By Scott Rigby
Direct-to-consumer (DTC) e-commerce is gathering pace, with retail e-commerce in the Asia Pacific region growing by 26.4% in 2020. The benefit of selling directly to consumers and bypassing third-party retailers has driven an unprecedented number of organisations to hop onto the DTC bandwagon.
While business-to-business (B2B) organisations explore the potential of this profitable new growth channel, they should also consider the questions that this transition poses. Could employing this strategy harm your channel partnerships? Will traditional partners feel betrayed by this shift?
Failing to understand the pros and cons of DTC could lead to lost opportunities or even damage your brand.
The global pandemic has accelerated the changes
With many confined to their homes during the global pandemic, e-commerce engagement soared like never before. Entire industries have adapted and evolved in response to these changes, with many companies thriving due to their existing set ups. Conversely, many had to deal with a baptism of fire in the absence of their traditional bricks and mortar channels. This dramatic shift looks set to alter behaviour across companies, customers, and the number of sales DTC accounts for in the coming years.
Although the pandemic has accelerated these changes, the main driver for changing business models is the growing prominence of e-commerce within the marketplace. This prominence is giving B2Bs a unique opportunity to reach customers at any time and potentially reduce costs.
The DTC opportunity for B2B
By creating an effective DTC solution, the far-reaching environment and significant advances in e-commerce technology have made it possible for brands to scale and build awareness far quicker than if they were to create a physical store. Indeed, harnessing a DTC strategy can bring forth many benefits, such as:
- Revenue growth: By opening a new selling channel, B2B organisations can gain a boost in their revenues. In Malaysia alone, e-commerce income by type of customers via B2B increased to RM449.6 billion in 2020, which was a 13.0% jump, according to the Department of Statistics Malaysia (DOSM).
- Gaining valuable customer insights: DTC organisations have access to deeper customer data and insights compared to that made available through retail partners. With new insights easier to attain, businesses will learn even more about their customers’ needs when developing new creative solutions.
- Manage DTC and B2B sales from one location: B2B organisations can maximise technology investment by utilising one e-commerce platform that serves both B2B and DTC customer groups. This will future proof your business and improve efficiencies, giving businesses a holistic view of their data to make better use of it.
It’s not all plain sailing
While growth in the DTC sector is undeniable, at Adobe, we continue to see B2B organisations experience major growing pains on the path towards launching DTC e-commerce solutions.
Despite many B2Bs being well established in their existing models, the dynamic DTC landscape is uncharted territory. These organisations now face the same challenges all brands face online – standing out in a highly competitive and saturated environment.
Additional challenges such as budgeting, managing logistics processes, and measuring the impact on existing channel relationships, will need careful management to ensure customer experience is not jeopardised.
Can you offer evolving product solutions?
Cultivating a unique product and service offering is about creating a platform with the capacity to evolve. In today’s competitive e-commerce market, only the organisations that evolve with their customers will capture market share and prosper. As customer demands change, so must the products and services DTC organizations offer them.
Case in point, Unilever’s move to a more direct customer service with its FoodServiceDirect model, has seen B2B sales and new customer acquisitions each increase by 40% since its launch in 2018.
Adobe believes that the organisations that demonstrate intimate knowledge of their evolving customer profile will continually and successfully innovate their offering.
Is DTC the future?
With substantial growth figures, businesses might be tempted to over-dedicate energy and budget into DTC strategies. However, this needs to be justified to customer requirements. With everyone still trying to work out what “normal” will look like in the near future, one thing remains clear – DTC is the model that an increasing number of businesses are clamouring for. This approach could safeguard short-term future and grow a long-term strategy
Scott Rigby, Chief Technology Advisor & Principal Product Manager, Adobe