The Shipyard has a new take on how selling direct-to-consumer (DTC) benefits not only brands who do so, but also the retailers they do business with.
Building direct relationships with customers gives brands valuable first-party data that can be used to make retailers more confident in carrying the brand’s products and help in the development of new products. The Shipyard helps brands capture, leverage and extract actionable insights from data that enables more relevant and motivating creative messaging, engages consumers at scale, and drives exponential growth.
In the early days of e-commerce, manufacturers were strongly dissuaded from selling direct out of fear of upsetting relationships with their retail partners. Competing for sales with retail partners was a threat and deemed “channel conflict.” Additionally, selling online was a complicated endeavor, so manufacturers were happy to leave it alone.
Today, however, retailers are much more worried about the threat that Amazon and other major online e-commerce channels bring to their business — Amazon alone controlled 37.3 percent of U.S. eCommerce market share in 2019 according to eMarketer. By comparison, direct sales are relatively insignificant on an individualized basis for most products and most major retailers remain confident of their value proposition of conveniently selling multiple products to their customers. And many omni-channel retailers offer free shipping thresholds that individual manufacturers can’t offer as easily.
The shifting needs of brands, retailers, and the digital marketing landscape itself make it an advantageous -- and maybe even strategically necessary -- time to consider building a DTC offering. Here are some tips from The Shipyard on how CPG brands can reframe their thinking and get started on selling DTC.
Aggregate customer data can also provide a macro view on customer preferences; consider it your own personal, real-time, 24/7 research platform that allows you to understand your customers more intimately than ever before. You’ll know what your consumers do (and not just what they say, which can often differ). The ability to interpret first-party data to generate actionable insights and activate on the data in-market to reach these precise individuals through programmatic media makes this information infinitely more valuable than that culled from traditional consumer surveys.
Digital to Retail Success Loop
The Shipyard Case study: Weleda launches new products on DTC first
Weleda N.A., a subsidiary of the Switzerland-based progressive European natural beauty brand. launches every new product on its own e-commerce DTC site before distributing to retail shelves. The result? Consistently successful product launches along with double-digit growth in retail distribution and turnover.
As Randi Jachino, the vice president of marketing at Weleda has explained, the company doesn’t have huge launch budgets, making it imperative to be uber-efficient in how the money is spent. By launching online first on Weleda’s own web shop, she noted, “it’s possible allows us to learn while we earn without breaking the bank.” Then The Shipyard turns on the tap full throttle with confidence that every dollar its spending is doing its job to support retailers.
Weleda has also found that retailers respond very favorably to gaining access to real-world DTC sales data. “Real sales data is the most convincing sales tool we have, as that’s what retailers use every day to run their own business,” explained David Laugen, Weleda vice president of sales. The company recently dealt with a major retailer that didn’t take one of its new products at first, but changed its mind after seeing Weleda’s DTC sales data, placing an order for the next cycle.”
Going forward, Weleda sees even more ways of partnering directly with retailers for future launches.
The Shipyard Case study: ScottsMiracle-Gro uses DTC marketing to find new audiences and reduce cost-per-acquisition
In looking for new growth, Ohio-based gardening brand Scotts, a leading American provider of lawncare products, leaned into DTC marketing to find scores of new audiences for its Miracle-Gro brand, using first-party data to predict which consumers would be most responsive to which SKUs and messages.
First-party data made it possible for The Shipyard to craft hundreds of creative assets across five story angles to learn who the hand-raisers for each product really are. Each story line featured a custom landing page and e-commerce experiences. When it comes to their lawns, homeowners have many different motivations. Some are motivated most by a beautiful lawn that allows them to enjoy the outdoors with their families. Some just want to avoid problems (weeds and patches). Others are motivated by how they would be perceived by their neighbors. Messages were tailored accordingly -- increasing the relevancy of campaigns by leveraging the messages that were most motivating to each audience segment. Through prospecting and retargeting, The Shipyard optimized biddable and social media, and creative formats far beyond benchmark engagement rates. It optimized purchase paths, message sequencing, cart abandonments, and retargeting offers.
Scotts and The Shipyard increased its DTC business exponentially, lowered the DTC cost per acquisition by more than 60 percent, while also driving significant incremental retail sales (e.g, offline big box retailers, etc.) in a mature gardening market.
Ultimately, your Brand.com site needs to have a clear role to get consumers to interact directly and differently than in instances where they might purchase your products at a retailer. While DTC won’t be a fit for all CPG brands, determining how and what first-party data to collect and analyze is key for future growth. To that end, consider how your brand site talks to its consumers — both functionally and emotionally — and better yet, how it listens.
How to build a DTC relationship without transactions
If you can’t sell directly, the good news is you can customize off-the-shelf SaaS (Software as a Service) digital products that can be integrated into your website - without even writing code. Some players in this space are Jebbit, Qualtrics, and Typeform.
For instance, online product selector tools can help consumers navigate a sea of product options to find what’s best for them, ultimately leading to a better product experience and higher repeat rates. These tools are the ideal shopper marketing tactic when consumers tap into their mobile phones for help while standing in the aisle to make a decision. Of course, the data from a product selector provides critical lower funnel feedback, even for companies that do not offer a transactional DTC function.
Even easier, virtual engagement online can also be an important data collection mechanism, through quizzes and polls that provide valuable “zero party” data, in which a consumer proactively gives data to a brand. Loyalty programs can also reward repeat customers, giving them special access to new products, serving as virtual advisory boards, and encouraging referral and social sharing. And finally, ratings and reviews feature both create valuable data for the brand and are helpful sources of information for many consumers.
Re-Framing the channel conflict story
The time is now to reconsider how CPG manufacturers and retailers view DTC selling — to see it as a way for both sides to work more closely with better data that instills more confidence in how products are brought to market. Especially as e-commerce has ramped up during the pandemic, it’s a time to listen to what your consumers have to tell you. Be the one they tell, and you’ll have an incredibly valuable story to share with your retail partners.
The Shipyard has a new take on how selling direct-to-consumer (DTC) benefits not only brands who do so, but also the retailers they do business with.
Building direct relationships with customers gives brands valuable first-party data that can be used to make retailers more confident in carrying the brand’s products and help in the development of new products. The Shipyard helps brands capture, leverage and extract actionable insights from data that enables more relevant and motivating creative messaging, engages consumers at scale, and drives exponential growth.
In the early days of e-commerce, manufacturers were strongly dissuaded from selling direct out of fear of upsetting relationships with their retail partners. Competing for sales with retail partners was a threat and deemed “channel conflict.” Additionally, selling online was a complicated endeavor, so manufacturers were happy to leave it alone.
The Shipyard is the world’s first “Marketing Engineering” Agency. Data geeks and strategists working side by side with storytellers and artists to grow your business. By harmonizing millions of data points, we create a deep, personalized understanding of your consumers to predict their behaviors and aspirations. Our test-and-learn approach allows us to repeatedly deliver courageous marketing that is compelling, effective and measurable. Our work consistently results in growth for our clients with higher acceleration and lower costs than virtually anyone in the industry. The Shipyard serves iconic brands such as In-N-Out Burger, American Electric Power, ScottsMiracle-Gro, Weleda, Protective Insurance, Bollé, NCR, BrewDog, Sempra, Nationwide and CO-OP Financial Services.