Retail or direct to consumer?
Sales strategy for new businesses
Think
So, you’ve created your product and you can’t wait to get started on the branding. You’re thinking about your colour scheme, what funky logo you’re going to choose, and figuring out a social media aesthetic that will get you more followers than Kim Kardashian.
If that sounds like you, it may be time to step back and reassess. Before you start working out the look and feel for your brand you need to work out how and where the hell you’re going to sell it.
If that sounds like you, it may be time to step back and reassess. Before you start working out the look and feel for your brand you need to work out how and where the hell you’re going to sell it.
Retail routes
Supermarkets
When following the retail route, new businesses often aim for the supermarkets straight away. Getting into a large supermarket is perceived to be the height of success. Seeing your product sat on the shelves next to some of the most well known household products can be an extremely rewarding experience for lots of business owners.
One definite benefit to selling your product in supermarkets is that you can gain a lot of exposure. Thousands of people of all ages, ethnicities, genders, lifestyles, hairstyles (the list goes on forever so I will spare you the detail) will see your product on the shelf every day. In a sentence, selling your products in large stores is a good way of getting your product in front of as many people as possible.
This kind of exposure does come with some drawbacks though and may not be as effective at increasing sales as you may first think.
This is the part where we burst your bubble… sorry
For most new brands, there can be a lot of setbacks to supermarkets. For new brands the cost of getting your product on the shelf can be higher than the return, not to mention the insane amount of competition your product will be up against.
Cost
Supermarket retail leads to high production costs for new businesses. If you are planning on getting your product on supermarket shelves, you’d best be ready to splash the cash. Supermarkets ask for a large amount of stock and ask that you reduce the price of your products so that they can increase their profit margins. This comes at a huge cost to many new businesses, not to mention as a young brand you aren’t guaranteed to make the sales necessary to get your money back.
On top of the initial cost of producing such a large quantity of your product at a lower cost than usual, extra costs can also be incurred in supermarket retail. Buy one get one free and other deals come at an extra cost for example, and although larger brands can handle special deals like these, smaller brands can sometimes find that the cost does not justify the return.
If you are planning on selling your product through a supermarket, weighing up your costs effectively can be the difference between making a decision that cripples your business and keeping your business afloat. When working out costs ‘hope for the best. Plan for the worst’ is the motto we like to work with.
Supermarket retail leads to high production costs for new businesses. If you are planning on getting your product on supermarket shelves, you’d best be ready to splash the cash. Supermarkets ask for a large amount of stock and ask that you reduce the price of your products so that they can increase their profit margins. This comes at a huge cost to many new businesses, not to mention as a young brand you aren’t guaranteed to make the sales necessary to get your money back.
On top of the initial cost of producing such a large quantity of your product at a lower cost than usual, extra costs can also be incurred in supermarket retail. Buy one get one free and other deals come at an extra cost for example, and although larger brands can handle special deals like these, smaller brands can sometimes find that the cost does not justify the return.
If you are planning on selling your product through a supermarket, weighing up your costs effectively can be the difference between making a decision that cripples your business and keeping your business afloat. When working out costs ‘hope for the best. Plan for the worst’ is the motto we like to work with.
Competition
Another setback is the amount of competition your brand will face in supermarkets. When you get your fermented cucumber water brand onto the shelves in ASDA, you enter into a direct competition with huge brands like Coca Cola, Pepsi and Schweppes who have huge production, marketing and branding budgets and who already have an established customer base.
Let’s be honest, as humans we are creatures of habit. It takes a lot for us to consider changing our buying behaviours or try new products. When your smaller brand is surrounded by the nations favourites, it can be hard to get noticed by Sandra who has probably bought the same two litre bottle of diet coke every week on her weekly shop for the past forty-five years.
The best thing to do here is aim for your niche, your 5% of the market that you can own. Twenty-seven year old workaholics who want a healthy green juice for lunch. Single mams who want healthy meals for the entire family ready in two minutes before she drops one kid off at karate, the other at swimming and the other at ice skating. Whatever your niche is, make sure you have a really good idea of who your brand is targeting and focus on them.
Another setback is the amount of competition your brand will face in supermarkets. When you get your fermented cucumber water brand onto the shelves in ASDA, you enter into a direct competition with huge brands like Coca Cola, Pepsi and Schweppes who have huge production, marketing and branding budgets and who already have an established customer base.
