Why Transitioning to DTC with an Ecommerce Store Makes Sense for Your CPG Company

If you’re in the CPG industry and you’re not engaged in selling direct-to-consumer (DTC), you could be missing out. Mass market and niche retailers and CPG companies know their bread and butter has always been establishing, nurturing, and strengthening consumer loyalty. With greater reliance on ecommerce, however, maintaining customer loyalty has grown more tenuous for companies that do not have a full-scale ecommerce presence.

Customers are demanding access to products quicker without necessarily having to shop for them in person. Customers who have grown accustomed to buying favorite regional products want the ability to access these same products after they’ve moved outside of the traditional geographic market. Typically their choices are: to find these products on an online marketplace and pay astronomical amounts to buy them; have family or friends purchase the products and ship them out; when visiting particular regions, load up on these products and transport them back home; or move on to new brands that they can purchase in person or online at competitive prices. Even customers who favor products not tied to a particular geographic region may find that the retailers they frequent do not sell their favorite products or that these products are frequently out of stock.

In addition to ensuring that customers across the country have access to your products wherever they are, expanding into the DTC arena via ecommerce provides CPG companies valuable immediate insight into consumers’ changing tastes, locations, preferences, and buying habits. This data can be used to not only improve marketing efforts on social media but open up email marketing and direct marketing by mail. Revenue-generating and cost-saving opportunities are evident. Your company can:

  • Reduce over-reliance on retailers by creating a viable additional stream of revenue
  • Strengthen brand loyalty by marketing directly to existing customers (not just social medial followers, who may or may not be customers) and rewarding them with special offers
  • Follow up directly with former customers who stop purchasing product in order to understand their behavior and how to potentially win them back
  • Initiate new product development earlier and roll out new product more efficiently based on timely information identifying what consumers like, want, and need
  • Adjust how and to whom you market specific product depending on who is actually purchasing them; for whom they are purchasing (e.g. self, spouse, child, etc.); and in what geographic region purchasing is taking place
  • Identify and replace poorly performing SKU’s quicker with fewer resources invested

Once a CPG company decides to enter the DTC arena, it needs to find a solid partner to handle its ecommerce strategy. The ideal partner is a centrally-located 3PL that has experience providing end-to-end fulfillment: online storefront design and maintenance; product storage; ability to manage inventory whether stored in one facility or multiple facilities; online order processing; picking, packing, and kitting if necessary; distribution directly to consumers; reverse logistics—particularly the ability to process returns. Most 3PL’s are either not equipped or experienced enough to handle all of these processes—usually by choice and often those not involving the design and maintenance of online stores. Therefore it behooves any CPG looking to expand into the DTC arena to find and talk with 3PL’s that have this experience and consider it to be part of their value proposition.