As a consumer packaged goods company, you're facing challenges like never before. Competition is increasing, with more players and channels to get products to market. Costs are being squeezed in many directions, from logistics and supply chain expenses to retailers demanding lower inventory requirements, smaller orders, faster shipping and better pricing. And then there's the consumer – more fickle than ever, searching for deals online and abandoning traditional loyalties to brick-and-mortar stores.
What's a CPG company to do? In order to survive, you need to rethink, innovate, evolve – and if you can't beat them, join them! That is, with online marketers making quantum leaps in shopper acceptance, market share and profitability, the time has certainly come for you to join the ranks of businesses forging new paths that lead directly to consumers.
Direct-to-consumer marketing offers a lot of benefits to you, the consumer packaged goods company. Among them are:
A bigger share of the profits – You may have the most advanced, versatile, value-engineered, user-friendly products on the market, but every time you sell one of them through traditional retail channels, you're splitting a large part of the revenue with merchants, who in turn are using it for their own purposes such as rent, store employees, overhead and so forth. What started out as a trend-setting product with the potential for commanding premium prices winds up being watered down to a commodity-grade item with profit margins so slim that hardly anyone is making money on it. If you were selling directly to customers, on the other hand, you would keep a larger share of the revenue.
Forging better customer relationships – When you're selling through retailers and other third parties, you're basically selling blind, totally dependent on them for any information or feedback from customers. Or, in the worst case scenario, they may not share any information at all, so you have absolutely no idea of how well your product is liked (or disliked) by shoppers, or what features might need improvement or tweaking. Selling direct to customers can give you a gold mine of valuable information, from simple product feedback and customer behavior to more sophisticated demographics and other analytical data. In fact, you can more easily obtain customer comments and reviews (such as those left on a website), which not only provide seeds for future products and user-generated content but also enable better one-on-one interaction with consumers.
More repeat sales – When a middleman is selling your goods, you don't have a good way to follow up, offer frequent-buyer rewards and incentives or encourage future purchases. You're at the mercy of the merchant, who has no vested interest in furthering your connection with the customer. One of the big advantages of online selling is the ability to personalize offers based on the customer's buying history. Many shoppers make it a point of looking for, and responding favorably to, customized marketing initiatives that treat them as valued customers and reward them for their patronage. If you want more repeat sales, there's no better way to stimulate them than direct-to-consumer marketing.
A seamless buying experience for your customers – Too often, consumers become frustrated when faced with product support issues that have to go through a chain of middleman resources – getting a defective hard drive replaced or restored, for example, doesn't happen automatically at the store level as expected, but needs to run the gauntlet from sales associate to phone support to packaging up the unit and shipping it off to another third party for repair. Think of how much happier customers will be when they can deal directly with your CPG company.
Every new approach has its challenges. Direct-to-consumer marketing is no different. In the short term, you may need to ramp up your operations into high gear. You'll have to develop new systems and look at every aspect of your business, from R&D to the plant floor and beyond. If logistics like fulfillment, shipping and delivery create bottlenecks or stumbling blocks, then you need to find new approaches.
You'll also need to find ways to attract and recruit the kind of IT and organizational talent who can bring this direct-to-consumer scenario to life, as well as support staff who can nurture those all-important customer relationships.
Finally, it's also a good idea to consult a supplier who knows the ins and outs of eCommerce and direct-to-consumer marketing. One example is Jagged Peak, which offers a full range of comprehensive marketing services designed to help you succeed.