In May of 2020, the New York–based specialty food distributor Baldor announced plans to start delivering directly to consumers’ homes. Baldor is one of the largest food wholesalers and importers in the Northeast, supplying groceries and restaurants in the tri-state area with local produce, specialty cheeses, high-end cuts of meat, and other unique foods.
So when business dried up because of the COVID-19 pandemic, Baldor decided to cut out the middleman and deliver directly to the same people who usually would have eaten their foods in New York City restaurants or purchased their products at local grocery stores.
Baldor wasn’t the only brand to transition from a B2B to a DTC business model during the pandemic. In fact, many B2B brands were forced to pivot their business on a dime, and it seems likely that this trend will continue, even after vaccines are widely distributed.
If your business is considering a similar move, here are four questions you first need to answer.
An automated approach to fulfillment can necessitate standing up a new consumer-facing interface for ordering.
In order to transition from delivering to restaurants and groceries to delivering directly to consumers, Baldor worked with its existing network of suppliers—the farms, the butchers, the artisanal food makers—to reorganize its fulfillment system. And in doing so, they offered their DTC customers a real benefit—the chance to enjoy restaurant-quality ingredients in their own homes. This also provided the brand with a PR win, as they were able to tout how this pivot to a DTC model helped struggling local farmers.
However, not all businesses considering a move to a DTC model can so easily transition their supply chain. Essentially, when businesses make the DTC pivot, they will move from fewer but larger orders to more, smaller orders. The best way to manage that change is with technology. As Derek O’Carroll, CEO of Brightpearl, says, “Whether it’s automating your order fulfillment, inventory updates, accounts journal creation, warehouse updates or order shipping, every step behind the ‘Buy’ button should be optimized and automated.”
An automated approach to fulfillment necessitates standing up a new consumer-facing interface for ordering, like the one Baldor created. It’s a sizable investment on the front end, but the profits that come from an efficient ordering and fulfillment system will pay off in the long run.
Find a target audience for your product and earn their trust.
When it comes to transitioning a shipping network from a B2B to a DTC business model, Baldor is a best-case scenario—the company simply rerouted a portion of its existing fleet of delivery trucks from restaurants and groceries to the homes of consumers.
For businesses that don’t have a dedicated delivery fleet, the transition can be more complicated. To make matters even more difficult, a 2018 study from Pitney Bowes revealed that 91% of potential e-commerce customers will decide against a purchase if free shipping isn’t offered. Consumers also expect something else that most B2B customers do not—the ability to closely monitor shipments.
For many small businesses, these challenges can be resolved by setting up a business account with any of the major carriers, such as UPS, FedEx, and DHL. Once you’ve chosen the carrier that best suits your needs, you should schedule a conversation with the carrier’s local representatives to make sure the shipping rates your business is paying fit your e-commerce goals.
When businesses make the DTC pivot, they will move from fewer but larger orders to more, smaller orders.
Consumers expect a very different brand experience from a DTC vs. a B2B brand.
For most DTC companies, the answer to this question is: yes. Consumers expect a very different brand experience, and you must meet those expectations if your DTC brand is going to succeed.
It’s important to remember that building a successful DTC business requires more than just creating new visual assets for your website and social media channels—though that step is very important.
Today, successful DTC brands need to create a compelling brand story that will resonate with a community of consumers. Building a brand community takes time, but you need to develop and then communicate effective core brand messages from the beginning.
Again, Baldor provides a useful example. The company’s social media accounts don’t just feature the sort of stunning visual assets typical of DTC brands—they also feature brand storytelling. The subjects for individual posts range from the stories of the local farms Baldor supports to unique recipes to the ready-to-eat meals the company began offering straight from the restaurants it supplies.
As this Harvard Business Review article says, “A unique advantage of DTC brands stems from their ability to have one-to-one relationships with their consumers while capturing valuable data that would be impossible to glean at traditional retail.”
That consumer data is essential to growing your DTC brand—it will help you learn what other products your consumers want, as well as help you locate other audiences to target.
At [B]RIGHT Brand Performance Group, we help DTC brands locate opportunity-rich audiences for launch, and then we help them harness consumer data to power continued growth.
For luxury vinyl tile brand Karndean, we developed a go-to-market strategy for this UK-based company that laid out which US audiences offered the most opportunity, and then we identified which channels the brand needed to leverage to reach those audiences. We also helped School Tool Box transition their business from selling to schools and teachers to selling directly to parents through our New Business Development Lead-Gen Framework.
If your B2B company is considering pivoting to a DTC model, we can help you launch with confidence and then drive continued sales with data-driven business insights. Contact us now.