Strategy

Why consumer electronics brands should go DTC

Lalo Aguilar
Lalo Aguilar May 19, 2022
Why consumer electronics brands should go DTC

The consumer electronics ecommerce market has enjoyed sustained success since the invention of the internet. The spread of the web, and the acceptance of devices such as smartphones and wearables only helped grow demand for consumer electronics products. With this momentum and demand there’s a huge opportunity in direct-to-consumer sales. 

The biggest companies in the segment have taken advantage of the opportunity that selling directly to consumers entitles: growing from barely having their own online presence, to being a direct-to-consumer retail leader

So, why is it so important to consider this sales channel? Because it gives you several advantages when it comes to gathering information around sales and user preferences, as well as better controlling the customer purchase experience. Here’s how.

Consumer information

The COVID-19 pandemic has given many manufacturers in all industries an opportunity to look at the direct channel in a more serious way, since there were so many disruptions in the supply chain and closures in brick and mortar stores. Now, many companies are considering the possibility of focusing their efforts on the dtc approach, and what that would mean for their relationships with physical retailers. 

“Businesses were closed, and it became a little bit of a desperation move for many. Now some companies such as Nike are limiting sales of their apparel to many outlets. We’re yet to see how successful this strategy will be, but they must’ve seen something in it.” 

Thiago Garcia, VP of Customer Experience for North America at VTEX

This ‘something’ might be the amount of information they were able to gather when they interacted with their customers without a traditional retail store as an intermediary. This customer data can not only inform future sale strategies, but even feed into the research and development phase of product design, in order to better align with the features that customers demand. 

Now, retailers are more used than ever to manufacturers having their own websites, so starting a direct-to-consumer sales operation is a project with less risk, since a company can always keep the rest of their sales channels open and adjust its strategy as it sees fit.

Experience control

We’ve talked about how consumers today are more informed than ever before, and how that translates into a longer buying journey, with more research involved in it. In this sense, DTC is important for two main reasons: the first one is the fact that a manufacturer can be the official repository of information about their own products, in order to better advance a consumer’s understanding of it.

“When you as a consumer have the chance to look for some product in several pages, you start to do more research, read reviews, ask your social media community, and watch videos. That makes you a more informed consumer and lets you check more sources before a purchase”.

Cristian Serrano, Head of Tekmovil’s Ecommerce Business Unit

The second is promotions and buying options. An informed consumer usually compares not only different products and their specifications, but also different offerings when it comes to product financing, guarantees, etc. As a direct seller, manufacturers can offer more attractive options for their customers, instead of depending on the retailer’s seasonal or special sales. 

This means that the product discounts offered by the manufacturer will go directly to the final consumer, instead of turning into part of the retailer’s revenue. The possibility is especially attractive for products looking to position themselves in the consumers’ minds. On the other hand, if your product is already well known and there’s demand for it, a DTC operation could turn into…

Higher revenue

In many markets it is impossible for a manufacturer to control the exact price that their products are sold at, since it can constitute a crime. A company can suggest a retail price, but it can be ignored by a retailer if it doesn’t align with its strategy or if it feels like the price doesn’t convey enough revenue or if —even worse— it doesn’t realize a profit. 

This is not the case with DTC sales, since the manufacturer is at liberty to establish its own prices, even if they somehow compete with the pricing or promotional cadence of the retailers. 

It’s also important to remember that, like Garcia told us in our article about consumer electronic trends, DTC operations also help close sales in other channels, as they help better control a client’s perception of product and brand. 

An overall better experience

Consumer electronics, as one of the most popular product segments in the ecommerce landscape, has many opportunities to push the standard of service for digital presale, sale and post sale service, and that will only happen with DTC operations.

Apple and Samsung, the market leaders, are already redefining how the consumer electronic manufacturers define innovation and consumer satisfaction, and a more broader adoption by other companies will only help in this endeavor.  

VTEX, with companies including Samsung, Sony and Motorola in its client portfolio, has been working on developing the right tools for a consumer electronics company, and now possesses the right formula to guarantee success — reach out if you want to collaborate.

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