Do you know what does D2C means?
How can I start my D2C business?
Did you face any account issues on the Amazon platform?
Have you started to sell on an independent platform (like Shopify or Woo-commerce) yet?
How is it doing?
These have become the most concerning among eCommerce merchants in the past year. Here are some real people’s faces and some tips that might help a little bit.
- What does D2C mean
- Attempts and adventures of Amazon sellers
- The path to transformational strategy
- Three major problems for D2C eCommerce
- Profit password-D2C model for eCommerce
What does D2C mean ?
D2C means direct to customers. Instead of using a third-party or mediator to sell, the manufacturer or service provider directly sells to the customers. This allows brands and companies to enter the market now instead of relying on third parties such as retailers.
Attempts and adventures of Amazon sellers.
Since the impact of Amazon’s accounts being banned in April 2021, most cross-border merchants have begun to consider the business model of D2C to share the risks from platforms. Some D2C brands have also become “sweet pastries” in the eyes of the capital.
The D2C model is becoming hot. However, in the eyes of the practitioners, it is far from the time to talk about making money. Through the lively appearance, the independent and flexible nature is a double-edged sword for the operation of independent websites. It is not easy for independent websites to make profits. There are still many problems to be clarified in commercial sections, such as selecting products, setting up the website, converting traffic, and customer service for after-sales.
What pitfalls do the merchants who left the platform to independent websites face, and how do they avoid them?
How do profitable independent websites operate? Is 2022 still a good time to enter independent websites vigorously?
The path to transformational strategy
1. You always need a Plan B.
Following the “Don’t put all your eggs in one basket” rule, merchants started to spread out their sales channels after Amazon banned them.
According to Fulfillmen Cross-latest border research, 58% of 115 independent store merchants started independent stores after the Amazon bans.
In 2021, new independent station sellers will choose the “station group” model. within a limited period, on a large number of websites simultaneously.
Each independent store only tests products in a particular vertical category to buy advertisements, test models, hit products, and then achieve conversion.
The “station group” model can create explosive products quickly, obtain dozens, or even hundreds, of returns, and recover costs in a short period of time to achieve profitability.
However, website content is often rough, repetitive, or suspected of plagiarism due to extensive operations, product iteration and quality issues are often ignored, and after-sales service is almost unavailable.
Sometimes, orders are not shipped, and the goods are shoddy versions of the same false propaganda.
“Almost all independent stations this year are developing in the direction of D2C vertical boutique stations.” Yan Lanxin(head of TiChoo’s data market operations) told Fulfillmen Cross-border.
It is mainly based on two reasons:
First is that the overseas traffic bonus period has passed, and it costs more money to burn advertisements through a large number of websites to test explosive products;
The second is that Facebook, Google, Paypal, Shopify, and other third-party service groups carry out “encirclement and suppression” in turn against “shoddy versions,” “fraud blind boxes,” and even the sale of prohibited items. Once funds obtained through illegal operations are frozen, it is very difficult to get them back. The “station group” model can easily lead to arrears, increase business risks, and reduce living space.
2. Problems faced by merchants.
The first problem is product selection and positioning.
Whether choosing the platform distribution model or the independent station group model, merchants can use large numbers of samples to test the products. The probability of figuring out the explosive item is relatively high, and the profit has potential. The independent boutique station must create something unique and continue cultivating it after selecting the specific category. Insufficient market research by the merchant will result in no orders being placed due to posting to the wrong audience.
A case of failure
A swimwear factory in Southeast Asia opened its own independent swimwear store because its products were selling well on Shopee. Because of low sales, the website was closed without regard for the Shopee platform’s recommendation technique or client group distinctions
A case of success
But also, there are some merchants who do gothic loli style dresses. They did not go to the hot-selling markets such as Europe and Japan. After some market research in the United States, they found young people who loved rock and quadratic elements, and they gradually accumulated fame from subcultural groups. so as to achieve a steady increase in profits.
“There are many methods of market research. Check the industry research, quarterly reports,white papers issued by consulting companies.Tax situation of the market is also worthy of attention; The other is to use Google Trends to search for keywords. In different states in the USA, you’ll find changes in popularity; Third, conducting mock interviews, contacting overseas friends and customers, and discussing what the local market lacks and what everyone likes For example, which products are in high demand but feel expensive? Ask friends to photograph the supermarket’s shelves and window displays. You can’t just research the copywriting to select products according to local consumer preferences.” The dressmaker said.
Three major problems for D2C eCommerce
1.How to build Website construction
After determining the vertical product category, the difficulty of your D2C website’s building and operation will also face three significant problems.
First of all, website construction is the basis for the operation of an independent website.
It’s effortless to apply templates to build a website, but it might not meet the standards. Facebook and Google have very detailed requirements on websites that want to open an account, and there are strict restrictions on privacy terms, terms of service, shopping features, etc. Zhang Qing, said a Facebook advertising optimizer.
When he first built his D2C platform, Chen Gu said he didn’t understand the website’s graphic and text requirements, and his advertising account was frequently blocked. Some examples are 50% off website advertising, Buy One Get One Free, 5-star reviews, and underwear ad images that highlight key parts. ”Amazon will not permit you to move Amazon store images to a different station. Unless the brand and manufacturer are identical between Amazon and independent station stores.”
