The “new normal” brought about by the pandemic has given prominence to direct-to-consumer (DTC) brands. For businesses, going DTC often translates to reduced overhead costs. For consumers, it means more familiarity and engagement, having a direct connection with the brand. As competition grows in the DTC space, it will become a necessity to start scaling DTC and optimising your operations.
When launching or growing a DTC channel, brands will need to be mindful of certain challenges particularly ensuing from increased costs from inflation, as well as potentially low consumer confidence. Global economic uncertainties have severely affected the customers targeted by DTC brands. Still, it is possible to succeed in scaling up in the current economic climate.
Consider the following tips that explore five of the most important points when scaling DTC business.
Allocate the appropriate resources
The right human and capital resources are essential to scaling any business. For DTC, this will involve growing customer outreach, determining product offerings and spending on additional services such as cloud services, marketing, supply chain support, cybersecurity and other important aspects of operations.
Improve both traffic and conversion rates
The average conversion rate for ecommerce is around 2 percent. Other studies show more optimism – Unbounce, for example, cites an average ecommerce conversion rate of 5.2 percent.
Scaling DTC will require growing traffic in the first place. How can DTC businesses improve traffic and conversion rates? There are different ways to do this, but the most convenient is to use UX analytics solutions that can reveal opportunities for various funnel touchpoint optimisation efforts. For example, brands might do well to emphasise checkout page optimisation to address the issue of cart abandonment.
Address supply chain issues
As brands grow, it becomes crucial to have a sound inventory management system in place. This system should have real-time data to guide restocking decisions and ensure that potential customers do not go elsewhere after seeing “sold out” indicators for many items. Also, order fulfilment has to become more agile. It may be preferable to outsource order fulfilment at some point. Businesses need to keep track of all supply chain indicators and make rapid but sensible decisions.
A good ERP solution can help manage supply chains better in the context of scalability. It can raise efficiency across different departments, automate workflows to lower overhead and operating costs and make supply chains more flexible or adaptable to changing market conditions.
In some cases, businesses may have specific requirements for inventory tracking and logistics. Companies involved in sensitive medical or pharmaceutical products, for example, may require smarter ways to oversee product movements and conditions. There are also specialised solutions for specific supply chain needs like this. Logmore, for example, makes it easy to monitor the conditions of sensitive products and ensures that they are in their best condition when delivered.
The data generated from the inventory logs can also be useful in analysing and improving product distribution and supply chains with scaling in mind.
While digital transformation has opened opportunities for better business efficiency, this also means higher exposure to cyber threats, especially as an organisation scales up and traffic grows. DTC companies are not immune to potential attacks. Businesses stand to lose from $800 to more than $650,000 per cyber attack based on the 2021 Verizon cyber threat report.
Scaling up will potentially mean more workstations, servers, ports, apps, as well as websites (or sub-pages and microsites) and online accounts in relation to the bigger scope of operations – these will increase the attack surface of your business. The bigger the scale, the higher the likelihood of finding vulnerabilities. Brands will need to prepare for these bigger cybersecurity challenges by validating and fortifying your security posture management.
Moreover, DTC companies can employ business-as-a-service solutions (BaaS) to reduce scaling risks related to potential customer fraud, regulatory violations and data loss. Outsourcing fraud protection, data loss prevention and compliance validation functions will provide an opportunity to avoid additional overhead costs while tapping into proven security expertise and experience.
Ensure good user experience and customer service
Many businesses have challenges in providing high-quality user experiences and customer service as they scale up operations. As they start serving more customers and processing more transactions, many tend to lose the targeted and quality service that a business can afford with a smaller client base.
A recent survey shows that 58 percent of customers are willing to pay more for better customer service. Customers tend to prefer ecommerce sites that provide worthwhile experiences even when the prices are slightly higher compared to those of competitors.
To prevent customer service degradation, it helps to turn to automation with the help of AI customer service agents like Chatbots to deal with less complex customer concerns. This allows employees to focus on more important customer service issues that justifiably require human discernment.
When it comes to improving user experiences with ecommerce, there are third-party solutions like UsabilityHub designed to comprehensively scan sites for usability issues, technical errors, and other issues that can adversely impact user experiences.
As with any business and industry, it is not enough to find niche success. A brand’s DTC ecommerce business will inevitably need to scale operations and sales, in order to achieve growth. There are challenges facing business scaling DTC, but these can be addressed through proper planning, the right tools, and access to a support system that will ensure the proper execution of these plans. Talk to an eCommerce expert at ESW and get started today.
About the Author – Lucy Manole is a creative content writer and strategist at Marketing Digest. She specialises in writing about digital marketing, technology, entrepreneurship, and education. When she is not writing or editing, she spends time reading books, cooking and traveling.