Some food start-ups decide to bypass traditional retail stores and set up a direct-to-consumer strategy. If the food start-up has expertise on creating e-commerce platforms then a direct-to-consumer launch may become successful.
Definition: Direct to consumer means you are selling your product directly to your end customers without third-party retailers, wholesalers, or other middlemen.
Direct-to-Consumer launches may include web-based stores only or more traditionally may include the multi-level-marketing model where company representatives sell directly to the public may a series of means (door-to-door, events and parties, telemarketing, friends only and more). Well-known companies such as Amway, Beachbody, Herbalife and Xango are strictly direct-to-consumer (multi-level-marketing) sales models.
Our Approach to Direct-to-Consumer: The Lemonaders Team has history and a complete understanding in the process of creating a successful direct-to-consumer business model. Our history includes creating a number of infomercial programs (via the television and radio) in the past years.
From the Industry (Source CoreDNA.com): D2C, or Direct to Customer, is a low barrier-to-entry eCommerce strategy that allows manufacturers and CPG brands to sell directly to the consumer. It bypasses the conventional method of negotiating with a retailer or reseller to get your product on the market. In D2C, brands sell directly to the consumer through an online medium.
Going D2C has many advantages, with competitive pricing being a major benefactor for consumers. Other advantages include having direct contact with consumers to get a better understanding of them, and being able to freely experiment with new product releases and test them with a segment of your consumer-based to gain their feedback.
PATH TO MARKET
With a traditional launch you have a more complex model of getting to market (From Manufacturer to Distributor to Retailer to the Consumer). In a D2C model your go-to-market routing is much simpler (Manufacturer to Website/Social Media Platform to the Consumer).
CoreDNA’s (www.CoreDNA.com) suggested path to market includes:
Creating Your Own E-Store
Most manufacturers and brands have their own online store to complement sales. Some brands may see an online store equal to 10 to 20% of their volume. One of the more obvious benefits for having an e-store is the brand will make the best margins possible from not having middle men involved and not having to deal with in-store introduction, management and marketing costs.
- Hard to Find Products: Consumers will benefit from ordering online in a brand’s e-store if specific products are hard to find in brick-and-mortar stores or are regional in nature. If you wanted to add another way to get hard to find products to your customers, Amazon.com is very popular to use as a back-up resource for consumers looking for brands not seen in stores in their areas.
- Online Pricing Strategy: Make sure you keep your pricing equal or higher to the highest suggested retail price as to keep your brick-and-mortar customers happy. They basically will revolt if they see better deals online. Somebrick-and-mortar retailers will discontinue brands if they feel they are being underpriced by a vendor.
- Exclusive Online Promotions: If you have brands in brick-and-mortar stores try and avoid exclusive promotions to avoid issues with your core customers. If you are online only then exclusive promos are very common and expected.
- Amazon Stores: Some brands will create a strategy of using Amazon.com as their primary e-store source. Amazon is ideal for their dominance in delivery programs, no cost shipping and software programs.
Other Benefits of Running an E-Store Include:
- 24/7 Sales
- Easy Access to Your Customer
- Cost Savings
- Faster Delivery of Products
- You Can Manage the E-Store From Anywhere in the World
- Easy to Manage Suppliers
- Easy to Communicate With Customers
- Offer Other Services to Your Customers
- Low Employee Counts and Costs
- Able to Research Competitors
- Easy Way to Trial New Products
How to Create an E-Store
There are a number of companies who specialize in easy e-store creations. The more popular ones include Shopify, Zoho Commerce, Squarespace, BigCommerce.com, 3DCart, WooCommerce, Weebly, WIX, Magento and Prestashop.
The main steps in deciding what type of store to create include…
Step 1: Decide on your niche.
Step 2: Choose between dropshipping or holding your own products.
Step 3: Brainstorm a business name and register your domain name.
Step 4: Select products to sell.
Step 5: Create your website with an online store builder (we love Shopify).
Step 6: Set up a company and get a sales tax ID.
The Lemonaders Team Relating to E-Store Creation and Management
Our team members can advise on the creation and shopping cart features needed for a successful company e-store. Another area for discussion is the potential creation of company branded merchandise that can be for sale to their customers. These can include apparel (hats, shirts, sweatshirts), household items and more.