Pricing control is another advantage in the DTC space. Some retailers may ignore minimum advertised pricing (MAP) because they’re big enough or not paying attention.
Cons
The major disadvantage for brands selling direct to consumer is that they can’t share costs. (This is the other side of the “don’t have to share profits” coin.) Your brand bears all costs, from customer acquisition (ads, campaigns, etc.) to discounts and promotions to a brand’s marketing budget.
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In addition, your brand won’t be able to harness the power of the pre-existing community that many specialty retail shops cultivate. These communities tend to be very loyal, and are a great way to tap into the passion we all share, building evangelists for your brand. Sticking to a pure DTC model misses out on these opportunities.
Big Box / Big e-Commerce
Pros
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When your brand sells to Amazon, it becomes a volume game. The sheer reach of big-box and big e-commerce stores means that your brand can move a lot of product in a short span of time. They buy more because they have so many more stores and sell so much more product.
Your brand will have access to a lot of customers, because these stores have a lot more customer traffic than specialty retail. That established customer base is one that your brand can market and sell to.
Cons
One of the downsides of working with big-box stores or big e-commerce is they dictate the rules of the relationship — and they’re looking out for Number One – namely, themselves. Their size means that they get to decide on and structure the deals. Will the terms be favorable for your brand?
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As if that’s not bad enough, your brand will also see smaller margins in this sales channel. Huge retailers figure that if they’re helping you sell massive amounts of product then they should get a price break from you. This allows them to run more ads and draw more customers in with low (or even the lowest) prices.
Last, big retailers may want “exclusive” products or SMUs from your brand. Costco, Target, Amazon, etc. all want to have exclusivity so they’re able to say “Available only at [retailer].” These are often less expensive products because they are made of lower-quality materials; the result, though, is that they serve to cheapen your brand image.
Specialty Retail
Pros
In specialty retail, your brand has more control. The retailer and the brand are on more of an even footing than in the big-box channel. However, these retailers need the best products and brands in order to attract their customers, who are more demanding than those in other channels.
Brands who sell in this space will gain access to loyal customers who shop at specialty retail stores because the experience isn’t purely transactional. They know they’ll get help selecting the best products based on fit, use, value, and so on. This personal, intimate buying experience builds loyalty: when these customers “discover” a new brand and have a great experience then they often become advocates for the products and/or brands to their friends and family.
Source: https://t-tees.com
Category: WHICH
