Chapter 4:
How to Leverage D2C Channels During the ‘Next Normal’
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“Many of us like Amazon for sales, but they cut into our margins considerably. They’re built to be transaction machines: they want you to come in, look for a specific product, show you competing products, commoditize the whole thing. If you want to keep your margins tight, you want to build emotional connections with your customers [on D2C channels].”
Josh Walsh Founding CEO of The Refinery
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Scott Sommers
Vice President, Insights & Innovation - ShurTech Brands
Scott Sommers is the vice president of insights and innovation at ShurTech Brands, home of the beloved Duck Tape brand. Sommers excels at fostering unique communities and outside the box approaches to creating brand value for customers.
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Daren Garcia
Partner - Vorys eControl
Daren Garcia is a partner and member of the Vorys eControl team, where he represents manufacturers and brands eager to control their online sales. He has extensive trial experience representing companies trying to stop unauthorized resellers in their tracks.
Denise Zmuda
Chief Strategy and Client Success Officer - Vorys eControl
Denise Zmuda is the chief strategy and client success officer at ecommerce consulting group Vorys eControl, where she works with clients to understand the financial impact of uncontrolled online sales and protecting their brand.
D2C Experts Weigh In on the ‘New Normal’
It’s always a good idea for a business to diversify their marketing channels, and in the midst of the COVID-19 pandemic, it is a necessity. But even with an omnichannel approach, businesses shouldn’t neglect the channels over which they exercise the most control: their own. As more and more customers turn to online shopping during this “next normal,” how should brands lean on these direct-to-consumer (D2C) channels for their advantage? What’s the best way to start? Five D2C experts joined us at The Digital Shelf Virtual Summit, presented by The Digital Shelf Institute (DSI), to share best practices for businesses looking to increase sales and brand
Brent Bellm
Josh Walsh
Founding CEO - The Refinery
Chief Executive Officer - BigCommerce
Brent Bellm is the CEO of BigCommerce, a powerful SaaS ecommerce platform for tens of thousands of established and rapidly growing businesses, including many internationally recognized brands.
Josh Walsh is the founding CEO of The Refinery, a strategic consulting firm for enterprise brand manufacturers. After starting the company out of his college dorm room in 2001, it has since grown to become a leading ecommerce operation.
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Why ‘Future-Proof’ Your Business With D2C?
In a time when so much ecommerce is centered around massive online retailers like Amazon and Walmart, it might seem counterintuitive to focus on your own channels. However, Bellm touted three primary benefits that might make you reconsider.
3 Primary Benefits of D2C
Deeper Insights Into Shopping Behavior With total control of the channel (i.e., without a “middleman”), brands can retain all of their associated data, including information about brand interactions, sales, and trends. Those insights can also inform your approach in other external channels.
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Tipograph shared five tips for ensuring your brand is striking the right message for the moment.
Greater Flexibility and Agility for Brand Manufacturers Selling directly to the customer allows brands to quickly test marketing campaigns and other messaging on the fly, at a much greater speed than a third-party retailer would normally allow. This way, your content not only remains consistently fresh but tailored to the often-changing needs and interests of your customers.
Retain Customers by Providing New, Innovative Experiences Through Customization Would a subscription box service work for your brand’s line of products? Could you personalize your products in a way that wouldn’t be possible on Amazon? There are all kinds of ways a D2C model could provide a heightened brand experience that customers just cannot get with third-party online retailers — don’t be afraid to experiment.
Unauthorized, third-party resale markets can provide brands with substantial opportunities — offering customers additional information about products, increased sales, and price flexibility. However, they also extend appreciable risk — especially when these retailers fail to meet the branding, messaging, and customer service standards of the products’ original manufacturer. They can also strain your relationships with other, authorized resellers who follow the rules. “The amount of conflict, the amount of confusion, and the amount of disruption for a manufacturer’s brand, can be quite significant if that manufacturer doesn’t have control of their selling situation on [unauthorized] marketplaces,” Zmuda said.
Maintain a Strong D2C Model to Control Your Brand Across Channels
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Step 1: Assess How Unauthorized Resellers Affect Your Business
Your first focus should be determining who these unauthorized third parties are, as well as establishing the means by which they’re obtaining your products. “More often than not, those items come from your authorized channels,” Zmuda said. Once you’ve developed a clear overview of the problem, you’ll be better equipped to address it moving forward.
