Why Manufacturers Are Establishing a Direct-To-Customer Sales Channel

Every company has their own unique rationale for establishing a direct to customer sales channel. They may be responding to a progressively competitive market, managing a weakening sales channel, expanding their current distribution channel- or a combination of all of these threats. Industry research indicates that manufacturers are citing the following reasons for wanting to establish a D2C sales channel.

• The Economy: It’s Ugly Out There. The economic landscape has changed. After months of declining sales, shrinking gross product margins, and a weakening distribution channel, manufacturers realize it’s time for a new strategy.
• Managing the Brand and Product Pricing. Manufacturers want the ability to exert a stronger influence on product messaging and pricing to preserve brand value.
• Competition is Greater Than Ever Before. Manufacturers need a venue to sell products without the distraction of competition and private label products.
• Consumers Want to Buy Direct. Research has proven that consumers visit a manufacturer’s website for product information prior to purchasing. The absence of a “buy now” button could send them to a competitor’s site.
• The Advantage of Direct Consumer Relationships. Manufacturers realize the value of tapping into customer feedback as a means of improving their business processes.
• Channel Conflict is Manageable. Selling direct doesn’t mean abandoning existing distribution channels. A successful direct-to-customer sales program should be built on a strategy that supports current distribution partners and increases revenue across all channels, rather than prioritizing one over another.
• The Competition is Selling Direct. A growing number of manufacturers are realizing the benefits of establishing a direct sales channel. Manufacturers recognize that if they don’t adapt, they will be left behind as competitors capture market share.

Why YOU Should Consider It

• Increase in Overall Sales Volume. Provide an additional channel for customers to purchase your products.
• Improved Gross Margins. Preserve higher margins lost to your distributors and resellers.
• Control of Your Brand. Gain greater control of your brand and product messaging, pricing, and marketing channels by directly engaging customers.
• Direct Customer Acquisition and Ownership. Consumers are already visiting your site for product information. Why not give them the opportunity to buy?
• Improved Customer Loyalty and Retention. Utilize customer feedback for insight into improving customer service, marketing, and product development.

The Early Bird Gets The Worm

Most industry analysts agree that the D2C strategy has progressed through “innovation” and is now in the early adoption stage of the adoption/innovation curve.

One could easily conclude that early adopter companies that implement a sell direct strategy today are emulating the trend and success of the airline industry that adopted a D2C strategy in the early 1990’s. The lessons learned then still apply today in that the early adopters of a megatrend will benefit most. Call it a megatrend, a strategy adaptation, or simply a new means of survival in a challenging market- there’s no question that more and more manufacturers in a growing number of industry sectors are evaluating and implementing a D2C channel to reap the rewards of this new business opportunity. There’s never been a better time to take advantage of the D2C opportunity to increase revenue, improve margins, and gain greater control of your brand.