Where the market is today
- Direct-to-customer sales are growing faster than retail overall
- The most profitable customers buy through multiple channels – store, catalog, online
- Customers want a uniform brand experience across all channels
- Debate of Sales/Use tax nexus and collections
- Impact of shipping cost on order size, shopping cart abandonment
- Advertising revenue for radio, newspaper is declining, while online ads are nearly sold out – based largely on the ability to target customers
- Brands adapt to fit the direct-to-customer space
Where the market is going
- Channel conflict is losing its influence
- As affluence increases, the importance of convenience grows
- Direct-to-customer channel will continue to grow
- Customers expect a online presence where they can research and buy
- Customers expect to interact with the brand via email or online
- Customers will post their opinions and stories about your brand online where everyone can read them
- Merchants are still learning the nuances of customer acquisition, customer retention, life-time-value, and share-of-customer – all well established principles of direct marketing.
The problems of getting there…do it myself or outsource
- Running a direct-to-customer business is different than running a wholesale business or retail-store-based business.
- Direct-to-Customer distribution is a different skill set than retail distribution
- Assorted SKU cases v. unique SKU cases
- Case picking v. Item picking
- Residential delivery v. Commercial delivery
- Merchandise planning
- Demand planning & forecasting
- Daily shipping deadline (when the truck pulls away)
- Package presentation/merchandise presentation is important
- Direct-to-Customer care is a different process than in-store service
- Pre-sale product inquiries — what do these really look like and feel like?
- Where is my order?
- Returns & Exchanges
- Anywhere, anytime
- Direct-to-Customer technical systems operate on a different scale and at a different speed than retail systems
- More exceptions, because we have less influence over customer behavior
- Systems must support unexpected customer requests
- Order volumes can be thousands per day, rather than hundreds per week
- Pure volume of data explodes
- Systems must be scaled and optimized to support intraday peaks of calls, orders, shipments
- Use of multiple payment options especially the use Stored Value cards with credit cards.
- Ability to customize marketing offers beyond the basic free shipping.
What you need to get there
- Execution expertise in the direct-to-customer supply chain
- The ability to expand on short notice
- Key stats on orders handled, calls answered, shipped sales, shipments
- Network map
- The ability to adapt your processes to support your brand
- Technical integrations to web sites, ERP systems, data warehouses
- Monitor and manage to meet or exceed your target Service Levels, improving customer satisfaction
- Persistent effort to improve your processes and lower expenses
