There has recently been some talk about whether selling on Amazon is profitable for direct-to-consumer (DTC) brands. Nike and Ikea are two examples that have left the site in favor of their own sites instead. But many other DTC companies still rely heavily on Amazon to get sales as well as reach more customers than they would otherwise attract through just one website alone.
Companies like Nike and Ikea succeeded in their transition from Amazon to DTC due to their brand power, company size, marketing dollars, and several years of e-commerce experience. However, for companies in their budding stages that are trying to establish a name and create demand in the market, letting go of Amazon’s immense footfall won’t be the best decision. When you are starting your own company and have a product that is slightly differentiated from the competition, it’s important to study their actions so you can always be a step ahead.
In this blog, we’ll go over the reasons why direct-to-consumer businesses need to adapt if they want to make it in today’s marketplace. Read on for how your brand can use Amazon even if you are currently just selling directly with consumers!
The Growth of the U.S. Retail Industry
If there’s anyone to thank for the development of the American retail industry, it would be Henry Ford, who developed the first moving assembly line, allowing the mass production of an entire automobile.
Although the assembly line was first put in practice at a car manufacturing company, it turned out to be beneficial to businesses of all kinds. The assembly line sparked a drastic change in the market, streamlining the production process and enabling the mass production of goods, introducing more products than ever before.
Mass production urged the American retail industry to build large department stores, which led to shopping malls, and finally, the big box stores everyone goes to today. As of 2019, the United States is recognized as the largest retail market globally, with a few trillion dollars in sales.
The Long-Time Frontrunner
Walmart is undoubtedly a domineering presence in the retail industry, with $559 billion in global revenue. Although the largest global retailer turns 60 this year, it shows no signs of slowing down.
With the continuous evolution of the retailing landscape and changes in consumer behavior, it seems the steps Walmart is taking to adapt to the changing expectations of customers are paying off. However, even with these growth opportunities and Walmart’s impressive global revenue, how long do you think it would take for Amazon to overthrow them and take the crown?
In Second Place—But Not for Long
Walmart may still be over double the size of Amazon, but it’s no longer the only retail giant. Although Walmart is catching up to the rising trends and changes in consumer behavior, Amazon still leads, thanks to its e-commerce capabilities.
Although the brick-and-mortar native is growing to become one of the major contenders in online sales, it doesn’t seem to be enough to catch up to Amazon. Considering everything, it looks like Amazon has a great chance of finally advancing beyond second place and taking the title as the largest retailer in the U.S.
The growth of Amazon further emphasizes the need for brands to utilize the traffic that exists within such marketplaces. Gone are the days when you had to go through a middle-man entity to sell to your customers! Thanks to marketplace sites like Amazon, it has become easier to reach consumers and provide them with what they need through the Direct-to-Consumer (D2C) strategy.
D2C and the Disruption of the Economic Landscape
As technology evolves and consumer preferences shift from retail toward online, entering the market directly instead of through middlemen like wholesalers and retailers is the smart business move to make.
The direct-to-consumer (D2C) model has significantly impacted the past decade of retail, proving to be an intelligent way of finding prospects, serving customers, and getting ahead of the competition. Manufacturers of different consumer packaged goods (CPG) have started marketing, selling, and distributing products directly to customers through marketplace sites, such as Amazon.
The Benefits of Selling Direct
The high startup costs and low margin of error make selling to retailers look less attractive for new brands. Since the shopping experience is too much of a hassle, millions of shoppers are opting to avoid stores altogether for the convenience of click-and-ship options, which means that retail chains will be losing more customers in 2022 than ever before.
DTC communication and advertising are all about personalization. With a DTC platform, every customer interaction can be tracked which leads to better service, support, and retention rates that help strengthen the brand loyalty you’ve worked so hard for!
1. More Control
Since you’d oversee everything, including the customer experience, you won’t have to worry about the capabilities of the person you’re selling through, what the checkout process is like, or how fast the website is.
