Top 8 mistakes you should avoid while moving into the D2C model
Introduction
Between 2019 and 2021, the size of the D2C market grew by a whopping $7 billion in the U.S. alone. If we count the rise in online shopping during COVID-19 into the equation, launching your own DTC business seems like a no-brainer!
That being said, bear in mind that you should approach your D2C business model implementation wisely. You will have a lot of decisions ahead of you. However, as the classic rule says – it’s best to learn from the mistakes of others.
With that in mind, we’ve decided to share three common implementation traps we’ve witnessed while helping our clients go into the D2C business model. We’ve also reached out to other experts, asking them to share their mistakes and what you can take away from them.
Let’s get to it!
8 biggest mistakes to avoid while moving to the D2C business model
#1 Overestimating the power of one platform
We have recently started to move to a D2C to grow bigger revenues and connect more with consumers. I think that our biggest mistake was that we OVERESTIMATED THE POWER OF MOBILE. What we accidentally missed all throughout the moving process was the fact that a lot of people stay more on their mobile phones rather than on the PC or Desktop. What we thought is that we will have to need a mobile app, but it's not the case at all times. As long as users find it convenient to type your brand and shop on there, then there won't be a problem if it's not a native app. Build or create something that will be used. It's a no-brainer to invest in an app and not be able to maximize it fully because it's simply not what your customers need.
Inspect whether your customers genuinely require a native mobile app experience. Otherwise, simply create a mobile-friendly interface and the like.
#2 Recruiting an in-house tech team when unnecessary
The biggest mistake we did while moving to the d2c business model was recruiting and hiring our own Data Science team. Customer data initiatives should be based on marketing platforms and software automated moments in the digital experience during activation. Personalization strategy begins to exist through a diverse ecosystem of individuals, processes, and resources for established brands in the $100 million+ online market, with years of consumer data. A data scientist's experience may be beneficial in this situation. I can count on two hands the number of D2C brands (not retailers or marketplaces) that should even consider hiring data scientists. While this talent is critical to the ecosystem, it does not make sense from a branding standpoint.
#3 Creating a custom CMS, selecting the wrong e-commerce platform, and overlooking security
The first obvious mistake was to create my own CMS. Let me tell you, if you’re not a highly-trained web developer, creating your own CMS from scratch is going to be near-impossible. Heck, doing so can be a nightmare even if you are an experienced developer.
The second mistake I made was choosing the wrong platform. Of course, not all open-source or proprietary content management systems are created equally, either. The last thing you want is to get your site all set up on a given CMS only to realize the platform doesn’t offer a feature that’s vital to your operations. If that happens, you’ll essentially need to invest a ton of time, money, and energy into migrating to a different platform.
Another mistake was that I overlooked security. As the manager of a newly-launched D2C store, I thought I was only responsible for internal activities, not knowing that I was also responsible for my customers' private information. Then finally, I didn't have any clear value proposition from the beginning.
#4 Lacking an expert in the team
Sometimes cutting someone in the equation is better in order to grow. And in business, cutting the middleman means bigger margins and more opportunities. As a business owner, I know that moving into the D2C model is crucial. Here are some mistakes to avoid during the transition.
Never think you can do it the right way the first time around. When I first decided to move into a D2C model, I thought I knew enough. With the experience and level of expertise I have when it comes to managing a business, I never consider any help even from someone who’s already an expert in the field. And I was stunned by the complexity of the process. As a result, lots of issues arise after the other. I needed to iron out fulfillment issues. Fine-tune the packaging and shipping. And even struggled with handling returns. And the worst part, I’ve bolted my eCommerce store to my current website. And it resulted in a bad user experience. Overall, it was a nightmare. But thanks to that experience. I’ve learned my lesson well and asked for help. I’ve employed one top-notch eCommerce expert with proven experience on how everything works in a D2C model. And that was all I needed to take everything off ground successfully.
The bottom line, learning the ins and outs in a D2C model doesn’t always mean looking only at those who already succeeded. You need to understand that there’s a lot more to learn from those who failed as well. To be precise, don’t just follow those best practices. Instead, you need to figure out why others fail in order to avoid them. And once you do, there’s no way you can’t steer away from those pitfalls.
#5 Implementing Advanced Technology Before Reaching Maturity Stage
Tony Kelly, CEO at CameraGroove
To orchestrate an end-to-end digital experience, the typical brand integrates 20-30 vendors at launch. There are a lot of choices to be made! Third-party technologies that are simple to install, do a lot of the heavy lifting for you, iterate easily, and, perhaps most importantly, work well together should be prioritized by activation brands. Enterprise technologies, on the other hand, typically have the most enthralling sales teams and the most sophisticated future visions. What they don't often tell you is how much data, staff, and processes are involved in achieving the use case. Also, the most established brands have a difficult time making it work. When I looked at the Our Tech Stack, I noticed that we used a lot of advanced technology. I've realized that activation brands are not ready to use technologies. Don't get me wrong: I adore technology, but only when the brand matures.
With the above mistakes in mind, below we also share our own take on the subject. Based on our extensive experiences in helping businesses implement the D2C model, at New Gravity, we believe you should stay wary of:
#6 Basing your pricing, discount, and shipping policy on assumptions only
Needless to say, before you start working on your D2C store pricing and logistics, you should conduct thorough target group research. What exactly would encourage them to shop from you directly – is it free delivery, a customer loyalty program, or maybe an unbeatable price?
Recently, we helped develop a D2C store for one of the top beverage companies in Poland. Our client’s initial vision was to create a store for the ‘premium’ buyer, where the buyer experience itself would be more important than the price per unit. However, after conducting research, that a lower price than that in brick-and-mortar stores was the number one motivator. Secondly, the brand was able to understand that potential customers were also hoping to find all of their assortment online – even products that have been recalled due to insufficient sales in-store.
#7 Not getting continuous internal buy-in from the C-suite throughout the implementation
It’s crucial to get internal buy-in from key stakeholders before launching your D2C business. Lack of communication between the project team and the company board of directors has contributed to serious problems during one of the projects we were involved in. Since the ideas weren’t consulted with the C-Suite on a regular basis, the project scope had to be changed right after implementing the D2C model, which inhibited monetization.
#8 Launching your promotional campaign too late
Another DTC business mistake we’ve seen throughout the years was seeing companies wait with their promotional campaigns until their E-store had already been brought to life.
This is a wrong approach, as it takes away the entire financial and promotional potential the new store brings to the table. Instead of creating an atmosphere of excitement around the store launch and curbing peoples’ interest, companies extend the time needed for ROI and profitability.
With these three examples coming from our experiences at New Gravity, we’ve also decided to reach out to other D2C store founders and business leaders and put together a list of other potential obstacles. Let’s continue below:
Summary
While it’s a great time to launch a DTC business, it’s absolutely crucial to plan it well, to ensure your implementation goes smoothly. A good starting point is going through the list of the common mistakes, so you don’t follow in the same footsteps. If you’re searching for an experienced partner that will guide you through the process of setting up a D2C business model, then get in touch with us. We will gladly discuss your options.
