If you’re considering going direct to consumer (D2C), this checklist will help to ensure that you’re doing everything you can to make your sales strategy as effective as it can be.
As consumers shift to buying online, manufacturers and brands are under increasing pressure to develop direct-to-consumer channels.
In this article we outline 5 essential must-haves for a winning D2C eCommerce strategy – specifically for the home appliance market.
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Covid Catapults Appliance and White Goods Sales Online
Direct-to-Consumer eCommerce has been growing rapidly with double-digits for several years now. The pandemic has catapulted this change forward years – and given the recent uncertainty in retail and loss of control of the supply chain, the D2C market is predicted to grow by a further 19.2% in 2021.
- From a 2019 survey of 500 manufacturing companies, 72% agree that D2C is good news for manufacturers and consumers. What’s more, 96% of manufacturers are now selling D2C via their own websites with 80% currently or planning to sell on Facebook / Social Media – Barclays, 2019
- Recent research from consumers are more willing to buy appliances online than prior to the Covid-19 pandemic. – Bain & Company, August 2020.
- Online sales of appliances grew by 10.5% every year between 2015 and 2019, compared with just 1% at retail outlets. – Bain & Company, August 2020.·
- By the end of the year, a total of 20,620 retail stores will have pulled down their shutters for the final time – Centre for Retail Research, August 2020.
With all these data points in mind, it’s clear that consumers are now more willing than ever to buy appliances online. This marks a significant shift in consumer behaviour that shows consumers are more likely to switch to digital sales channels in the next two to five years – faster than anticipated. Bain & Company predict an increase in the online purchase of white goods to 40% of the total industry sales by 2025, up from 15-20% in 2020.
Direct-to-Consumer channels are now powering a growing share of appliance sales online, and manufacturers are under intense pressure to reshape their strategies.
The message is clear – digital transformation is vital not only to give consumers the convenience to buy what they want, how they want – but to ultimately protect market share. The home appliance market needs to play catch up, or risk falling behind.
The Benefits of Going D2C
It’s clear that today’s consumers are demanding better customer experiences and companies, of all shapes and sizes, are fighting to
deliver direct, one-to-one, experiences that exceed expectations.
Beyond the desire to drive more direct sales, what’s in it for manufacturers and B2B businesses?
Direct-to-consumer (D2C) eCommerce is a way for manufacturers and B2B businesses to take matters into their own hands. Not only is it a way of opening up new sales avenues to grow profits, build customer insight and consequently gain a competitive edge.
In a nutshell, D2C eCommerce gives home appliance manufacturers:
- The ability to build a better understanding of their end user through direct customer relationships
- Control over the end-to-end experience from product design, data gathering, brand marketing and the post-purchase service
- Potential to reach larger audiences and expand their market share
- Advantage of not having their products on sale alongside their competitors
- A platform to provide up-to-date and accurate information to consumers
- The ability to provide a better brand experience.
- Consumers inherently trust OEM manufacturer’s websites and product information over and above a retailers’ site.
- An opportunity to deter customers from buying counterfeit products
- As a minimum, opening a D2C channel will increase your brand presence and pay for itself in the process.
In a recent survey from Episerver, we see a rising trend for consumers spending directly with manufacturers, “59% of respondents prefer to do research directly on brand sites” and “55% want to buy from brands directly.” As brands and manufacturers become more comfortable with selling direct, this trend will only grow.
Direct-to-Consumer eCommerce means owning the entire customer relationship. It gives manufacturers the ability to leverage additional consumer insights that come with it. To create unique, personalized online engagement, better fulfillment and returns experiences.
Not only does a D2C channel help to drive more direct sales, but it provides an opportunity to create recurring revenue streams – be it through subscriptions, new product launches or annual repair services for example. These brand-led tactics provide much better brand loyalty and lifelong customers than otherwise possible through a traditional, retail model.
2 Key Challenges
Potential Conflict with Partners
One of the biggest barriers we find when working with manufacturers
/ B2B brands is the fear that this D2C transition will jeopardise their partner
relationships. Will their partners see this shift as a threat and consider them new competition – dropping them from the shelves altogether?
We’ve found that offering an exclusive range or bundles to your retail partners, whilst selling the ‘basic’ product on your own D2C channel (or vice versa) may be the best way to achieve the best of both worlds.
There are plenty of approaches you can take depending on how risk-adverse or aggressive you’d like to be. If you’re considering shifting to a D2C model but aren’t sure where to start. Then get in touch for a free D2C strategy session with our team.
One of the major issues is that many pure-play start-ups have the benefit of agility on their side. Not shackled by the baggage of legacy systems, processes and operations, or by leadership teams who insist on tradition or “our way of doing things”, these newer businesses can change strategic direction on a whim, and capitalise on new opportunities well before the competition.
The D2C concept is nothing new, and is an area most consumer goods manufacturers, B2B businesses and wholesalers have been experimenting with for some time, but many are recognising the need to step up, or fall behind. The truth is your future survival may well depend on it. We’re already seeing established manufacturers being challenged and usurped by D2C start-ups able to offer a more engaging customer experience.
