As many consumers search for better deals on products, it’s a good time for manufacturers to sell direct to consumers with new private labels – while also protecting their B2B channels, writes Justin Racine, director, commerce strategy, Perficient.

JustinRacine-Perficient

Justin Racine

There’s no question our economy is in a state of flux. Gas prices and inflation are rising at record rates, and the American public is struggling to make ends meet as we are coming out of a two-year pandemic. Add in the ‘great resignation,’ and we have a recipe for a most uncertain future.

Approach some of your distribution partners to help fulfill these DTC orders … in doing so, you may have to give them access to your new private label product line.
Justin Racine, director, commerce strategy
Perficient

What is certain, however, is that the American public will be looking and searching for new  cost-effective ways to live their lives, including purchasing products and services at a discount. Within this ‘discount mindset’, folks will also be open to exploring new brands that they maybe never even heard of before. As we sometimes say, desperate times call for desperate measures.

But these times don’t have to be so desperate for manufacturing companies. In fact, this is the perfect time for these organizations to explore moving into a direct-to-consumer model to support this likely trend among consumers.

Here’s why it’s time for DTC

According to a study conducted by the University of Chicago Booth School of Business, many consumers were willing to switch away from mid-tier brands to low-tier brands during the 2008 recession. Which, in all honesty, makes sense, right?

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The study shows why manufacturers should dip their toes into the DTC waters in preparation for a likely recession later this year or early next year. Manufacturers have always explored the idea of going DTC but typically have been hindered by channel conflict, distribution of smaller, non-pallet-sized orders, and pricing strategies.

But today’s pending recession provides ample opportunity to overcome these elements and create a new, low-cost private label brand that can compete in this market and become a staple brand for consumers post-recession.

Here are four ways to build a brand to be recession-proof and overcome objections from your current B2B customers:

Channel Conflict

Channel conflict is a slippery slope. The only way that I predict manufacturers can start going DTC is by creating new products or services under a private label brand that aren’t accessible from your current B2B distribution customers. You also need to be transparent with your customers when approaching the DTC path as they keep your lights on today and will keep them on for the future. Articulate to your B2B customers that you are exploring the DTC channel with new product lines that you will likely make available to them in the future and that you won’t sell through the new DTC channel your core brands that they purchase from you today.

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Pricing

As you likely will be setting up a new ecommerce store that will be competing with Amazon, Wal-Mart and others, your pricing strategy needs to be in line with your product category digitally. Focus on what potential competitors are selling products for, where they are selling, and how they have set up their ecommerce instance. Look to deploy strategies like product bundle pricing, recurring and auto-ship order pricing, and discounts for referring friends.

Order Fulfilment

This is a big hurdle for manufacturers that are not used to shipping small parcel orders. There are a few options here to overcome this challenge.

First, look at using an order management system (OMS) and warehouse management system (WMS) to lay the foundational elements needed to actually fulfill and pick these orders within your current warehouse. This also will require some change management organizationally, as your warehouse staff will need to be trained on how to pick, pack and ship smaller orders within these new systems.

Second, you could approach some of your distribution partners to help fulfill these orders – however, in doing so you may have to give them access to your new private label product line. Which at the end of the day wouldn’t be the worst thing – especially if they are okay with you moving into their channel with new lines of products, which leads me into my last option.

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Third, approach one of your top B2B customers who has the fulfillment capabilities you need to partner on this new private label brand. Both organizations could split the revenue and team up to serve a highly anticipated demand in your product category of choice.

Branding Strategy

Finally, you’ll need to leverage a brand manager to help build out this new private label brand. The best way to build a brand is to first start with some voice of the customer (VOC) activities to truly understand what type of experiences consumers might be looking for. In this instance, a solid customer experience might just be the low-price option of your new brand. However, if you can build an exceptional site user experience (UX) on top of your low prices, even better.

In addition,, you’ll need to make sure your product packaging is built out to be clear, attractable and memorable. Make sure to focus in on modern product packaging design.

Bring the customer experience full circle. Once a customer purchasesfrom you, make it easy for them to come back or refer a friend. Use mail servicee providers (ESP) to drive email drip campaigns to pull consumers back and to remind them in a thoughtful manner that it’s time to purchase.

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Jimmy Dean once said “I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” Well said, Mr. Dean, and very appropriate for this topic. The winds of consumer sentiment are changing as this recession approaches. Will you be willing to adjust your sails to reach your destination of Direct-to-Customer bliss? If I were you, “I’d wake up to that goodness.”

Justin Racine is director, commerce strategy, at Perficient, a digital technology and services agency focused on digital transformation. He is a former director of ecommerce and marketing at distributor Geriatric Medical and Surgical Supply Inc. Follow him on LinkedIn.

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