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The Decision To Sell D2C Requires Consideration Of Many Moving Parts

December 19, 2018: 12:00 AM EST
An article in Supply Chain Quarterly looks at the potential benefits and pitfalls in direct-to-consumer sales for CPG companies. D2C startups have managed to disrupt the traditional oligopolistic market structure in CPG. Large established companies have been cautious about adopting D2C as a channel, but they have been catching up. The pitfalls include potential damage to traditional relationships with retailers and losing high-value shelf-space developed and paid for over many years. D2C sales may cannibalize traditional retail sales, and the move to D2C also involves a significant cultural shift and investment in new distribution networks. Potential benefits include better access to the consumer and their preferences, and it enables the brand to better control its image online. However, the choice doesn’t need to be binary. An omnichannel approach can allow brands to leverage the advantages of both channels. Selling D2C, however, will have involve significant supply chain challenges, which will impact product design and manufacturing – including designing products that will attract consumers without them being able to touch the goods. Companies will have to balance the attractiveness of packaging with the cost and space implications. Developments in D2C, such as product customization and personalization, have created their own challenges for manufacturers. Logistics is another area to consider. Companies like Amazon have raised consumer expectations of next-day, or even same-day, delivery, and Amazon Prime has focused consumer attention on delivery charges. The “last mile” issue is also complex, and some brands are using click-and-collect services, in-store or at collection points, to overcome it, but some consumers will still expect door-to-door delivery, which may require precise time slot deliveries. [Image Credit: © CSCSMP's Supply Chain Quarterly]
Gurram Gopal and Albert Fabregat , "Delivering on "direct to consumer" in the CPG industry", Supply Chain , December 19, 2018, © CSCMP's Supply Chain Quarterly, a publication of Supply Chain Media, LLC.
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