Manufacturing The Direct-To-Market Revolution

The fundamental steps manufacturers need to take to build DTM digital channels.

As the world continues its digital transformation, even in industries as traditional as manufacturing, it is essential to stay ahead and embark on the digitization of sales processes or establish direct-to-market sales channels. 

The growing preference for online purchasing has permeated everyday life and extended its influence into the B2B sphere. If you’re in doubt, the following results from a PwC survey in 2021 say it all.

65% of B2B buyers prefer to research products online, and 86% prefer to reorder online instead of speaking to a sales representative - PwC COO Manufacturing Survey, 2021

But, deploying this functionality to meet your customers' buying behaviours is one of many reasons to move in this direction. There are numerous additional benefits which include creating new growth opportunities, optimizing resources, improving profit margins, and controlling the customer experience to improve loyalty to your brand, to name a few.

If the perceived complexity is holding you back, this article is for you. If you’re deeply concerned about disrupting the relationships you have built with your distributor network, check out How to Build Direct Sales & Not Upset Distributor Networks. 

Trusting the ladder is covered, here are the fundamental steps you will need to action this initiative.

Six Steps for Direct-To-Market Success

Product Supply

Do you have the capacity and capability to produce and stock the inventory required to meet market demand? There is a lower margin of error with a direct-to-market customer base. Not having the product in stock or delaying shipment will quickly tarnish your reputation.

You must invest in inventory management functionality and warehousing logistics to stay well-informed about your inventory. A well-organized warehouse armed with the appropriate technology will lead to lower costs, improved speed and a higher degree of accuracy in fulfilling orders.

Pricing and Margins

You will need to determine the pricing for your products, taking into account production costs, desired profit margins, and your competitor's pricing. Should you decide to do it all in-house, marketing, packaging, shipping, and handling product orders will have to be factored in.

Unlike B2B, for direct-to-consumer (D2C), pricing must be standardized and shared freely on your website and other marketplaces. If you’re simply looking to add more B2B customers outside your distributor network, consider standardizing pricing around volume discounts and product bundling criteria. 

If you are building direct-to-market assets, your consumer prices must be clearly communicated and shared with new and existing B2B clients to demonstrate that you are not competing with them by undercutting their distributor or wholesale pricing.

Ecommerce Functionality

To sell directly to the market, you will need ecommerce functionality to allow customers to browse and purchase your products online. There are several ways to go about this (see Comparing Ecommerce Platform Capabilities), but ideally, the technology you adopt should leverage the data needed for the transaction directly from your existing business systems.

For your customer, this will allow you to create a robust, seamless and ideal shopping experience, providing all the necessary information for the research and buying phases in their journey. For example, showing your customer items in stock and inventory counts would come from the inventory management functionality built into your ERP and fed directly to the ecommerce system. (see Five Critical Steps To Selecting An ERP).

This will allow your staff to avoid swivel chair processes and manual data entry errors, saving you time and money. For example, if an administrator has to cut and paste order information from the ecommerce platform to your fulfillment system or manually update inventory at the end of each day from the ERP into the commerce platform. This extra process can be eliminated by syncing systems through integrations.

Careful consideration must be given to the platforms and your technical architecture as you move forward to ensure compatibility and interoperability.

Order Fulfillment and Shipping

If you’re looking to add a direct-to-market B2B channel or a D2C channel, there are many considerations to keep in mind when it comes to fulfillment and shipping:

• D2C orders are typically smaller and more frequent than B2B orders, and transaction volume will be something to consider logistically.
• Personalization becomes a factor. Knowing your customers and saving their buying preferences will be needed for automation.
• Support requirements grow immensely due to sheer order volume and a larger customer base to handle inquiries, returns, and resolving issues. This may require a knowledge base they can access and the staff to support them through online chat and phone.
• Pricing and payment for D2C will be different from B2B, whereby pricing will be non-negotiable and payment required upfront.
• Perks such as 2-day shipping, free shipping over a certain value, and order tracking are expected buying criteria in D2C.
• For B2B sales, you may have custom pricing and buying workflows to simplify in order to fit a particular platform. Alternatively,  they may be accommodated through more flexible software options to handle functions such as configurable products, contract approval workflows, purchasing with a PO, or unique pricing rules.

You may choose to offload the actual fulfillment of orders to a 3rd party rather than facilitate it yourself. Albeit you are losing some level of control by taking this route, there can be large cost benefits to doing so. Some world-class companies have perfected this service, which would remove a considerable amount of burden. 

Go-to-Market Strategy

You must promote your products to attract new customers to buy from you directly, starting with your brand identity. It likely needs to be revisited to consider your brand value, mission and unique selling points that resonate with the consumer.

You will have to develop a comprehensive marketing strategy to drive awareness and traffic to the website. This may involve digital marketing, social media campaigns, search engine optimization, online advertising, influencer partnerships, and other promotional activities.

You’ll need the ability to gather and leverage data analytics and insights about customer preferences and behaviours to improve the buying experience and marketing tactics continuously. Collecting and analyzing data on consumer behaviour, purchasing patterns, and preferences is vital for making informed business decisions and continuously improving the strategy.

A completely different set of marketing skillsets will be required to handle this in-house, or a 3rd party agency can be selected.

Comply With Regulations

Finally; you may need to make changes related to the production and sale of your products to comply with specific regulations.

• Tax compliance rules change depending on the jurisdictions you’re selling into.
• Relevant authorities and governing bodies, such as the U.S. Consumer Product Safety Commission or Health Canada, will dictate any safety or quality standards needed.
• You may need specific licenses or certifications depending on the types of products being sold and into what markets.
• Trade agreements may affect import/export requirements depending on the countries you want to sell into.
• There may be language requirements, such as in Canada, whereby product labels must be in French and English.

In conclusion, your organization must adopt these fundamental steps to facilitate a B2B or D2C model. Should you want to discuss any of these steps and how they would apply to your business, feel free to ask any questions by contacting us directly, and we’d be glad to help.