2.How to bring Free traffic
In addition to essential graphic and text compliance, merchants often step on pits in website design. Many merchants have low conversion rates after attracting traffic from off-page sources. One of the reasons is poor website design, such as an unattractive brand name and logo and a cluttered page layout. This directly leads the website to a low reputation and fewer customers willing to pay.
“Businesses from platforms such as Amazon may lack experience in brand management.” One is a lack of awareness, and the other is a lack of professionalism, and they don’t know what to do after realizing it. The cost of professional advertising companies is still a bit expensive for small and medium-sized businesses. There could be some small institutions in the market, with flexible fees, to help merchants manage the brand or provide training.” said Yan Lanxin, head of TiChoo’s data market operations.
The functional integrity and UI of the website also directly affect the benefit of off-site traffic, which has always been the most worrying aspect for independent website merchants. Independent website building platforms such as Shopify and Store Maker can help small and medium-sized merchants build an online sales infrastructure. Still, they cannot provide sufficient support for channel traffic.
The most significant difference between a D2C business and an e-commerce platform is traffic acquisition. E-commerce platforms have their own traffic, but user data belongs to the platform; D2C needs to conduct external traffic on its own, which has the advantage of facilitating user retention and data appreciation.
3.How to run paid ads for more traffic
Understanding the attributes and rules of various traffic platforms is a significant pain point in attracting traffic off-site. For example, Google is for people looking for products, and Facebook is for products looking for people. The two’s keyword settings and optimization directions are different, and the audience groups are also different. Google ads can usually bring more business customers and are suitable for products with higher unit prices, but the starting volume will be slower than Facebook.
It is difficult to control traffic costs, which is a deeper pain point for off-site traffic. As per the latest Fulfillmen Cross-border research, 76% of currently operating D2C businesses are losing money due to high traffic costs. Facebook’s CPM (cost per thousand impressions) in 2021 will be roughly 30% higher than in 2020 as more merchants compete.
The initial charge for Facebook ad accounts is $1,000, and for Google, it is $500. The monthly advertisements are at least $10,000 and the universal monthly advertisement is around $200,000. “D2C is more suitable for merchants with financial strength,” say some small businesses. “D2C selling is expensive for us.”
According to Facebook advertising optimizer Zhang Qing: “There are also independent website merchants who invest only a few hundred dollars per month, but their ads cannot run, and their income is minimal. Many give up after six months. Although many merchants left the market at the end of last year, there will be more entering this year than exiting, so advertising costs will remain stable”.
Profit password-D2C model for eCommerce
According to the latest Fulfillmen Cross-border research, 46% of independent website merchants have increased profits this year, while 37% have decreased. The declining earnings stores have all kinds of problems, while the stores with growing revenues have some things in common.
1.How to fix the niche
The selection of D2C platforms needs to subdivide vertically, strictly control the quality of products, and go to the source factory more.
A businessman said he first focused on advertising and “chasing hot sell niches.” However, despite the high volume of orders, the supply chain is unstable.Later, when he focused on swimming supplies, he would first find a supplier to get samples. He would put forward product optimization requirements if he found that the quality differed from his imagination. The conversion rate of D2C platforms has gradually increased to 4%, and the refund rate has also decreased significantly.
Increasing traffic through multiple channels and offering creative functions and limited-time discounts can help increase customer acquisition.
D2C brands, which have developed rapidly in recent years, have performed well in marketing and drainage. The TikTok challenge, launched by sports and fitness brand Gymshark, has gained about 20 million fans in 66 days. Outer’s “Neighborhood Showroom” project of home furnishing brand has encouraged purchased users to invite neighbors to come experience outer products and build more than 1,000 fan communities in 2021.
3. What is the low-cost marketing
With a 40% open rate, an independent website merchant told Fulfillmen Cross-border that he has recently focused on EDM email marketing. The repurchase rate reached around 14%. “Abandoned order recovery emails” can be sent multiple times in the background to provide different discounts for different order stages.
Products, prices, and marketing strategies are set, and most profitable D2C platforms will focus on fine-tuning operations. The system is straightforward to use and has a simple and attractive interface. Brand story pages and user engagement are also available as options on the homepage.
After a customer places an order, some D2C merchants will send an email with links to track the order’s progress. Solicit feedback via email after the order is placed. Consumers’ purchasing or repurchasing decisions are made easier by eliminating obstacles and making ordering as simple as possible. Chen Gu shared.
After a year of adventures, merchants realized the D2C model was simple to learn, but difficult to master. Some merchants failed to operate D2C platforms and returned to major e-commerce platforms. Still, some merchants successfully developed their own ways of differentiation, and the profits of D2C platforms increased steadily.
The new crown epidemic will continue to spread faster than expected in 2022, and the Russian-Ukrainian conflict will persist. Borderless e-commerce will face new challenges and opportunities. Deep cultivation of products and user operations is an irreversible trend with D2C or platform models. Traders need only pick a track that matches theirs and proceed cautiously.