How To Optimize A D2C Business
I thought we hit peak D2C ecommerce hype about 2 years ago. Nope.
COVID has brought the investment community out of the woodwork. There is a lot of new capital chasing eCommerce, on and off-Amazon.
If you've just purchased a brand that is D2C-enabled but seems under optimized, you may be wondering what's next?
Start with supply chain, I mean, all the value streams that start with order placement, and end with the customer's parcel on the doorstep. Audit those processes first. Are they ready for scale? What are the gaps in people, process, technology?
Rich Richardson chimed in and thanked me for putting supply chain first on this list! He adds “EFFECTIVELY managed supply chains are value creation centers, not cost centers! Covid-19 exposed the real life and death consequences of the lack of global supply chain resilience. Based on the global pandemic, business now finally understands that supply chains are MISSION CRITICAL! Supply chains move three things: data, products, and cash, and moving the first two faster and with higher quality creates more of the third!” It's no accident that Amazon is the best at eCommerce, and also the best at supply chain. The fact that people think about driving more traffic when you can't deliver a great experience is mind-boggling to me. It’s the fastest way to kill a brand.
Next, focus on traffic. If there is not enough traffic to drive the business, you need to figure out why the brand is not yet resonating. Start with your brand promise and differentiation. Then tackle product, pricing and presentation, then move on to your channel mix - i.e. placement. Start with your landing pages and move upstream.
Here, Sean Poe shared some thoughts “I'd start with a myopic focus on the listing experience - great imagery, impactful content, ratings & reviews, competitive price. You're right to call out supply chain BEFORE marketing, as marketing is something that can be turned on/off quickly whereas supply chain requires significant investment. Many companies I've worked with just want to think about driving traffic growth, but conversion growth yields greater returns in the long run.”
Then, conversion. If your traffic is solid, start with your landing pages (are they the right ones?) and move downstream. What's happening?
Tim Davies might want to switch points 2 and 3 around, but let’s hear him out: “I'd prioritize conversion over traffic. Why waste money and effort on attracting visitors to a leaky site? Get the customer experience optimized first, and when the traffic comes, you'll get higher sales velocity and volume.” I think we actually agree here that making sure the user experience is a solid one is the way to gain and retain customers.
Don't forget those existential risks. Every business has them. Those "what if?" questions will haunt you if you don't have backup plans for the existential risks. It's blown up many startups.
When I asked if folks had any other ideas to contribute to this list, right away Lawrence Taylor came through with a key one: loyalty. Absolutely. If customers aren't repeating purchases, it is a serious indicator or something wrong with the business. Lawrence added that “it is 6 times cheaper to attract an existing customer than it is to acquire a new one.” Also true - the costs for customer acquisition need to be far less than customer lifetime value.
