With an unprecedented number of local businesses shut down due to COVID-19, millions of people have been buying both essential and non-essential items online instead of relying on local stores. This has made many entrepreneurs wonder whether it might be the right time to enter the direct-to-consumer (DTC) market, in which a company sells and ships products straight to customers without wholesalers, middlemen or retail stores involved.
The DTC business approach can help companies better understand their target customers’ needs, preferences and desires. That way, brands can adjust their marketing strategies and offerings to build a robust online presence.
Check out the following information before launching a DTC business to maximize your customer reach, discover any challenges you may face, consider the steps you should take, and understand what makes a DTC company successful.
Check the Challenges that DTC Business Face
Although launching a DTC business presents many opportunities, brands of all sizes across various industries often face the following challenges when entering the industry.
It’s becoming increasingly difficult to win trust and build loyalty in a crowded market with increasing competition. Brands unable to innovate or adapt to market changes often struggle to meet the sudden rise in consumer demand.
The biggest challenge of a DTC business is to get that first potential customer, since the DTC model makes it difficult to try a product before buying it.
Advertising prices on social media platforms are gradually increasing, and as they do, the profit margins of DTC companies tend to decrease. Therefore, companies are trying to reach audiences (via traditional marketing platforms) that may not be reached via brand ads on social media.
To launch a successful DTC business in the market, you need to be agile, quick, efficient, decisive and ready to learn and adapt. Customers expect a quick delivery process, and if you fail to provide that, you may harm your brand name.
DTC companies need to keep website speeds at the top of the priority list and ensure that they provide a customer experience that is on par with customer expectations.
Retail Partner Conflicts
Opening DTC channels creates profitable opportunities for brands, but it can also generate conflicts with their existing partners, where applicable.
Steps to Launching a Successful DTC Business
An increasing number of companies are adopting the DTC business model to meet consumer demands and expectations. Here are seven simple steps to successfully launch a new DTC business.
Step 1: Find the product/market fit. Don’t build your new business without first getting feedback from your potential customers. Find a product/market fit and implement customers’ feedback into your product before you launch.
Step 2: Market your products. A successful marketing campaign requires constant trial, time and dedication. Create your landing and social media pages, use relevant images and run ads to the landing page. You should also collect visitors' information and demographics to improve your marketing campaign results. Communicate value and showcase how and why the product is going to work for the consumer.
Step 3: Offer an incredible online experience. Since your website and social platforms are the primary drivers of sales, these need to be consistent in tone and messaging. Your website should convey your brand values and story. A well-designed and easy-to-use custom website can help you run campaigns smoothly and catch all conversions. A great site search experience can also help your customers find answers about your brand and products easily.
Step 4: Use high-quality visuals. Websites with appealing images, creative ads and pages with engaging content often convert more. Therefore, you need to plan out your visuals strategically.
Step 5: Create engaging customer journeys. Every customer goes through a journey from discovering a pain point to learning about a solution to buying it. There are multiple reasons people are attracted to a product, so there must be several different pain points that may trigger someone’s initial interest in it. Therefore, view your customer journey from the buyer’s point of view so you can offer products and services they’ll want to purchase.
Step 6: Find early adopters. Find your first customers and make their experiences so amazing that they make repeated purchases and naturally help you find more customers. Also, send them periodic reminders for fresh offerings.
Step 7: Communicate. Communicating your brand message or story correctly is essential, and it must be reinforced across all channels. Share your values in a way that engages and inspires your customers and builds loyalty. The product packaging also gives you a way to convey your brand messaging and brand values.
What Makes a DTC Company Successful?
Building a successful DTC company requires planning, leadership input, investment and ongoing support. Brands that invest time, effort and resources into a DTC business can get positive ROI, brand loyalty and more insightful customer data. This allows brands to further optimize their products, profits and marketing campaigns. Following are the key components required to make a DTC company successful.
Better Customer Support. A DTC business can offer consumers lower costs, a quicker response time and better customer service. It can also be a great way to test your product and start small with a limited product line.
Customer Data. A DTC business model can help you improve your product based on the users' feedback. DTC companies have the advantage of a huge volume of information available about their customers. Access to the targeted customer data can help brands offer a higher degree of personalized products. The brands that leverage this information intelligently often become successful.
Marketing Campaigns. While budget is often a consideration for early-stage DTC brands, successful marketing campaigns can help you achieve long-term brand success. Ultimately, the product must also live up to its all promises for a successful launch.
Effective Communication. Consumers expect streamlined and effortless interactions on websites, and the brands that stand out among the competition are those that consistently provide value to their customers. With effective communication channels, brands can resolve customer issues quickly while delivering on every brand promise made.
Quick Delivery and Returns. Quick delivery and return processes are highly effective at building trust and loyalty among consumers. Customers expect a seamless delivery experience and messages that notify them at every stage of the process. You can keep customers satisfied by making the return process simple.
Competitive Prices. Keeping your product prices competitive can help you attract potential customers. Try to keep prices a little lower than competitors at the time of launch if possible to attract early adopters.