5 Ways to Navigate the Retail Ins and Outs for DTC Startups
Meeting customers where they already shop is key for branching into the retail sector. Here's how to navigate doing it.
Retail can mean many different things for many different industries. Through my years of leading a direct-to-consumer startup, I've learned that retail means meeting our customers where they already shop — whether that is a big box store on shelves every Sunday, or while ordering groceries via an instant delivery app. For a startup, finding where your customer is present and willing to spend from a retail perspective is crucial.
Here are a few ways that startups can work through retail strategies and touchpoints, as it's not a one-size-fits-all model:
Talk to your customers
When looking to get into retail, data matters. Retailers want quantitative insights showing that your product will be successful on their shelves. And knowing if you'll be successful with a retailer is equally as important for you. Send out a survey to your customers, with two simple questions: 1. Do they want to see you in stores? and 2. Which type of retail stores are the most attractive?
The answers might surprise you. We learned that although we are a DTC subscription-based business, 85% of subscribers want to find us in-store to purchase. And even though we thought pharmacies might be a popular place to buy paper essentials like toilet paper and paper towels, it wasn't in the top three locations to shop. These types of insights can help you figure out which retailers to prioritize and narrow your focus, which is crucial for a growing company with limited resources.
Test distribution channels
There are so many distributors and third-party logistics companies out there, it can be overwhelming to decide who to work with, if any. It all depends on what your strategy is and how much margin you can afford to give up to a third party. Some larger retailers may require you to work with their distributor of choice. But if you can go direct, and fulfill orders on time, it may make sense to tackle it yourself until future retail opportunities require a distributor. This will allow you to have greater control and bring in more margin, which you can then funnel into promotions and marketing with the retailer(s) to help ensure your brand and products are a hit on the shelves.
Utilize shopping and commerce platforms as a first entry point
Expanding from a DTC brand to a multichannel business can be daunting. Where do you start? We've decided to gather some solid learnings from platforms like Gopuff and Amazon to see how they perform and how it impacts our DTC business. The success of these channels can also be a way for you to gather insights and turn them into talking points with future retailers. Also, if you're having a hard time getting into retail as a smaller brand, starting online with a store like Walmart or Kroger and proving your value will make the conversations for in-store placements easier down the road.
The pros and cons of big box stores
Large retailers can be very competitive to get into, and usually require a large promotional budget to ensure your brand is successful and stands out on the shelves. That being said, having your products in a big box store like Target, for example, provides legitimacy and helps make conversations with other retailers easier since they have such a strong brand. You should, however, determine if you have the ability to invest in a large retailer, and also come up with a strategy for which ones you want to target.
For example, if you have a higher-end product, you'll likely want to target retailers that traditionally bring in your target customer. That's why surveying and collecting data from existing customers is so important — they already know and love your brand, so your goal should be to try to get into stores where people with similar profiles to your existing customers shop.
Don't lose sight of DTC
While expanding into retail can be a great way to scale your business and find new customers, you do lose the direct connection to your customers. That's why it's imperative to still pay attention and grow your direct-to-consumer channel. One way to do this is to provide exclusive offers or bundles that aren't found in retail stores to entice customers to buy directly from your website. By continuing to acquire new DTC customers, you'll have the ability to re-engage with them in the future and create a true brand connection. This one-on-one conversation with your customer can be lost when their only touchpoint with you is through a retailer or a third-party platform.
There is no one-size-fits-all approach to retail. Personally, I'm an advocate of focusing on just making progress (even if you're just taking small steps to start). Start talking to your customers, find low-touch channels to test and gather data, set a target list of retailers and be ready to adjust your approach as you learn along the way.
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