By Kris Tait, managing director, Croud
People love to support independent businesses with a strong sense of identity and ethics — and DTC brands tend to provide exactly that. As such, the retail industry has seen independent retailers like Reformation, Glossier and Everlane explode in popularity, providing specialist products and showcasing the sort of category growth that many traditional retailers could only dream of.
The next logical step for DTC businesses looking to expand would be to leverage a new sales channel to meet demand and grow the business. And where better to do that than a reseller? Imagine: your beloved products displayed on the likes of Amazon or Sephora, alongside some of the biggest names in the industry.
This can be an excellent strategic move. Brands get significant exposure and can take advantage of the easy buying process afforded by the likes of Amazon, such as faster shipping and a frictionless purchase journey, which provides greater convenience to the consumer.
Yet what we’re seeing time and time again is that businesses are adding new channels into the mix without changing anything in the way they buy media, or their understanding of how their customers’ purchase behavior changes.
Subsequently, sales to their once fast-growth website start to plateau or even decline. But if overall and incremental sales are going up, everyone should be happy — right? Not so much. This growth can put the ecommerce team responsible for website sales in a tricky position. However, there are ways DTC brands can confidently and effectively expand into new channels without losing control of sales or the consumer journey.
Sing from the same hymn sheet
Before building a house, it’s important to lay a solid foundation.This logic is no different when working alongside resellers. It’s easy to forget that when a business is leveraged, a certain amount of control is relinquished, so it’s important that everything is in order with the current business before making this significant step.
The first step to selling with resellers is to impact a cultural change across the whole business. Ensure every stakeholder — from internal teams to affiliates, resellers and distribution companies — understands the agreed upon growth strategy and speaks the same language across the board; or else it’s very easy for a business to become siloed and lose the big picture.
The effects of not doing this early on, and therefore staying siloed, can be felt deeply. A popular wellness brand I know started leveraging Amazon as a sales platform earlier this year, but found it challenging to drive incremental sales, and not just shift where customers were buying from. When faced with the choice, consumers shopped with Amazon over direct channels. Rather than recognize the movement of sales from one channel to another, the brand continued to plough investment into their own website, expecting the same ROAS. Naturally, this left the team responsible for website sales scratching their heads as to why the results of their marketing efforts were decreasing over time.
The solution, of course, would be to have a clear, cohesive measurement strategy across the entire business and all departments working toward the same goal. If the consumer has an easier experience buying from Amazon over your website, lean into it — and don’t battle against it.
Choose the approach to measurement, and do it really well
To this point, it is crucial to agree the measurement framework against which you’ll judge success across the business upfront. Without measurement, businesses won’t necessarily be clear as to where sales are coming from and therefore won’t have the correct data informing them of where to invest next.
Too many businesses rely on outdated measurement methods and are then surprised when their marketing efforts don’t deliver incredible results. Take the last-click attribution model: so many businesses are using this as a method of measurement when it fails to take into account the actual customer journey. Should an affiliate be getting the credit they often do for the sale when a consumer is simply searching for a coupon, after having already decided what they want to buy? The answer is most likely no. Consumers are shopping across different devices and touchpoints, and their relationship with a business — and path to purchase — is far more convoluted than it once was.
As technology has reshaped the way audiences shop, businesses of all kinds must make the switch to multi-touch attribution measurement and take into account the full customer buying journey. This will ensure your efforts to reach new customers do not go to waste and more of your budget can be invested into truly driving incremental business. Once a solid method of measurement is established, it must be consistent across the entire business. This means when new channels like Amazon are added, that sales data is available to your whole business. Otherwise teams will continue working in silos, competing against each other for the same customer.
Embracing resellers can be a great way for DTC businesses to expand, but brands need to understand how this will inevitably change their revenue split between channels. Most importantly, it’s key to recognize how this will change the way their customers buy their products in the future. Ultimately the aim is incremental sales, not cannibalization of sales you were already getting from your website.