Have you ever asked yourself “Why don’t I sell more myself?” Perhaps not as your primary sales strategy, of course. But as a way to reach new markets or an additional avenue to increase your sales and keep those profits in your bag, not the middleman’s.
The idea of selling products directly to consumers may be daunting at first. But it’s not as difficult as you think, and doing so has many benefits.
Price Control
For one, you’ll be able to control the pricing of your products. When you sell through retailers, they will naturally mark up the price of your products to increase their profit margin.
But when you sell directly to consumers, you can set the price yourself. This makes you much more competitive since you don’t have to factor in the retailer’s markup.
Do not underestimate the markup price for the consumer. The rule of thumb in retail is that the markup should be at least double, if not triple, the cost of goods sold. So if your product costs $10 to make, the retailer will sell it for at least $20-$30. When you sell directly to consumers, you can undercut the retail price and still make a healthy profit.
Brand Protection
Additionally, selling directly to consumers allows you to build brand equity. Customers who buy from you are more likely to think of your brand when they need a product you sell.
This top-of-mind brand equity is precious and can help you command a higher price for your products in the long run.
Perhaps you’ve heard of OnePlus, one of the original “cheap but high-end smartphone” manufacturers. They’ve only been around since 2013, but they’ve already built up a loyal following of consumers who are passionate about their brand.
OnePlus managed to do this by selling its products directly to consumers, bypassing the traditional retail channels. They built up a network of customers via referrals, social media, and online forums, and they continue to sell their products at a very high margin, raising their prices year-over-year.
Smaller companies who’ve had similar success, like OnePlus via D2C sales, are Everlane and Dollar Shave Club. Everlane’s managers were convinced they could make a much higher quality product than what was currently on the market and sell it for a fraction of the price by cutting out the middleman. Dollar Shave Club’s gamble was that most guys weren’t particularly brand-loyal when it came to their razors, so they could undercut the prices of the Gillette’s and Schick’s of the world by selling directly to their customers. Both Everlane and Dollar Shave Club were proven right, of course.
Data Collection
Finally, selling directly to consumers allows you to easily collect data from your customers. You can use that data to improve your marketing and sales strategies and to develop new products that meet the needs of your target market.
You may also find that you don’t need to develop new products but instead improve or use variants of your existing products. Perhaps a specific feature of your product is much more popular than you thought. In that case, you can focus your manufacturing and marketing efforts on that feature and potentially even charge a premium.
Platform Ownership (If Self-Hosted)
Now, selling directly to consumers might seem daunting at first, but in today’s world, there are so many easy-to-use e-commerce shopping platforms you can use. Of course, you can opt for opening a physical store, but remember that this pathway usually requires a significant investment and more staffing.
However, the benefits of opening a physical store are that you will completely control the consumer experience. You can create a warm, inviting space that accurately reflects your brand identity and trains your staff to provide the best possible service. Plus, selling products in person can help build a strong rapport with your customers and foster loyalty to your brand.
Meanwhile, e-commerce platforms like Shopify and WooCommerce provide everything you need to sell online quickly, with minimal upfront costs. You can create a professional-looking branded website in just a few hours and start selling your products to consumers worldwide.
Summary
If you go the D2C route to find new revenue for your company, consider using software that can help you manage your inventory and connect with e-commerce platforms – it’ll save you a lot of sleeping hours and unnecessary headaches in the long run.
