For companies in all sectors, Covid-19 has illuminated the dangers of relying on a singular business model. Nowhere has the revelation been more apparent, however, than in the B2B space.
With major retailers forced to temporarily shut their doors and consumers turning to the internet in droves to buy straight from the source, B2B brands have had to rethink how they sell and who they sell to virtually overnight. For many, that means shifting, at least in part, to a direct-to-consumer (D2C) model.
We tapped our network of eCommerce experts for their best pieces of advice to brands going from B2B to D2C. Here are ten of the biggest takeaways.
Stuart Pick, Vice President of Global Alliances for Brightpearl
1. Implement automation ASAP
As you shift from high-value, low-volume sales (like shipping a dozen pallets a day) to low-value, high-volume sales (like shipping a thousand single-item orders), pretty much everything about your operation changes.
“This includes the channels you use to find and interact with consumers, the way you hold stock, the way you buy, forecast, plan, and take payments, the courriers you use… everything,” says Pick.
B2B processes, which are often manual, simply can’t be applied in a D2C world. The key to navigating the transition is automation.
“Automation allows merchants to easily scale up the operational part of the business and adjust to high volumes of orders without introducing bottlenecks and mistakes, which ultimately end up affecting customers and therefore loyalty.”
Pick’s company, Brightpearl, helps brands automate back-office operations like order fulfillment, inventory planning and retail accounting so that they can manage by exception and focus on revenue-driving activities.
2. Prepare for sky-high customer expectations
When you sell directly to the consumer, you’re responsible for the full scope of the customer experience–and they’re harsh critics.
Consumers are less loyal than ever, with greater choice and more competitors. Their expectations are sky-high thanks to the likes of Amazon, which has taught them to expect more when shopping online.
“D2C customers expect fast delivery,” says Pick. “They expect what they ordered, when it’s supposed to be delivered. They want to start their buying journey online and collect from the store. They expect to have a choice of payment options. They want free delivery, and they don’t expect to pay for returns.”
Like we said, it’s a demanding crowd.
A Brightpearl study done in conjunction with Trustpilot found that 77% of negative feedback for merchants is not about the product, but about the service a customer receives. Again, as with automation, the customer experience is tied to loyalty and lifetime value.
Pick says B2B brands aren’t used to thinking this much about the customer experience, but it must be a priority for successful D2C operations.
Mark Miano, Executive Vice President of Sales for Glew.io
3. Adopt a new approach to customer data
When you’re B2B, you don’t have a huge number of data sources. If you sell a beauty product, for example, you might have a list of the franchise owners and addresses of a few hundred drugstores.
When you go D2C, the content of your customer data and the volume of it change dramatically.
“You might suddenly have customer data coming from Shopify, Amazon, Facebook, Klaviyo, the list goes on,” Miano says. “B2B brands have never had to have an individual person’s contact info or worry about understanding that person.”
Now, you need a system for storing and leveraging data like demographics, location, purchase history, website activity, and so on. Miano’s company, Glew.io, takes the data from your numerous sources and aggregates it in one place, standardizing the various fields in the process.
“Shopify data is in London’s time zone. Recharge’s data is in U.S. eastern time,” Miano explains. “Amazon calls your earnings ‘revenue,’ while Shopify calls it something else.”
Glew solves this problem with a feature called ETL–extract, transform, and load–giving all the data a singular structure so you can use it in a meaningful way.
As a B2B brand with a limited, fairly static list of customers, building your own infrastructure to support your operational needs may have been a practical solution up to this point. As a D2C brand, it’s rarely feasible or cost-effective.
This is because of a classical economic challenge known as the principal agent problem.
“Think about when you bring your car to a mechanic,” Miano says. “You’re not the expert, so you don’t know how the repair is supposed to be done or how long it’s supposed to take.”
The same thing happens when you try to build solutions for D2C sales despite being new to the business model. The solution? Outsourcing your technology needs to the experts.
“Glew helps you not only build the calculations you need, but tells you what they should be if you’re not on track so you can take the appropriate actions to right the ship.”
