Direct-to-Consumer (D2C): The configurator as a sales genius
Author: Elisabeth Sonnleitner
40% of consumers have purchased a product directly from the manufacturer in the last six months, according to a study by Capgemini. Direct-to-consumer sales from manufacturers are booming. The trend is being driven by new digital solutions that enable manufacturers to offer their customers a tailored user experience. What constitutes the D2C sales model and how do companies benefit from digital direct sales?
D2C: From retail to direct sales
Before digitization, the distribution of products to end customers functioned almost exclusively through retailers. The retailer acts as an intermediary between the manufacturer of a product and the consumer. He buys goods from the manufacturer, which he then sells to end customers. Often, several retailers are involved until the goods reach the customer.
A carpenter's workshop, for example, manufactures tables that it sells to various dealers, who in turn resell them under their own names. In the days before digitization, the joinery had few other options for selling the tables itself in the appropriate quantities. For the joinery, this distribution model has a clear advantage: calculable purchase quantities and access to a distribution network without investing its own resources.
In return, the manufacturer gives up some control: Each retailer wants to make a profit on the product, so the margin for the manufacturer decreases. In traditional retailing, the market power of the retailers is so great that they can largely set the prices. In relation to the end customer, the manufacturer loses control over product presentation and communication with customers. In addition, not every product is suitable for traditional retail distribution. Complex and customizable products can be better represented in the digital world than in a store.
Direct-to-Consumer: Advantages of direct selling
The direct-to-customer approach connects manufacturers of products directly with end customers. As a result, marketing and sales fall entirely under the responsibility of the manufacturer. Instead of selling their tables to large retailers, the joinery can now offer their tables online themselves, taking back control of distribution:
- Customer journey: In direct sales, the manufacturer has direct control over all contact points in the customer journey. He decides for himself how he wants to communicate and be perceived by his customers. It receives direct feedback and generates valuable insights into user behavior, which forms the basis for data-based optimization of the customer journey.
- Pricing: The manufacturer determines the price himself and does not have to share his margin with a retailer. As a result, he can either pass on price advantages to the customer or use them for investments.
- Customer care: By controlling the customer relationship, there are numerous opportunities for the manufacturer to increase customer lifetime value - from brand building to shaping the buying experience to after-sales care.
- Product development: Not every product will work in every retail setting. For retail distribution, our cabinetmaker had to tailor its product line to meet buyers' criteria for space requirements and turnaround time. With a D2C model, the manufacturer creates an interface to individually implement customer wishes and deliver product variations directly to the customer.
From supplier to product owner - challenge of D2C distribution
The D2C approach is older than the Internet - however, D2C sales owes its increasing spread to digitalization. On the one hand, the technical infrastructure allows companies to set up a digital sales channel quickly and cost-effectively; on the other hand, the vast majority of end customers own an Internet-enabled device and can therefore in principle be addressed directly. This gives rise to various challenges for marketing and sales:
- Competition: Digitization is causing existing value chains to split up and markets to be reorganized. Young companies are using the opportunities of the digital world to revolutionize commerce. Digitization is also characterized by a triumphant advance of platforms. In order to hold their own against platforms, manufacturers must offer a clear advantage - for example, individualization options, better prices, or more direct customer service.
- Customer requirements: According to a Salesforce study, a good user experience is essential for a sustainable business relationship. At the same time, more than half of these people perceive this experience as fragmented. To get help on a product, they have to talk to different departments at different levels that don't have complete information. Different marketing and sales channels and different tools lead to data silos that negatively impact the user experience. In digital direct sales, manufacturers need to avoid data silos and use tools that create a unified database.
- Building infrastructure: Dealers take care of product presentation, marketing, and sales. In direct sales, manufacturers take care of this themselves. Building a profitable digital sales channel involves a resource commitment and a learning curve. However, thanks to cloud and modern SaaS solutions, digital sales solutions are no longer the preserve of large companies with the resources to build a digital infrastructure.
Configurators in direct sales (D2C)
Companies have to hold their own against competitors in the digital world and at the same time meet increasing customer requirements in terms of an individual customer experience. Complex products can hardly be mapped in a user-friendly way in classic e-commerce systems. Configurators are a crucial tool for creating a state-of-the-art customer experience in the D2C sale of customizable products:
- Individualization: the configurator provides the customer with a detailed overview of all options. Here, he can design the product according to his ideas and order it based on the configuration.
- Modern product presentation: The product is set in scene. It can be viewed and zoomed from all sides and is within reach. The customer can get a more accurate picture of the product and thus make a better purchase decision. The product can be experienced.
- User-friendliness: via a configurator, producers provide their customers with an intuitive user interface to put together products according to their wishes and thus obtain a better solution than in traditional retail.
- Customer loyalty: By interacting with the website and the product, the customer builds an emotional connection and gets answers to most of his questions. This shortens the sales process and provides a significant increase in sales.
Our Sales Boosting Configurators for your D2C Sales
Are you ready to take your D2C sales to the next level? Then win over your customers with an intuitive configurator that visualizes their end product and simplifies the buying process. Our sales boosting configurators are designed to maximize your sales. Over 12 years of creating configurator solutions for a wide range of companies, we have pursued a clear goal: more sales for our customers.
Working closely with you, we design a configurator that gives your customers the freedom to try out individual wishes and buy their dream product. There is no better way for manufacturers of customized products to make your sales professional and customer-friendly.
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