The rise of business-to-consumer ecommerce is changing the way B2B suppliers sell. Faced with stiffer competition for shelf space among their traditional retailer clients, which means retailers don’t always carry a supplier’s full line of merchandise, and consumers’ expectations that B2B suppliers sell direct-to-consumer, several B2B suppliers are opening direct-to-consumer ecommerce channels.
Recognizing the trend towards DTC sales, Compac Industries Inc., a Tucker, Georgia-based manufacturer of oral and skincare, home and baby products, decided the time had come to open a DTC channel.
Opening a DTC channel, however, was not as simple as putting up a website or selling through online marketplaces. Compac, which sells DTC through six websites and 10 marketplaces, including Amazon.com, realized it needed an ecommerce platform that was compatible with its legacy EDI platform, which it was retaining to service its B2B clients. The company has since installed the NetSuite platform from Oracle Corp.
In addition, Compac realized it needed to develop content for its DTC websites to drive traffic and proactively market its brands, such as its “baby buddy” baby-care products. The company sells DTC products under multiple brands, including its Brilliant Oral Care brand.
Dean-Paul Hart, president of Compac Industries, discusses the company’s experience opening a DTC channel, the challenges it faced, and how the company has fared selling directly to consumers.
DC360: What were some of the specific reasons Compac saw the need to go DTC?
Hart: We set up a website 10 years ago that was all B2B. We knew we wanted to sell more directly to consumers eventually, but weren’t there yet. As our product line continued to grow, DTC was definitely on our roadmap, but having limited availability to consumers pushed us into the channel. We saw that consumer habits were changing, and I realized we needed to get all of our products before consumers. We wanted to open ourselves up to more opportunity by not just having our products accessible through retailers, but creating a relationship directly with our shoppers as well.
DC360: What were some of the challenges Compac faced launching its DTC channel?
Hart: When you develop your own websites to sell direct-to-consumer, you realize you have to develop your own traffic. Selling online direct-to-consumer also forces you to grow out your marketing. As a B2B supplier, these were challenges for us. We’ve added content like FAQ’s, video and customer reviews, and we advertise online, including on Amazon. We also added payment options such as Amazon Pay and Google pay to remove as much friction as possible from the purchasing process.
DC360: As Compac began the transition to DTC sales, the company moved onto the NetSuite platform. Why?
Hart: When we were changing our systems, we didn’t want to move our EDI supplier. We chose NetSuite because it was a cloud-based platform that would easily connect to the platforms we wanted to keep in place like our EDI platform. Now, all of our orders run through NetSuite whether they come from EDI, an online marketplace or our website.
DC360: Compac also sells DTC through marketplaces. How are you coordinating the orders and transaction data coming through that channel?
Hart: We engaged ChannelAdvisor to syndicate item data from NetSuite through ChannelAdvisor to marketplaces approximately 15 months ago, opening new products and marketplaces.
DC360: Has selling DTC given Compac more control over the consumer/customer relationship?
Hart: Absolutely, DTC has enabled us to connect with our customers more authentically. We’ve started to dig deeper into these experiences one brand at a time. For instance, for our Brilliant Oral Care brand, we’ve created tailored email campaigns, launched a blog for customers and are giving our shoppers more opportunities to talk with experts directly to answer their questions.
As our DTC business has grown the last several months, we’ve increased our focus on customer service and having people there that are ready to respond. Sometimes, people just want to speak with someone to get their questions answered. Good customer service can help you win tough situations, multiply how we care for customers and create loyalty.
DC360: Can selling via DTC remove the sales ceiling created in traditional retail, giving suppliers new ways to reach consumers and further opportunities to increase volume?
Hart: Yes. Twelve months ago, we were processing about 1,000 to 1,200 orders a month, now we’re processing anywhere from 8,000 to 10,000 orders a month. We’re going from traditional large retail orders to individual orders all over the world. Operating in an omnichannel fashion has allowed us to grow our business and find new opportunities outside of traditional channels. The coronavirus is only accelerating this trend. It’s no longer a zero-sum game, and having more than one sales channel is allowing us to keep innovating after more than 40 years in the business.
DC360: Has selling DTC helped offset any decline in B2B sales due to the coronavirus?
Hart: Yes, selling DTC has helped cover some of the sales we lost in B2B due to coronavirus. We had some B2B retailer customers shut down for extended periods and some began focusing on select items.
DC360: Does selling DTC put you in direct competition with your B2B customers?
Hart: In many cases, we don’t compete directly with our B2B customers, because they don’t carry all our products. The challenge for us is if we can’t get product to consumers through a retailer, how do we get it to consumers? We’re finding that as we do better marketing and selling DTC, our retailers do better because people tend to remember our brands more when shopping in-store.
DC360: Finally, do consumers expect suppliers like Compac to sell DTC now as a result of ecommerce?
Hart: Consumers have increasingly expected easy and clear access to what they need, and the pandemic has moved this expectation forward quickly. It’s not a one-size-fits-all solution, because in many cases it will depend on the segment you operate in. But there is an increased opportunity in going to DTC. Not only are you closer to your consumer customers and understanding their needs, but by not being solely reliant on one channel, you’re creating more opportunity for your company.
Peter Lucas is a Highland Park, Illinois-based freelance journalist covering business and technology.
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