Robert Befumo, Head of eCommerce Strategy for Parkfield
5. Sell a new set of benefits
Focusing on how your product benefits the customer is a golden rule of marketing. When you shift from B2B to D2C, the audience you’re speaking to changes and thus, the benefits you focus on in your messaging must change, too.
“In B2B, the benefits to the customer are the margins, the money they can make, the convenience of dropshipping,” Befumo says. “For consumers, you have to speak to the benefit to their life. How does this product help them?”
6. Strategize first, attract visitors second
Befumo says one big mistake he sees B2B brands make when transitioning to D2C is investing heavily into attracting customers without first having a plan for what they’ll do with those customers.
Obviously, you want to sell to them, but the D2C buyer’s journey is more complex and typically involves many more brand touchpoints than B2B.
“You need to plan out your communications with your new customers. Understand why they’re coming to you, where they’re coming from, and what you’re’ going to do with them once they arrive on your website.”
For example, make sure the landing page you’re sending ad traffic to is relevant. If these are brand new customers, they might have never heard of your brand before. The page they land on should quickly sum up who you are, what you do and why you’re the best–and again, selling the value proposition of how your product benefits them.
Short, succinct blocks of text (rather than long paragraphs) work well for this, as do customer testimonials.
7. Seize the learning opportunity
It’s tempting to fall into the trap of looking at sales numbers as the be-all, end-all metric for success. But in fact, there are other important payoffs that aren’t as easily quantified, like the ability to gather feedback from hundreds or thousands of customers.
“A lot of the value in shifting to D2C is in the learning,” Befumo says. “You now have access to these insights about what your customers are looking for, how they behave on your website, and what products move quickly. There’s value in this beyond just sales dollars.”
These insights can inform other areas of your business, including your B2B strategy. In this way, many companies benefit from having both B2B and D2C channels.
Richard Emanuel, Co-Founder and Creative Director of Parkfield
8. Think of it as a conversation
At Parkfield, everything we do comes back to engaging the customer. This is second nature for eCommerce retailers, but it’s something many B2B brands haven’t had to consider before.
“Remember, this is a customer who’s not going to be talking to a sales rep,” Emanuel says. “They’re probably not going to be ready to buy right away, so you need to give them a way to continue the conversation with your brand.”
This might happen by offering a discount in exchange for an email address, offering the option to live chat, or following up by showing the customer a retargeting ad.
You can also engage the customer and build your data set at the same time by using contact forms and widgets to gather input.
“Make it a two-way conversation. Ask them questions, like ‘are you purchasing this for your home or for your business?’ Use the opportunity to build that customer profile.”
9. Set clear expectations before checkout
D2C customers need a bit more hand-holding than B2B customers to make it all the way through your sales funnel. Help move them along by setting clear expectations at various points in the shopping experience.
For example, don’t save shipping information until the last page of checkout.
“Use on-site messaging to set expectations up front. Do you offer two-day shipping? Ship all orders the next business day? It’s a big mistake to make the customer wait until they’re checking out to find out. It creates a big fall-off point,” Emanuel says.”
Low-inventory alerts are another example of expectation setting. There’s nothing worse for the customer experience than letting them get through to the checkout page and then telling them their item is out of stock. You can’t sell inventory you don’t have the same way you can in B2B.
10. Base decisions on data
One great thing about D2C is that the margins are generally a lot higher. Still, the units per transaction are much lower, so you can’t just put up an offer like ‘free shipping’ and assume that the numbers will work out.
Define what your most important metrics are–some of the ones we rely on most are average order value and customer lifetime value–and use them to guide your strategy decisions.
“For whatever you’re planning to do, do the numbers work? How much is fulfillment going to cost? Is there a ceiling to how many orders per day you can fill? Don’t make the mistake of making a decision and then running the numbers once the plan is already in motion.”
Get Expert Help Navigating the D2C Transition
Entering the D2C space is a major business shift. We help brands like yours make the switch effectively, positioning you to meet the demands of an eCommerce audience while ensuring your have the technical infrastructure to support the transition.
If you could use some expert guidance, we’d welcome the opportunity to connect. Book a time to speak with our passionate eCommerce team now.