Should Your Business Go From B2B to DTC?

Neal Kaiser
Thu, 21 Nov 2024 22:29:45 +0000
B2b, B2b-and-dtc, B2b-dtc, B2b-marketing, Business-to-business, Direct-access, Direct-to-consumer, Distribution-strategy, Dtc, Dtc-and-b2b, Dtc-e-commerce, E-commerce, E-commerce-sales, Ecommerce-platform, Sales-channels, B2b-vs-dtc

While working with resellers and channel partners in a business-to-business (B2B) relationship has its advantages–higher transaction values and relatively low customer service demands–selling to consumers through your website provides direct access to the people who are buying and using your products. This direct relationship with consumers offers many advantages beyond additional sales.

Direct access to consumers allows your business to improve its brand loyalty; surveys indicate that customers prefer making purchases directly from brand and manufacturer websites, rather than through those of resellers.

And because direct-to-consumer (or DTC) sales offer direct, two-way connections with shoppers, it’s easier to build the relationships that will increase your customers’ lifetime value and makes it more likely that they will refer others to your company.

Will DTC work for your business?

With all of these advantages, why wouldn’t every business engage in DTC e-commerce? There are a few reasons it won’t work for everyone.

When going from B2B to DTC isn't a great idea

Some companies have strong competitors that already dominate the DTC e-commerce space in their industry. In this case, jumping into the DTC e-commerce pool may only force the company into increased and unnecessary competition with rivals with deeper pockets and wider visibility.

Moving into DTC is also usually a bad idea when price is the primary driver in an industry. In this case, you’ll be competing with Amazon–and we all know how that ends. Finally, the DTC channel does not usually make sense for startups, as working with a wholesale channel can allow a new company to quickly gain exposure of its product in the market. Once this is achieved, then it will be easier to succeed in DTC e-commerce.

Questions to ask before jumping into DTC sales

If none of these scenarios apply to your business, then you may be a good candidate for DTC online sales. First ask yourself the following questions:

Does my company focus on its brand identity? If it doesn’t already, be warned: DTC will force your business to focus on its brand. By adjusting the focus of your business, your company will see the competitive landscape in a new way. Opportunities will look different, and even your team–well versed in the demands posed by B2B–may need shaping up.

Do I need a new website? You may argue that your non-transactional, informational site is already focused on your company's brand and core message, so the next question becomes should you build a separate site, or should you add DTC features to your existing site?

Both options have drawbacks, so consider a different approach: turn your main site into your flagship e-commerce site. Some may reject the e-commerce focus, but your DTC site is targeting those who would be purchasing items online. Visitors who simply want to learn about your company will still be able to find the original informational links in a different section of the main site.

Can my platform easily integrate feedback loops? Double-check that your e-commerce platform can implement Key Performance Indicators (KPIs) and social media integrations and buttons. Once trends are identified and data is analyzed, better site performance will soon follow. When evaluating your platform, it’s essential that your e-commerce partner can offer such plug-ins and assistance in transitioning to DTC.

Are my products highly visible in my current sales channels? If you are competing with only a few other brands in your current sales channel, you may have all the “shelf space” you need. However, if competition has proliferated and your sales channel is swamped with options, your visibility is quite low. To get fair visibility for all your products, product variations, etc., you have no other choice but to go direct. Will this have a positive effect on your sales? It will without a doubt.

It's also important to be mindful of potential competition that could arise between your business and your existing B2B partners through DTC e-commerce. Manage these partnerships by choosing a platform that allows creative discounting and promotions solutions. For example, if you're consistently discounting your products, resellers could become frustrated. However, integrating store locators into your platform allows customers to find products easily by identifying the closest reseller, so all partners can benefit from DTC sales.

Additional benefits of DTC over B2B

Integrating DTC e-commerce into your current brand website offers several advantages beyond increased sales. The biggest advantage is having a single, consistent source for all your data, including customer, merchandise, SEO, and otherwise. A DTC storefront will also give your business opportunities to grow in two directions, both via your current wholesale channels and direct to consumers.

Lastly, fostering a relationship with your DTC customers will let you gather data on browsing and shopping behaviors so you can tailor marketing plans to best capitalize on customer habits.

Deciding whether to add DTC e-commerce to your distribution strategy takes careful consideration of many factors. But when done correctly and for the right reasons, the result can be phenomenal, sustained growth.

About the Author

Post by: Neal Kaiser

Neal Kaiser is the CEO of Upshot Commerce (now Mi9 Retail), a leading convergent commerce solutions provider located in Boston. He has 18+ years of experience leading and managing e-commerce and technology projects for more than 500 companies including NASA, the Department of Justice, Tea Collection, The Boston Globe and the U.S. National Gallery of Art. Neal is a member of the Boston chapter of the Entrepreneurs’ Organization.

Website: www.upshotcommerce.com