Let’s be honest, as humans we are creatures of habit. It takes a lot for us to consider changing our buying behaviours or try new products. When your smaller brand is surrounded by the nations favourites, it can be hard to get noticed by Sandra who has probably bought the same two litre bottle of diet coke every week on her weekly shop for the past forty-five years.
The best thing to do here is aim for your niche, your 5% of the market that you can own. Twenty-seven year old workaholics who want a healthy green juice for lunch. Single mams who want healthy meals for the entire family ready in two minutes before she drops one kid off at karate, the other at swimming and the other at ice skating. Whatever your niche is, make sure you have a really good idea of who your brand is targeting and focus on them.
Think local
Supermarket retail is not a bad strategy in and of itself. Aiming for prime position on supermarket shelves is an honourable goal, but there is a way to get there without putting your business at risk or sacrificing your overall profits.
If you want to end up on supermarket shelves it is best to start off local. Before you approach huge retailers, try to get your product in smaller shops like cafes, farm shops, garden centres, grocers, museum shops, local delis or your local trendy health shops first. These shops don’t require the same quantity of stock as supermarkets, you will have less competition on the shelves, and whilst your sales are growing you can gather data and slowly build up your manufacturing.
Of course, there will be a time when your business will be ready to approach chain stores. They grow up so fast *wipes tear from eye* … When that time comes, it is a good idea to approach smaller chains like Budgens, Whole Foods or Planet Organic and ease yourself in. Building up to big supermarket retail slowly will ensure that you have multiple streams of income. You will have time to develop as a brand and your decisions will come with less risk. In other words, it’s best to start off at the baby diving board before you go and do a belly flop from the 10 metre. You will save yourself a lot of panic and pain.
Supermarket retail is not a bad strategy in and of itself. Aiming for prime position on supermarket shelves is an honourable goal, but there is a way to get there without putting your business at risk or sacrificing your overall profits.
If you want to end up on supermarket shelves it is best to start off local. Before you approach huge retailers, try to get your product in smaller shops like cafes, farm shops, garden centres, grocers, museum shops, local delis or your local trendy health shops first. These shops don’t require the same quantity of stock as supermarkets, you will have less competition on the shelves, and whilst your sales are growing you can gather data and slowly build up your manufacturing.
Of course, there will be a time when your business will be ready to approach chain stores. They grow up so fast *wipes tear from eye* … When that time comes, it is a good idea to approach smaller chains like Budgens, Whole Foods or Planet Organic and ease yourself in. Building up to big supermarket retail slowly will ensure that you have multiple streams of income. You will have time to develop as a brand and your decisions will come with less risk. In other words, it’s best to start off at the baby diving board before you go and do a belly flop from the 10 metre. You will save yourself a lot of panic and pain.
Online retailers
If the past year has taught us anything it is that online business is more important than ever. So whatever you do, don’t limit your sales strategy to physical retailers.
Online retailers are pretty darn awesome. The web is a weird and wonderful place. No matter how niche your product, you will be able to find an online retailer that is catering to your exact audience.
Is your product vegan? There are hundreds of online vegan stores to choose from. Do you create luxury pet food for tortoises? There are online stores for that. Have you developed a hand cream for hipster boulderers, which reduces soreness, but doesn’t soften the callouses they have worked so hard to build up? Online climbing stores would love that.
Unlike supermarkets, the goal with online retailers isn’t to gain exposure to a wide group of people. It is to find the perfect audience for your product and offer it to them directly. With online retail you can dangle the carrot right in front of the donkey, rather than placing it in a huge field full of other root vegetables and hope that the donkey finds it.
You needn’t limit your search to just your product type either. You can position your product in any online space where your customer already hangs out. For example, many FMCG products can be found at websites like ASOS. So if your target audience is 25 year old fashionable women, this is a great place to be listed.
Subscription boxes
Another emerging option for online retail is subscription box providers. Think of subscription services like Borough Box and Awe Box. They deliver a monthly package full of independent food and drink brands to their subscribers every month. It’s not just food and drink though. There is a subscription box for just about everything these days.
That lavender spray you created would go really well in a spirituality subscription box. That cleansing tea would go really well in a spa subscription box. That candle you made that went a bit wrong and smells like your secondary school library for some weird reason… monthly book subscription boxes are booming recently and I bet book lovers everywhere would love your weird library candle.
With these boxes, the more niche your product, the better. So if you have been worried that your product may be just that little bit too weird for conventional retail, a subscription box would be perfect for you.
