A number of designer labels once found mainly in department stores have turned their attention to direct to consumer channels. Brands like US-based label, Milly, for example, have spun off lines specifically designed for DTC. These brands offer exclusive lines that can’t be found through wholesale channels to engage directly to digitally native and millennial customers. Ultimately, their aim is to increase the share of direct sales that, without a retail middleman, translates to better margins.
DTC or B2B: It's the brand that counts
What these labels are doing is part of a wide phenomenon among brands and manufacturers. Social media, eCommerce and marketing automation put the power of DTC into the hands of businesses that 20 years ago had no choice but to use wholesale channels. By 2015, as much as 40% of manufacturers were said to selling direct to customers alongside their wholesale channels. As we’ve written here before, the old B2B/B2C distinctions have blurred. With DTC becoming a natural part of company growth, the brand is far more important than the channels it uses.
Each channel has benefits
Each kind of channel comes with its own set of benefits and problems. While many brands, especially in fashion, start off as wholesalers, the immediate connection to customers afforded by social media creates almost a parallel need to develop a DTC brand. As a wholesaler, the brand builds its brand awareness and a steady revenue stream (but at a lower margin) than selling direct. As it sells direct to customers, the brand earns higher margin and gains more control over the brand-customer relationship, but at a potentially lower volume than as a wholesaler. Furthermore, the brand has to manage the marketing and promotion in house to grow that channel. So each kind of business comes with trade-offs. However, many of the brands that use CIN7 balance direct channels with wholesale to reap the benefits of both.
Cin7 and DTC
CIN7 provides a flexible platform allowing brands to manage inventory and orders as a wholesaler and direct retailer. Click below to find out how CIN7 can help your brand.