The Path to Direct-to-Consumer Sales for CPGs
As the pandemic quickly shifted the shopping habits of consumers around the world, many consumer packaged goods (CPG) companies have been eyeing an opportunity to expand into direct-to-consumer (DTC) sales as a way to grow market share, build their brands, test new products, and get closer to consumers. As this Forbes article notes, with double-digit growth in ecommerce in recent years, hastened by the 2020 pandemic, CPGs are thinking about how to quickly roll out or expand their DTC strategy. But how can a CPG company roll out a DTC initiative quickly, with as little risk as possible, and at a reasonable cost? In this blog post, we’ll discuss DTC Launchpad, an end-to-end technology solution from VTEX, a long-standing AWS Retail Competency Technology Partner and the leading provider of global commerce solutions, on AWS.
Key Elements of DTC Sales for CPGs
Implementing a DTC sales strategy might seem like a daunting task. It has taken years of investments in technologies and distribution systems for retailers to achieve success in the ecommerce space. However, much of the complexity has been removed, especially with cloud-based technologies providing speed and flexibility not possible in the past.
To ensure a successful DTC rollout, every company must consider these key components:
- Website and marketing—CPGs might need to create a new website just for DTC sales or revamp their existing website, so they don’t redirect consumers to distribution partner websites to purchase items. CPGs also need to market directly to consumers on their website and by other means with an engaging brand experience that encourages people to buy items and provide valuable personal data.
- Customer data—Collecting, maintaining, and securing first-party customer data, or personally identifiable information (PII), like name, address, and phone number, is a key element of DTC sales. Although there’s tremendous benefit to obtaining customer data, CPGs need a strategy to comply with local, state, and country data-management laws.
- Payments and localized sales taxes—For CPGs, DTC sales are very different from wholesaling products to retail partners. CPGs need to put ecommerce payment and accounting systems in place to manage transactions and comply with local sales tax regulations. CPGs also need to comply with the Payment Card Industry Data Security Standard (PCI DSS) to ensure data protection and security of credit card transactions.
- Fulfillment—CPGs usually ship large quantities of products to distributors and wholesalers. With DTC, companies must change their fulfillment model to ship much smaller product quantities to individual consumers.
Benefits of DTC Sales for CPGs
CPGs who implement a DTC sales model can get closer to consumers, understand their wants and needs, create products to meet those needs, and develop long-term relationships. When you nurture consumers with personalized content, experiences, and promotions, they’ll purchase more products and return fewer items. The result is a high customer lifetime value (CLV) for a CPG company.
DTC Launchpad for CPG Companies
If you’re a CPG and want to implement a DTC sales model, DTC Launchpad can help you achieve success quickly. Powered by VTEX on AWS, this fully integrated, end-to-end solution combines cloud-native AWS services with VTEX’s ecommerce and online marketplace solution, Collaborative Commerce. It delivers the elements that CPGs need to implement a DTC sales strategy as quickly as possible.
Website and Marketing
In just eight to ten weeks, you can create a full-featured ecommerce website that can scale to support global operations in one region or across multiple regions. VTEX’s Collaborative Commerce platform comes with a prebuilt personalization engine, but CPGs can choose to integrate with Amazon Personalize, a powerful customer engagement tool that uses machine learning to make personalized product recommendations as buyers browse your website. And with the potential to use Amazon Connect, you can provide a responsive and efficient service to your DTC customers.
Having a DTC website to collect first-party customer data is the best way to learn customers’ preferences so that CPGs can provide more personalized experiences online and offline that result in more revenue. DTC Launchpad includes prebuilt integrations with online analytics tools like Google Analytics, but CPGs can also integrate with other tools offered by top AWS Retail Partners, including Segment, Cordial, Amperity, mParticle, and Tealium. First-party customer data can be exported from the solution and then imported into a CPG’s customer data platform (CDP) to drive personalized customer interactions.
Payments and Localized Sales Taxes
With a user-friendly, intuitive checkout process, DTC Launchpad has an option to integrate with Amazon Pay to manage transactions wherever Amazon Pay is available. Currently, Amazon Pay is available in the US, UK, and many European countries. It is trusted by more than 33 million active users. The solution also has prebuilt integrations with payment gateways like Cybersource and tax calculation providers, like Avalara, to ensure that online transactions comply with PCI DSS and sales tax regulations.
To ensure fast, on-time deliveries, DTC Launchpad includes a prebuilt integration with Amazon’s Multi-Channel Fulfillment (MCF). You can store your inventory in Amazon warehouses, and as customers place orders, Amazon will pick, pack, and ship the orders with one-day, two-day, or standard shipping options. MCF is currently available in North America, the UK, and these countries.
With a SaaS subscription model, your company can benefit from an OPEX line item instead of the typical, hefty upfront CAPEX costs that come with major technology implementations. You can configure DTC Launchpad to meet the needs of your company and DTC sales strategy. You can also use predefined user-experience templates, or your developers can tailor user experiences based on your target customers. Because the entire solution is built on AWS Cloud infrastructure, you’ll enjoy a 99.99% compute service level agreement, guaranteeing virtually no downtime even during the busiest shopping days.
If your company wants to implement a DTC sales strategy, this end-to-end solution powered by VTEX on AWS will help you launch your digital commerce initiative as quickly as possible, with less risk and lower cost. If you have questions for Danny, Scott, VTEX, or AWS, please leave a comment below. To request a demo, visit VTEX, or contact your AWS account team today to get started.