Direct to consumer
During this past year, businesses have begun to move away from retailers and take matters into their own hands, finding ways to supply their products direct to consumers. With the increasing popularity of online shopping and the events of this past year making retailers seem like a less stable option, jumping straight into a direct to consumer strategy has become tempting for new businesses.
There are a lot of benefits to selling direct to consumer. You can limit some of the costs, as you don’t have to pay retailers or pay high costs to produce large quantities of your product. You can get your product out on the market sooner and you can achieve a lot even with a relatively small team.
It is by no means the easier option though, and there is a lot to consider before you jump in.
Exposure
If you plan on selling direct to consumer, one thing you will need to reflect upon is how you plan on gaining exposure. When you sell products through retail, you automatically gain exposure because your products are there on the shelves for customers to peruse. In order to gain exposure for yourself you will need to knuckle down and increase your branding efforts. There are a few ways you can do this:
Social media
Social media is a free and relatively simple way of spreading the word about your business and building up your brand. You can use social media platforms like instagram, facebook, twitter and dare we say it … TikTok to find and connect with your audience. Using videos, photos, infographics and quirky captions is an effective way of building up your brand identity and attracting your desired audience.
Besides posting regularly and creating quality content for your socials, there are a number of other ways you can use social media to gain exposure for your brand.
Partnerships and giveaways are a great way to gain more followers and attract more interest. Giveaways give followers the chance to win a prize by sharing your profile and tagging a number of their friends. You can gain quite a lot of followers when conducting giveaways for a relatively low price (usually just one product from your business). It is even better If you partner up with other brands to give away a bundle because then you get exposure to their audience as well.
Just make sure you pick your partnerships well. If the brand you partner with target 80 year old women that knit and your brand sells beard oil for hipster men then the partnership might not be the best....or maybe it's a genius new audience...
Influencer publicity and marketing is becoming a key strategy for almost any business these days. Influencers usually have a specific niche and a large amount of followers who are interested in that niche. If you specialise in beauty products, you could send some of your products to beauty instagrammers or youtubers. If you create tasty granola you could send it to healthy foodie instagrammers. They will promote your product to their followers whilst eating smoothie bowls, swimming in infinity pools or doing other influencer stuff.
Website
Now you have people’s attention and they're on your website. That brand experience needs to be top notch to drive the sale through.
The thing with websites is that they take a lot of work. You can keep developing them and improving the experience with pop ups, landing pages, SEO, meta descriptions, blog posts, newsletter sign ups... and it can all get a little overwhelming. Not to mention the cost.
Templates on websites like shopify are a great way to kick-start on a smaller budget. But if direct to consumer is your key sales channel then you might want to invest in something a little more bespoke that is built to your specific needs.
The most important thing of course is to make sure your website is consistent with your brand visually and verbally, whilst also making it easy for a customer to find and buy what they want.
The unboxing experience
When selling direct to consumer, it isn’t just the packaging that needs to be taken into account. Direct to consumer businesses are putting more and more emphasis on the unboxing experience. If you are sending out orders for delivery, you could send it out in a plain cardboard box with nothing but the receipt included or you could create a magical experience for your customer including little extras like stickers, handwritten notes or clever packaging that creates surprise and intrigue. Positive unboxing experiences are more likely to be shared on social media which in turn provides you with free publicity.
Instead of just packing your product in a box with some bubble wrap think of some unique ways that you could deliver your product to your customer. Some really successful direct to consumer businesses have come up with ingenious ways of creating the best unboxing experiences possible. Birch Box for example have created a packaging that fits through the letter box and that does not need to be signed for. This saves the customer a lot of trouble with delivery. Beyond logistics like this, creating colourful packaging, themed packaging or adding extras like bespoke notes and recipes can be the difference between a customer returning or not.
So what is better retail or direct to consumer?
Both strategies come with their own unique set of benefits and setbacks. Although you may feel more comfortable with one form of distribution, at Studio Unbound we suggest trying your hand at both. If you are retail focused perhaps add a shop section with limited stock to your website and see how it goes. If you are direct to consumer focussed, try stocking your product in a small number of physical retailers or online retailers. In doing so you will be able to guarantee multiple streams of income. There won’t be as much panic if your website crashes or if …. I don’t know… some weird pandemic causes retail stores to close for like a year…
Want to be noticed on the shelves? Want to create crazy unboxing experiences for your customers? Get in touch today to see how we can help.