With control over your brand story, price-cutting counterfeit and inferior goods is hardly ever a problem. As a direct-to-consumer brand, you could ensure that the quality of your goods, packaging, and pricing meets your standards.
2. More Insight
Being a direct-to-consumer brand allows you to communicate candidly with your customers. With an open line of communication, you have the opportunity to educate and interact with your customers to understand what they want and need.
Instead of relying on reseller data to learn about shopping trends, you can get interest reports in real-time and learn about your consumers’ buying habits and experience interacting with your brand through D2C platforms.
3. Less Retailer Reliance
As more people turn to the internet to purchase what they want and need, brick-and-mortar retailers are feeling the heat. With declining in-store sales, retailers must consolidate and minimize their physical locations, reducing the chances of seeing your products in-store.
There’s no surviving on a sinking ship—if you don’t want to be affected by the loss of physical shelf space, then D2C is the way to go. Thanks to e-commerce, you no longer need to rely on retailers; you can now invest in selling directly to customers to sustain your market segments.
Becoming a Distinguished D2C Brand on Amazon
Going direct-to-customer certainly has many benefits, but simply launching on Amazon isn’t enough to get you the results and sales you’re aiming for. With the rising number of companies jumping on the D2C bandwagon, you’ll need to go the extra mile to gain a competitive advantage on Amazon.
If you want to build your D2C brand on the largest e-commerce platform successfully, you must invest in an Amazon ad campaign. Advertising on Amazon can drive more than just sales—as an avenue consumers visit to shop and discover brands, Amazon Advertising can help your business reach millions of customers, support product education, improve brand awareness, and more.
Of course, the cost is a natural part of the conversation when it comes to advertising campaigns. Although Amazon advertisers pay $0.81 for every click on their ad, the cost of Amazon Advertising isn’t set in stone, as it will depend on your competition and budget. This is where considering third party software will benefit you. Instead of trying to learn how to run ad campaigns yourself– an often confusing and complicated process– consider incorporating Amazon advertising tools into your business operations; with tools like Simpliworks PPC campaigns, you can easily set up an advertising strategy at low cost with little effort. Setting up campaigns with third party tools allows you to focus on other important aspects of your D2C brand, knowing that your Amazon advertising needs are taken care of by experts.
Working with an Amazon ads manager and having a sufficient budget to compete for highly competitive keywords is crucial to advertising on Amazon and building a solid D2C brand, but that’s not enough.
Once you’ve determined that using the D2C model is the best for your business and consumers, build your brand with these methods:
1. Market Your Product on the Consumer’s Pain Points
The key to gaining success as a D2C brand is recognizing the problem that your prospective customers are experiencing and marketing your product to solve those problems. By promoting your goods to resolve a common consumer pain point, your company will certainly grow.
2. Simplify Your Choices
If there’s anything better than offering affordable and high-quality products, it’s selling just a few of them!
If there’s anything better than offering affordable and high-quality products, it’s selling just a few of them! Options are good, but too many of them can lead to confusion, negatively impacting the shopping experience. Sometimes, less is more! If you want to generate more sales, eliminate the unnecessary choices, and focus your advertising efforts on niche products with the potential to be preferred by your consumers.
3. Deliver Excellent Customer Service
Nothing beats a good old end-to-end customer experience! Of course, your products play an integral role in the success of your D2C brand, but it’s not everything. If you want to see an improved brand image, awareness, and loyalty, you must also invest in developing a culture of responsive customer support.
The direct-to-customer model shows no signs of becoming outdated anytime soon—with more D2C companies basking in the limelight, it only makes sense to sell directly to customers through e-commerce platforms such as Amazon. With the right Amazon ad campaign and D2C tactics, your brand is sure to become the next best thing!
Are you looking to create an Amazon ad campaign but don’t know where to start? Then, leave it to us at Simpliworks to make selling online as easy as buying online. As the first automatic campaign builder tool for Amazon Sellers, we can help you easily promote a single product or a catalog of products with the help of our experts. Build your free campaign today!