Why direct to consumer private label ecommerce is a smart move right now
As ecommerce continues to evolve, there is a growing opportunity for selling direct to consumer private label products.
Flora, the latest demo shop to come with the Flex Shopify theme, takes on this approach by illustrating the possibilities of a private label plant store.
In this fictional example, Flora sells plants and accessories that are only sold on its online store and under its own name.
What is direct to consumer?
As its name implies, direct to consumer, also known as D2C, is a broad term that defines a strategy of selling products directly to customers rather than using a third party retailer as a go between.
Put another way, direct to consumer strategies don’t require you to sell products wholesale to another company who, in turn, marks up the products and sells to their customers.
D2C businesses can manufacture products directly, but they don’t have to. In fact, many direct to consumer brands utilize traditional or legacy manufacturer partners to produce their products.
This is especially true for early stage direct to consumer businesses since it avoids the cost and hassle of setting up manufacturing facilities and operations.
Because of those challenges, many direct to consumer brands opt to continue using contracted manufacturers even as they grow.
It’s also worth noting that a particular company or brand can operate in both the D2C and more traditional retail arenas at the same time.
There are, however, some advantages to sticking with direct to consumer only — namely that products remain exclusive to your platforms and that you can control the entire purchase experience and “own” the customers.
In other words, any customers acquired or served directly will provide you, as part of the order fulfillment process, with information that you can, subject to privacy regulations, retain and use for tracking, analysis and further marketing.
If someone else sells your product on your behalf, that adds another layer between you and customers that can’t be controlled or tracked as effectively.
Direct to consumer selling also eliminates the challenges of negotiating and inking distribution deals with retailers both online and offline — whether they be large or small. It also typically avoids having to pay for shelf space in stores or listing fees.
That said, offering products both D2C and via traditional retailers (whether online or not) has the advantage of bringing your products before a larger number of customers at once — if you can get your products in those marketplaces.
Direct to consumer selling also has its challenges and expenses since it requires the brand owner to market the products and brand independently as well as cover the costs of operating either a physical store or online one.
Private label is another broad term that’s a key driver in direct to consumer commerce.
Private label products are, almost by definition, typically only available at a specific retailer or ecommerce site rather than being sold at any store that’s willing to carry them.
It’s not just small and medium sized businesses and entrepreneurs that are entering the private label space — it’s also become big business for national retailers as well — with chains including Target, Walmart and Amazon all selling their “owned brands” alongside national brands.
Private label and owned brands are essentially similar to “store brands” or “house brands,” which are often priced lower than national brands and appeal to customers looking for quality and value.
However, as the idea of owned brands evolves, especially at national retailers, strategies have also shifted to create customer loyalty with the brand name, often with less of a focus on pricing.
In recent years, many traditional retailers have also started larger advertising campaigns for their owned brands. This is a bit of a shift from the traditional model of store brand items that were not advertised as heavily, which was often the reason they could be sold at lower price points.
Owned brands also benefit from the large number of shoppers large brands attract and, since they ultimately control placement in the stores, introduce customers to these brands by putting them, quite literally, right in front of them.
Another big advantage of D2C ecommerce is that products can be personalized for each customer.
This can involve something as simple as adding custom embroidery to a product, or a more advanced tactic, such as offering product customization so customers can configure the item to meet their specifications.
Although in-store embroidery, engraving and similar services aren’t unheard of, it’s typically difficult or impossible to let customers make more sophisticated customization decisions without having to order the product, wait for it to be made and then return to pick it up.
For formulaic or configurable products, this would require stocking potentially thousands of combinations — which more often than not would end up being both impractical and cost prohibitive.
By selling these types of products online, customers don’t have to visit a physical location — instead they select from options, take a survey or virtually create their own products online and then have the product delivered to their door.
Personalized products have the added benefit of helping you further build profiles of your customers and use that information for marketing or product development.
In addition, each layer of customization adds another element of uniqueness to your product offering.
Personalized product possibilities
There are a myriad of possibilities to go with when building a brand that offers customizable products:
- Health products: Vitamins, supplements and similar items targeted at specific health conditions or nutritional needs.
- Food and beverage: Custom combinations of flavors, nutritional profiles and other ingredients.
- Beauty products: Makeup, hair care, cleansing and other similar items with custom colors, scents or formulas to target specific conditions or goals.
- Clothing and accessories: Customizable clothing that allows customers to select fabric and other materials, exact sizing or adornments.
- Furnishings and home decor: Everything from adding a custom photo or message to being able to select the color or finish of every part.
- Baby and children: Personalized books, toys and decor based on a child’s name and appearance as well as products with selectable finishes.
- Pet products: Blended food for specific breeds and dietary requirements or pet products available in multiple colors, sizes, finishes or patterns.
Selling customized products online using menus or an interactive survey that asks users about themselves is also a great way to encourage engagement and buy-in to your product or store as well as collect data — even from those who don’t make a purchase, which can provide valuable insights.
Creating and branding your own D2C and private label store
In the next installment of this three-part series, we’ll take a look at ideas for creating private label direct to consumer stores and things to consider when building your shop. The final part will focus on branding strategies for your private label.