When is it the right time to change your D2C strategy?

When is it the right time to switch from D2C to B2B2C?

The right time to change your D2C strategy depends on a variety of factors. Thus, there is no set timeline for all businesses as it depends on the business nature and company goals.

Nevertheless, switching from D2C to B2B2C strategy including distribution and retailers into your go-to-market plan can be a big step for any company, but it doesn’t have to be. Of course, it requires a shift in mindset, pricing strategy and focus to successfully navigate the transition. In this article, we will explore the key steps and considerations for making the switch from D2C to B2B2C.

Why do most companies start with a D2C strategy?

Before diving into the key steps you need to take to change your direct-to-consumer strategy, it is important to understand the difference between the two market strategies. 

D2C, as the name implies, is a business model where a company sells products or services directly to consumers. Companies typically focus on creating emotional connections with their customers and providing a seamless, user-friendly buying experience directly from them without any channels in between like retailers or distributors. 

B2B2C, on the other hand, is a business model where a company sells products or services to other businesses who then sell it to consumers. These companies typically focus on building relationships with the other businesses. Examples of a B2B2C market approach include wholesalers, distributors, retailers and business service providers.

However, you can easily have both and that’s what the most successful companies do. Making their product available to buy directly from them or one of their retail partners.

Why is it important to do both strategies?

Well simply, going after a global market directly to consumers is hard. Even if you sell your products on all Amazon marketplaces and other local marketplaces, you are still doing most of the business online and selling a unit at a time. This is not sustainable unless your product is so popular and in high demand globally or your marketing is off the charts and your product becomes viral.

Let’s face it, most companies can’t set up a store in every country in the world and reach out directly to their end consumer in person. However, in today’s world, 85% of all retail sales happen in-store.

While you’re beginning to have great sales numbers with your product or you are already selling hundreds of units daily directly to consumers,  at some point it makes sense to find partners that have access to hundreds of thousands of potential customers. At this point you need to start thinking changing your direct-to-consumer strategy. The next step is to consider the B2B2C approach. This strategy will get your product listed with them and help you grow your product sales in huge volumes in new markets.

What are the pros and cons of a B2B2C approach?

When you are ready to change your direct-to-consumer strategy, you need to access the pros and cons of a B2B2C approach. The whole upside of finding other partners to sell your product in new markets is their expertise and access to thousands of potential customers. The volume of sales that comes with this approach is the most important aspect. However, as you are not selling directly and that means that you don’t always have control of your retail pricing and service your partner gives to your future clients. 

1. Pricing

Before going to a B2B2C approach, you first have to calculate your margin. Can you handle a partner financially? Nobody wants to work for free, so distributors and retailers rightfully ask for a margin. They take the risk of buying and selling your product, they have personnel and operations to run. If you can’t afford around 30% for retailers and 15% for distributors perhaps this approach is not right for you.  

However, if you consider the volume of units they purchase, then producing these volumes might help reduce your costs and have more room to offer better margins.

2. Market

Which market fits best for your international growth and how to find partners there?

Conducting market research is an important step in assessing which market to target next. This includes gathering information on your target market, competitors, and industry trends. This can be done through surveys, focus groups, and analyzing data on consumer behavior. Starting with D2C approach there is recommendable.

Can your consumers afford your product in their market, what alternative options do they have now and how affordable is that compared to your product?

3. Who can you partner with in your target market?

Start looking at your competitors or indirect competitors in your target market. Who are they and with whom did they partner, which retailer and distributors?

If your product is not competing on the most important key characteristics, you can reach out to these companies as well and find the right decision makers.

This is easier said than done. This requires time and effort. However, once you succeed and you open these doors, then your end consumers can find your innovation easier, making it more accessible to purchase from your partner directly than paying import fees to buy overseas. Make it convenient for your end customer to find your product locally.

To know exactly what retailers are looking for to list a new product, we created a guide with 7 steps to get your product in front of retail buyers.

If you are looking for a fast and smart way to access distributors and retailers in new markets, check out how Tradesnest can help you. Tradesnest is a B2B platform for emerging brands in consumer electronics looking to find distribution and retailers in new markets around the world.

Starting today with a B2B2C approach is easier than it was years ago. With a lot less capital, you can enter new markets in months now instead of years and costly trade shows. You can read the full article here.

Not sure if B2B2C is right for you? Do the quick test here.