and amazing online experience was the road to success.
There were big implications for businesses relying on bricks and mortar, whether directly or via their existing distribution and/or supply chain, for example. This was mainly because of the situation logistics providers and retailers found themselves in. Even if consumers were scrambling to buy a manufacturer’s products, they couldn’t make the purchase. In most cases, manufacturing businesses didn’t have transactional web stores that consumers could go to, creating a huge barrier.
The shift to D2C
Many manufacturers and brands started being far more questioning as to their logistics, distribution, and retailers online, as well as eCommerce capabilities. To stay competitive, it may have been a case of accelerating their own plans for D2C sales. That is if they hadn’t already been forced to do this during the height of COVID.
This shift from B2B to B2C/D2C was one of the primary ways of countering the rapid shift we saw in consumer behavior and market trends. Brands and manufacturers had to up their game and start thinking about things that previously, they wouldn’t have had to worry about as much.
They were more discerning about the retailers they chose and the investments they were making in their eCommerce strategy. They were also more conscious of their product’s digital footprint and the digital personification of their products all round.
Consumers were driving this, and making effective use of technology was key in staying ahead of the game. The winners in all this are those who know how important the online journey is. These businesses understand that rich, detailed product descriptions and digital assets are paramount to creating unique online experiences.
In a pre-COVID world, most manufacturers simply didn’t have to think about how their products were represented. This was something retailers and distributors took care of, but this soon changed!
Though a shift to D2C represents a massive change, what are the advantages for manufacturing businesses considering D2C? Here’s a snapshot, along with an overview of how you can achieve a smooth transition.
Quicker time to market:
By cutting out the ‘middle-man’ and selling directly to consumers, manufacturers can be more agile with the products they release to market. They can test a specific product on a specific demographic to quickly gauge the products that are and aren’t working. This enables them to make the necessary adjustments and release the best-sellers in no time at all.
Having the right technology in place to facilitate a swift release is undeniably a huge consideration here. Mastering product data and being able to create online experiences that are customer-friendly is paramount in a successful D2C model. You can adjust entire product ranges quickly and easily when you have all product data in one centralized hub.
Providing an omnichannel experience:
Manufacturers can reach a larger pool of customers by having a presence on more channels, marketplaces. They may even consider establishing a physical presence to deliver an omnichannel experience once there are no more restrictions. Consumers like to have the choice of being able to visit a physical location after researching a product online or vice versa.
An omnichannel experience can help drive sales, as customers have more choice in terms of where they can shop. As a result, the customer engagement and experience will be much better. By increasing customer engagement, you’re highly likely to see an increase in ROI. One thing to consider, though, would be how to ensure consistency across all channels. An effective solution is to utilize workflows and lifecycle stages, which means you’ll never release products with missing information.
Greater control over data:
Previously, manufacturers would have relied on retailers and distributors to create the ‘shop window’ for their products. A D2C approach means this will lie with them. In terms of the product data, there will be a much higher level of control. They can choose the specific details they want their products to be associated with.
This also means manufacturers can provide a deeper, more granular layer of detail. This ultimately means customers have more confidence in their buying decisions. In addition to the product data, manufacturers will also have ownership over any data they collect from customers. Having this data will contribute a large amount towards improving the overall customer experience. You can tailor experiences accordingly by having a deeper insight into trends, behaviors, and product preferences.
Better customer relationships:
Recent research from IMRG, states over 50% of consumers prefer to research products directly with the manufacturer. It, therefore, makes sense to provide as much detail as possible. Accurate and rich product descriptions help give customers a better relationship with your products. If you master this, you’ll likely see an increase in engagement and conversion rates.
Having more insightful data leads to a deeper understanding of the customer journey. As a result, manufacturers can tailor the experience they offer. Determine which products are performing best, and the best times of day to interact with audiences. Streamline the process of making these decisions with a digital-first strategy.
By adopting the right technologies, manufacturers can still benefit from the key things they would have gained from working with a distribution channel. For instance, logistics, transacting and payment processing can all be managed with eCommerce platforms such as BigCommerce or Brightpearl. There is also seamless integration to home delivery services by the likes of UPS/DPD and payment gateways with PayPal/Visa. This means doing business directly with consumers can be super simple and it’s completely achievable.
It doesn’t matter what type of business we’re talking about here, be that a retailer, distributor, or manufacturer. You can yield huge benefits from a digital transformation strategy. It touches all elements of a business so, where possible, you need to think about how things can be done in a digital form. Those who do stand to reap the rewards. Those who don’t run the risk of losing out big time.
At Pimberly, we’ve developed the world’s most powerful product information management platform. It gives our clients the power to make their products really resonate with their audience. Provide them with the best possible product information so they can make informed purchasing decisions.
Learn more about streamlining your day-to-day operations with Pimberly