Direct-to-Customer Commerce

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Strategic insights into the direct commerce industry, including ecommerce, direct marketing and related fields

The Challenges of Direct-to-Customer Commerce

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
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Filed under: Direct Commerce, multichannel commerce, Omni-Channel Commerce

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