The appliance business is not an easy business to venture into. We had the opportunity to advise a chain store that does home-electrical and appliances. The difficult part of the business is to eke good margin out of products as famous brands like Samsung only provide as low as 5-10% returns. Apart from negotiations with retailers, manufacturers of appliance businesses have gone to Direct-To-Consumer (DTC) as a new channel to funnel more sales.
A recent analysis reveals that 32% of customers visit manufacturers’ websites but only 1.6% were converted into making e-commerce purchases.[1] This is a drop from the above average of 2% for the global conversion rate back in 2019-2020.
Why choose DTC?
· Higher margins
· Increased lifetime value
· Create higher brand loyalty
· Expanded customer base
What do customers check in DTC e-commerce?
· Get detailed information about products
· Check product reviews
· Find information with regards to repairs and installations
· Compare prices with other channels
· Check on product alternatives
· Buy directly
Why buy at the manufacturers’ website?
· Cheaper
· Availability
· Delivery
· Returns
· Post-purchase
· Free gifts
3 main barriers to DTC
· Conflict with retail partners
· Lack of digital talent and budget
· Lack of strategy or alignment
Strategies when embarking on DTC for appliances
· Clear picture of customer needs and why should customers go online
· How your sales executives who work with retailers and your DTC align to achieve better sales
· Realising the challenge is with other DTC of competitors and not within
How to scale your DTC
· Use KOL (Key Opinion Leaders)
· Make it easy to be searched
· Host regular events like 8.8 sales (8 August)
· Make purchasing easy (FPX) with no hassles or issues
· Creating moments and user-friendly, complementing sales executive
Future of DTC
With fervent AI usage, one can promote a DTC experience that allows full customisation before customers are to set foot into a physical store with a receipt to pick up their orders. There are no long queues and wait and the manufacturers have real indicators of the quantity to produce and how popular certain SKUs going to be. Lastly, don’t forget the retailers as through strong bonds can you then sustain stiff competition and have another channel for your product.
[1] Direct-to-consumer e-commerce in appliances: A strategic growth opportunity, Dave Fedewa, Nicolas Jabs, et al, 4 August 2023
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