Managing D2C as a Multichannel Merchant
While marketplaces like Amazon can be extremely effective channels for customer acquisition because of the existing traffic, owning a direct-to-consumer (D2C) store enables you to have the highest level of control over the customer experience. Additionally, selling directly to your customers via a D2C website gives you access to a much richer set of data about your customers, whereas with a marketplace you typically have limited access to your customers’ information because of privacy laws.
This control over customer experience, as well as the data you have access to, can be leveraged to create a more personalized customer experience, as well as to inform future marketing initiatives. In this blog post, we will explore the key elements of managing D2C as a multichannel merchant and how to use them to your advantage.
When a product is being sold in multiple places, it's important to consider the ripple effect that one channel can have on another. Specifically, many merchants run into challenges when managing Flash Sales or periods of high transaction volumes, leading to overselling and a degraded customer experience. This is because inventory is shared between channels, and the accuracy of the data is reliant on the speed of the integration between the sales platform, and the inventory source of truth.
As a specific example, Shopify limits the amount of API calls that developers can make via an integration, and if the quantity of sales is above this threshold, the inventory records can become out of date on an external order management system quite quickly. This could result in a separate channel continuing to list a product for sale, when in fact there is no longer any inventory available.
Therefore, for any period of time where a high volume of sales are expected in a short window, like a Drop or a Flash Sale, it is best practice to proactively allocate inventory for the flash sale on the channel listing, and then disable inventory syncing during the sale. The channel with the flash sale will use its allocated inventory and prevent overselling, while other channels will continue to function as usual with the balance of the unreserved inventory. Once the sale is complete, you can then re-enable the inventory sync connection to reconcile the inventory. This will ensure that your inventory management system remains your single source of truth, while avoiding any potential overselling.
There are several situations where a merchant might consider having separate websites, but it’s important to understand the implications of this choice. For instance, merchants may opt for a separate store based on geography - such as a main store for domestic orders and a different store for international customers. Alternatively, some merchants may create a separate website for wholesale customers, who place large orders with the need to manage unique price lists.
However, as a general rule, with every additional sales channel added there is increased operational complexity. All orders need to be recorded and centralized into one source of truth, and this will create more opportunities for errors to occur. You should only set up a separate store if it is absolutely necessary, and only after careful consideration of the potential operational impact, as there are often alternative solutions available.
For example, instead of a separate website, it may make sense to consider a platform that has a dedicated solution for wholesale customers, which enables the usage of inventory allocation, price lists, customer login (to check the status of an order), etc. With Fulfil, there is a native wholesale portal that allows merchants to accomplish exactly that, which removes the need to have an independently managed website. Additionally, platforms like Shopify make it easier to expand internationally without the need for a separate website, by handling things like currency exchange and international taxes and duties.
In conclusion, while direct-to-consumer (D2C) stores can offer a great level of control over customer experience and access to 1st party data, it is important to consider the implications of managing it as a multichannel merchant. Careful consideration should be taken when it comes to Flash Sales, and separate websites should only be considered if absolutely necessary and all other solutions have been explored. With the right platform and strategy in place, D2C stores can offer immense value to merchants and are worth the time and resource investment to implement. For more information about how Fulfil helps merchants manage their D2C channels, book a demo with our team.