 Hello, and welcome to Enhance.Training YouTube channel. Now, last week I read the following headline. With the current situation and online shopping increasing, direct consumer is all you need. Well this got me thinking, is it right? Do we even still need retail or should we just focus on direct consumer selling? So in this video, I look at both sides of this question and try and help you uncover the right distribution strategy for your product. My name is Anna Taylor, and if you're new to this channel, Enhance.Training provides online business courses to help professionals, managers and business owners improve their performance. For over 15 years, I've worked in finance alongside sales and marketing teams for companies such as Unilever, Mondales, SAP Miller and Asahi. I've seen firsthand the importance of getting pricing and distribution right, and I want to help you do the same. If you like this video, give it a thumbs up, subscribe and share with friends. So direct to consumer is all you need. Well, let's first look at the advantages of the direct to consumer or D2C channel. We'll look at the general advantages and advantages based on the current environment we find ourselves in. So first of all, direct to consumer channel means your relationship is with the consumer. This is because you work directly with the consumer rather than going through at least one middleman. Therefore, you get to control the messaging to that consumer. You don't have to rely on a retailer presenting your brand in the right way because you're doing it yourself. You have more control over your product and your brand. This relationship also means you get more direct feedback from the customer themselves. You'll get to hear the good, the bad and the ugly, but it means that you can learn faster what's working and what's not, what the consumer values and what they don't. You can adapt your product more quickly and efficiently. And secondly, with D2C, you have full control over pricing. So pricing rules set by the competitions and marketing authority means that you can only control the price of the person you sell to. If you sell directly to consumer, you choose the price. If you sell to a retailer, you choose the price to them, but they choose the price they sell on to others. You can advise them, but you can't dictate or set lower limits. But with D2C, it's entirely up to you. Thirdly, there's more profit per product. Well, at least on an individual product level, the direct consumer channel should give you more profit per item. This is because you don't need to share your margin with a retailer or anybody else. The consumer pays the price. You take away your costs. Well, and the rest belongs to you. However, of course, you might have more costs for shipping, administration or so on. So it might not always be the cheapest, but you'll have to weigh up the costs and see which is economically best for you. But it's not just the method itself. It's also the market conditions look to be favorable at the moment. For example, there are more consumers online than ever before. According to the ONS, in November 2020, 36% of all retail sales were online. This was up from 21.6% the year before and the same the year before that. Clearly, the coronavirus virus and lockdowns have had an impact, but the fact is still there that more people have been shopping online than ever before. Now that people have got used to this way of shopping is forecast that many will continue to do so. How many exactly? Well, well, no one knows, but most commentators believe it's here to stay and grow. Now this plays perfectly into the hands of direct-to-consumer companies, as it means that, well, geography is not a boundary and they can continue to expand their brand to those extra people who are now online. And more people are trying new ways of shopping. So in a global survey by McKinsey, in 9 out of 13 major countries, at least two-thirds of consumers said they tried new kinds of shopping in 2020. And in all 13 countries, 65% of consumers say they're going to carry on that way. So whether it's due to more time online, more new launches, or perhaps shortage of mass retail availability, but people have had to look at other options. For example, when supermarket delivery slots became fully booked, alternatives had to be found. We did come across new online retailers such as Bother, who've stepped in to try and fill the gaps, but DTC ones have too, especially with subscription services. Now there's a huge variety of these services and I'm sure you have your favourites. Personally, I love my monthly delivery from Freddie's Flowers. They certainly brightened up my 2020, that's for sure. But now that consumers are more used to direct-to-consumer companies, now is the time to focus and take advantage of it. And finally, well, simply more companies are using DTC. So when most businesses once relied on a middleman to reach their desired demographic, there's now a huge gap where that distributor or retailer once was. This has led to a growth in DTC companies and it's not just for those small or new businesses. In fact, PepsiCo have launched a direct-to-consumer site and I know that Unilever has done likewise. Now this business is likely to be small for them for now, but significantly more profitable per item. But retail does still matter, and I'm now going to tell you why retail does matter and why it's not worth abandoning completely. It still has advantages and there are current studies that suggest even in these times of crisis we should not abandon retail forever. Well, first of all, retail helps you to reach more customers. Whether we're talking about online retail or physical retail, the facts remain the same. You have a greater chance of reaching more consumers with retail. It's a key way to drive awareness of your brand, especially if you're starting out. Now there are several types of retailers, large and small, online and physical stores, and a combination of these and many online retailers really support challenger brands. Well, at least in part because they don't have to have the limits of shelf space and have a real belief in supporting more consumer choice. Over the last year, more and more people have turned to these online retailers and now the demand is with them, it will stay. It will be foolish to ignore the power of retail completely. Reaching more customers and selling more product will allow you to grow your business and to achieve those economies of scale quicker. Well, secondly, it's also an efficient use of your time and skill set because your expertise is likely to be with your product. It's less likely to be, say, with logistics or consumer shopping experience and so on. Retailers have abilities that you don't, so using them can save time and effort overall. I mean, why struggle with the extra time and cost it takes you when you can partner with someone else to do it for you? Focus on your strengths, what you're good at, and outsource the rest. You'll have less stress and it will allow you to develop your products and your brand further. Thirdly, well, direct consumer isn't as easy as it appears. Retail is easier. Huge internet followings really, if ever, happen overnight. It takes time and effort to build a large enough level of awareness for scale. Those that have succeeded have spent untold hours on PR and advertising but retailers can help you get there faster. In fact, when surveyed, only 60% of consumer goods companies say they're even moderately prepared to capture e-commerce growth opportunities. So, while many are trying, not as many are succeeding with direct consumer. I mean, as one exec said in the survey, when it comes to selling directly to consumers, we really don't know where to start. Because direct consumer selling requires specific skills, capabilities, logistics, and pricing models, it may be a really easy place to start, but it's certainly not an easy place to scale. Retail is still a practical choice for scale and it shouldn't be ignored. And finally, well, retail bounce back. Now, in business, we absolutely should take advantage of the environment around us. We need to be aware of what's happening so we can adapt and evolve, but we must balance this and make sure that we don't make any long-term decisions based on short-term situations. So in terms of the future of retail, well, McKinsey analysts actually predict 2021 will see revenue shopping as pent-up demand is unleashed when restrictions are eased. They predict this because this is what happened after previous economic downturns and what's happening in China now. Chinese consumers are beginning to act and spend pretty much as they did before the crisis. Of course, whether this will be the same in every country is still to be seen, but whatever the case, we should keep our options open and be prepared. So in summing up, what's the answer? Is retail still relevant or should it be ignored? And we should focus on just direct to consumer selling instead. Well, unfortunately, I can't give the definitive answer for your product. You need to decide what's important for you, what's right for one brand might not be right for another. And it's important to explore all avenues and opportunities and pick the route or routes to market that suit your product, your market and your growth ambitions. Retail does still hold significant advantages. And if you believe the retail matters to your product, look out for our next video in the series when I'll be speaking about product pricing into retail and what retailers want. You'll learn what they want to be easier for you to fill that need and to sell to them. If you like this video, please hit the thumbs up button below and subscribe and hit the bell to get notified of our weekly video releases. This really helps us produce more videos to help you. Thank you for watching and I look forward to seeing you again soon.