Step 2: Assess How Unauthorized Resellers Affect Your Business
Once you’ve identified your problem channels, it’s time to reconsider your pricing, incentives, or contracts in those spheres. You might change the type of volume discounts you provide to a specific vendor, drop volume discounts entirely, or swap them out for other incentives such as back-end rebates tied to sales through authorized channels. “You start to play a game of multi-dimensional chess: what are those economic incentives I’ve traditionally provided to my channel, [and] how might those channels be causing a margin situation?” Zmuda said. “Can you terminate your agreement with them? Stop shipments and pull back? Each situation will be different depending on your relationship with, and the power dynamic between yourself and the distributor.”
Step 3: Take Precautions That Protect Your Right to Sell
You can also take legal action against unauthorized resellers, but be prepared: Most third-party resellers operate under what is known as the “First Sale Doctrine” — a legal principle that stipulates brands only have control over their products before the first sale. After that, its new owner is free to resell it however they wish, even without the trademark holder’s consent. However, the law does provide some exceptions: Garcia points to both the “material difference exception” and the “quality control measures exception.” The material difference exception provides that unauthorized third parties must sell a brand’s products in a way that is “not materially different” than what the brand itself provides. Approaches that provide additional value — such as warranties, satisfaction guarantees, or other offerings that a third party would be unable to honor — are ways to ensure you have legal recourse against unauthorized resellers. Secondly, most brands have internal quality control measures that inherently cannot be reasonably replicated by a third party reseller. Because unauthorized resellers cannot match those quality control measures, they are prohibited from selling the brand’s products. “Any sold outside of those controls, or that interferes with them, can be deemed ‘non-genuine’,” Garcia said.
Step 4: Educate Your Stakeholders
Once the problems have been identified and addressed, educate your stakeholders — including those in roles traditionally outside of ecommerce — about the dangers of unauthorized resales and the efforts your company is taking to combat them. Problematic channels are easier to identify and address when everyone is on the same page.
4 Best Practices for Dealing With Unauthorized Resales
63% of Shoppers Use a Mobile Device While Shopping or Considering a Purchase In-Store
Source: BRP
Scott Sommers and Josh Walsh discuss how listening to customers lead to Duck Tape’s viral “Stuck at Prom” promo.
Leverage the Voice of the Customer
Harness the Power of D2C to Make New Connections With Your Customers
Major online retailers like Walmart and Amazon can be fantastic for securing sales but less effective at driving brand loyalty among customers. “Amazon, Walmart, etc., are really built to add loyalty for [themselves],” Walsh said. “They take your product, and they remove the tools you have to really tell a compelling brand story and emotionally connect with their customers because it’s against their interests to do that.” This challenge is why Walsh and Sommers recommend thinking of those gigantic retailers as more of a demand generation channel — one that, after a few initial purchases, ultimately funnels customers over to your D2C channels. Once there, your customer’s experience should be optimized to create unique, memorable connections that would be otherwise impossible on a third-party channel.
Comprises about 15% of consumers. Very worried about health, finances, and going out in public during the pandemic. Most likely think restrictions are being lifted too quickly, and are highly adverse to visiting public spaces.
Foster a Sense of Community Sommers pointed to his experience creating the robust community around the famous Duck Tape brand. By providing interactive experiences like arts and crafts contests, this seemingly ordinary, utilitarian product gained a surprising number of loyal, vocal evangelists online. “It’s about finding those layers of value you can add into your product beyond just the functional utility of the product that really matter to the end customer,” Sommers said.
Showcase Dynamic Content Do more than just offer product shots. Demonstrate your product’s value with stories, lifestyle photos, instructional videos, and other ways of immersing customers in your brand’s content and imagery. “The importance of telling the brand story isn’t about the product,” Walsh said. “You’re not the hero of the story — your customer is.”
Heed Your Customers Manufacturers now have unprecedented access to customer feedback, so there’s simply no excuse for ignoring it. Beyond the value of providing customer service, listening to your customers is the best way to innovate and expand your brand to meet their demand. Is there online chatter asking for a new feature on one of your products? A recurring problem that a simple fix or update could address? A new design? Maintain a fine-tuned sense of your customers’ demand, and they’ll reward you for it.
Though an omnichannel approach is still best for most businesses eager to stand out on the digital shelf, securing a strong brand presence on D2C channels is a great way to invest in long-term customer loyalty for the future and across all ranges of marketplaces. Continue to chapter five to get expert insights on how to best leverage direct-to-consumer (D2C) channels.
3 Best Practices for Building Brand Loyalty
Go to Chapter 5
