D2C Approach Makes Retail Brands their Own Worst Enemy

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We’ve all fallen into the trap of misunderstanding the consumer purchasing journey. We’ve been blinded with the news of online sales growth and mass channel store closures known as the Retail Apocalypse. The death of the brick and mortar store quite frankly, it’s not true. Brick and Mortar retail sales are up YOY and so are the number of stores now open.

With more tools and data readily available the consumers path to purchase is becoming clearer and the role the store plays is paramount to today’s shopper. Here are the reasons why you should be investing in your retail channel by leading with digital and finding ways to partner instead of compete:

Physical Stores Fuel Online Sales Growth

Want to know where most online sales occur? Right by your physical retailers. That’s right, anywhere your products are located in store online sales surge as more consumers webroom or showroom. Without a physical presence your online sales will suffer and acquisition costs rise.

So does it make sense to compete and sell against someone who is driving sales both online and in-store for you? Because without them, you will sell as much as 6X less in that trade area. A brands online direct to consumer sales are essentially competing against their future growth. As the mass channel shuts down, independent specialty retail will become very strong and now is the time to craft great relationships that span online to offline.

Consumers Prefer to Buy Offline

The best sites in the World convert 2-3% of online visitors and consistently a dealer locator is within the top 3 or 4 pages consumers click on a brands website. Meaning, more people try and buy local than checkout on your site. So why then are brands making dealer locators harder to find and/or removing them?

They are worried about losing the sale as consumer shop between a website and physical retail due to competitors or consumer distractions. Or are thinking about short-term profits on one sale over consumer experience and retailer relationships. By removing the option to find a dealer, retail brands are attempting to streamline the sales process for the consumer but in fact are clashing with how consumers want to buy. Every generation of consumer shops in store just as much as previous generations.

Online Sales Distance Retail Brands from the Market

Not only are online sales hurting retailers, but they are ultimately going to isolate retail brands from the market (where people shop) and in turn eventually consumers just won’t know they exist without herculean conversion costs. This clearly demonstrates a disconnect in how brands are selling and is less consumer centric. Shoppers are seeking the convenience of online ordering with the service only physical retail can provide. Making it more difficult for consumers to buy, how THEY want to, results in lost sales opportunities for both brand and retailer.

Isolated D2C Brands Targets for Amazon/Wal-Mart

Direct to consumer brands are also targets of Amazon and Wal-Mart Private Labels. As consumers are more likely to land on their marketplace rather than your website they will eventually seek to eliminate your sales with a private label alternative. See battery example below. Retail brands need physical outlets and without them will be subject to the next apocalypse we speak about, the Brand Apocalypse.

Direct to Consumer Jeopardizes Retailer Relationships

We just mentioned how retailers can help your brand sell more online and in-stores to become a more customer centric company. To complicate matters further, when a brand does sell direct next door to a dealer it creates channel conflict competing with the person you aim to partner with. You can guarantee your retailers sense of loyalty might not be very high with your company and you may find your spot in store taken by a competitor who wants to sell more online and in-store by partnering with that account.

So Why Do Brands Concentrate So Much on Direct to Consumer?

Many brands were lured into the consumer direct future as much of the consumer shopping journey was unknown or visible to brands. What brands could track is direct to consumer so in human nature we do more of what we can measure and optimize over time rather than invest in retailer relationships. Only now with more digital tools/infrastructure at our disposal are we are seeing the strength and necessity of physical retail to a brands success. With a physical retail presence you will sell more online and in store.

Ready to Put Your Customers First?

Do you want to sell more online and in-store? Or lower your customer acquisition costs in working with brick and mortar at scale? Let’s work together and see how we can make your company more customer centric and unlock hidden growth by combining your online and physical retail channels. Please contact us and schedule a demo.

D2C Approach Makes Retail Brands their Own Worst Enemy