5 Must-haves for a Winning D2C Approach
1. Streamline Your Product Range
Setting up an eCommerce platform becomes more complicated the broader your product range is.
Selling D2C or B2C differs from B2B in that consumers don’t always have a specific model number or goal in mind when researching online.
Consumers, no-matter how tech savvy, can find it overwhelming when viewing a large volume of appliance models and features on offer. Offering too much choice can be overwhelming and can adversely affect your conversion rate.
Tip #1 – Simplify the number of products and SKU’s you have available online, at least initially. Instead, focus your efforts on making your product portfolio as easy to navigate and filter as possible.
2. Manage B2B, D2C and everything in between
If you’re a manufacturer that has historically sold thousands of coffee machines in bulk to retailers, selling thousands of small applianes to individuals will need a completely different set of systems and processes to cope with the complexity of B2B, B2B2C and B2C. Not only do you need to consider a new business model but the logistics to fulfil these orders.
Tip #2 – Aim to have a clear and consistent strategy around who your consumer is and the “consumer journey” that you are looking to create. It’s vital that you implement an end-to-end eCommerce solution that can support every segment of your business. One solution that covers eCommerce, order management and systems integration to connect your CRM, payment processing and logistics.
The organisations that we see winning in the D2C market are truly obsessive around consumer-centricity. Make sure this runs through every single consumer touch point from the online website through to the delivery, installation services and the removal of large appliances. Every consumer touch point is key and quite often it’s the last mile delivery and installation process that the customer remembers!
3. Work to your StrengthsAppliance and electronic orders are 2.6x larger than a typical eCommerce transaction ($416 vs $159) – Adobe Dec 2019. Given the high-value nature of home appliances and electricals. Many consumers will understandably take a long time to research and compare products before pressing the “Buy” button. Expensive products require multiple visits which will drive down conversion. In fact, consumer Electronic conversions are typically half the average (1.4% vs 3%). To instil confidence – make sure you cover the basics – from good product photography, model specifications, to customer reviews. But remember nobody knows your products like you do. Tip #3 – Work to your strengths and bridge the retail gap by providing what your retail partners can’t. In-depth product knowledge and expertise. This could be through videos, blogs, reviews or even web chat – for advice and guidance – or perhaps comparison engines or filters. Brands like Dyson have decided to create immersive, brand experiences on their website but still enable “ease of purchase” through a stylish website with fantastic online support. The underlying eCommerce and Marketing technology you choose should be able to intertwine content and commerce to drive business results online and help deliver a friction-free customer experience. Home appliance and electronics brands that provide shopping experiences that go beyond mere transaction will be the ones that will thrive in 2021 and beyond.
4. Use Repairs and Spare Parts as an Opportunity for GrowthRepairs and spare parts represent a large after-sales opportunity for appliance manufacturers. In fact, more than 45% of consumers are willing to pay a premium price for an appliance if it includes additional services such as same-day repair. Tip #4 – Differentiate your online and retail offering with value added services such as repairs, spares and maintenance packages. Value-added services such as these are a great way to increase customer satisfaction, revenue and loyalty.
5. Onboard, Surprise & DelightOne of the key reason’s companies look to adopt a D2C model is data. The engagement they can be cultivated before, during and after the purchase is incredibly advantageous. By adopting a D2C channel, you should know when a printer is going to run out of ink… or when a consumer’s current washing machine is in need of maintenance… or when a dryer is ready to be replaced. This data can be used for lucrative cross-sell and up-sell marketing. Tip #5 – Make sure you on-board customers after their initial purchase and in the first few weeks of using an appliance and follow up with useful tips and advice to nurture those long-term relationships. Once your customers are on-board, surprise them with digital experiences that add value. An ingenious example from Electrolux’s Vintec, a maker of temperature-controlled wine cabinets, recently launched Oeno. Oeno is a virtual wine cellar management app that keeps track of a customer’s wines and provides sommelier-style advice on the best time to open bottles, serving temperatures and wine pairing advice. It can also order wine and restock automatically. These connected-appliance ecosystems are a great way to build value and ‘lock-in’ consumer loyalty. Granted, not all appliance manufacturers can invest in grand, innovative ideas such as these! If you’re a kitchen or home appliance brand, new digital services could be simple interactive recipes, step-by-step cooking guides or online courses, all designed to engage users.
ConclusionThe home appliance and white goods industry is facing rapid transformation, particularly as the pandemic accelerates the shift to online sales. Manufacturers that take advantage of the treasure trove of information about their customers and connect with them before, during and after a sale will be the ones that survive, and thrive, in the years to come.
NextCheck back soon when we’ll share our “D2C Maturity Guide: Are you really ready?”. We will outline things to consider when making the move from B2B to B2C or D2C. A practical checklist that covers everything you need to consider before going direct – from people, processes and tech.
Book a free D2C Strategy SessionConsidering going direct-to-consumer but not sure where to start? Simply contact us for a free 2-hour session with one of our consultants. *Limited to the first 5 enquiries.
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