Why go in the DTC space?
Building a DTC e-commerce company is really not that easy, getting to profitability can be quite
Which I've explained further in this blogpost.
So if it’s that difficult, why should you be doing this?
Let’s start with what it takes to build a DTC brand, what should you be doing?
- Yes, having an amazing product is a non negotiable, preferably combined with some innovation on the product itself, the material, the experience, …
- Yes, having an amazing online store is also very important. It is still the digital equivalent of an actual store.
- Yes, having an amazing Instagram feed has become a non negotiable.
- And finally yes your ads should also be great, and great doesn’t perse mean it all need to be premium shot videos, it means that it should suit both your brand values and the platform.
Once you have all of these things and you are getting some visibility online, meaning: you'll have some PR, you'll be able to partner with the right influencers and you'll be spending quite some media budget.
Without a question the partnership and resell requests will start flooding in.
From blogs that want to feature your products to other webshops/concept stores that want to resell your products as retailers that want to work with you. Via these channels it’s often easier to make money. The contribution margin on these sales are often at least 40-50% & they are ordering per 10(0)’s at a time.
Should you accept all these requests? Again no, it’s not that simple. Bringing me back to our previous blogpost about your position in the market. So be very careful which stores/brands/retailers you start associating with, they can make or break your brand.
This is thus one of the main benefits of having a DTC e-commerce channel:
You get noticed by potential partners and resellers.
Next to this the DTC business model has a few other side benefits:
1.It’s very hard to create the same proximity to your client in another way.
As a result it’s a lot easier to:
- Ask for feedback on your current (and future) products
- Form a community
- Create real fans for your brand
- Gather insights in the markets and identify opportunities for new products
2.It can help you to establish a long term position in the market:
- Building a DTC brand can be quite hard for the bigger player. Because it requires a completely different approach/skillset and they are often bound by B2B2C relationships.
- This might provide you with exit opportunities somewhere along the road.
3.Selling via your own online store might have a positive impact on your long term profitability as there are no intermediaries. Also, when positioned correctly online, it might be possible to ask for higher prices than those you would normally sell at.
4.When done right, it might also increase the sales of your resellers. By being more visible online people will recognize your brand when shopping somewhere else and that might just be the difference between buying your products instead of those of your competitor.
So to conclude, if you are ambitious and want to build a DTC e-commerce brand but you don’t want to spend the next 5-10 years fundraising you should figure out a way to maximise these side benefits and reach profitability sooner.
But… Most of us already have a tough time managing the current logistics and other workload that goes with growing a webshop. How the hell can we combine that with also trying to reap these side benefits?
Well, that brings me to my next learning of 2021: the importance of The E-commerce Engine.