As a distributor or Brand selling to retailers, there is the forbidden fruit of D2C commerce. Understandably, it is so tempting to cut out and cannibalise the retailers and sell directly to your loyal consumers. Just think of the margin! But it will not work out as easily as it sounds, because D2C mixed with distribution leaves you with 2 options:
- Screw over your retail partners and start to compete with those who owns your customers
- Screw over your most loyal consumers and sell your products more expensive from the official website to them than your retailers are doing
There are no other options.
I have done both “solutions” myself and that is why I want to tell you to not do the same mistake. Let’s go over the two options
Option 1) Screw over your retail partners
This means that you start competing with your existing retailers and present offers that are competitive in the market. So indirectly you are taking business away from your retailer. That is annoying for the retailer and it makes it less attractive for the retailer to push your products to his customers.
There are brands and distribution companies out there that do this every day. Often the argument to do this is that you as the brand owner can provide a better shopping experience and get closer to the consumer. And often agencies will confirm this argument for you. But this creates a lot of huge problems:
- You think you can do eCommerce, but you will never get the same local market reach as the local retailers have. Even Apple doesn’t have that
- You will open pandora’s box to a world of politics you did not know existed. It is really fine politics and killer administration to decide what deals you should offer as compensation to your retailers. Politics don’t sound like real problems before you have seen them unfold in your own company. You will need to hire more people than you know just to coordinate stuff
- Your retailers will find other brands to push to their huge audience (Newsletter, push notifications, websites)
- Brand sucks at eCommerce and always will. They hire 3 overpaid employees (+a good-looking intern) to run a webshop, while the local retailers have 1000 low-paid (But super efficient) employees that have worked and specialized in IT, logistics, marketing, customer service and online marketing for decades. They might not be Einsteins you are up against, but they know their numbers and work as fine-tuned machinery
- If you don’t want to screw over your fans and consumers then you need to always be the cheapest as well. Congratulations, you just started a price war with your own retailers, just to kill your brand at a record speed
*if you are a pureplay D2C company, then this does not apply
Option 2) Screw over your fans and end consumers
The other option is that you don’t compete with your local retailers and use your own store as a place to just display the fake RRP to make your retailer’s prices look better. Now you are effectively skimming your most loyal customers, while your less loyal consumers buy your products from local retailers at lower prices. Do you see the problem with this?
Solution (Hint this is us doing marketing)
- Don’t build a D2C store
- If you already have built a D2C store, then add links to your retailer’s product pages, so that your fans and loyal consumers can buy the products where they are the cheapest and where they prefer to shop normally.
- Build local landing pages that guides your local consumer to your local retailers
- You can see how we do this here (www.etaility.com/takeoff)
