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As we continue to work with more and more manufacturers coming into North America, we are seeing a sharp increase in the number of companies that are exploring a Direct-to-Customer (D2C) model.
The advantages of this are many, including:
In the manufacturing segment, markups are typically 100% on the wholesale cost before it goes to retail. Innovative manufacturers are using that 50% channel margin, not to take additional profit, but to provide additional value to the end customer.
Five years ago, a direct-to-consumer model was difficult to implement but today, with the amount of easily available on-line information that end users have, a direct to customer model is a viable option in almost every market. Software companies are already along way down this road with SAAS offerings.
Let me give an example of just how well-informed end-customers are. I was chatting with a contractor friend of mine about a strategy we’re developing for a farm implement manufacturer. I happened to mention the retail price of one of their more popular products was $120,000. The contractor’s 13-year-old son piped up with “I only pay $90,000 for mine ...”. What on earth would a 13-year-old boy know about the price farming equipment?? It turns out he plays a game called Farming Simulator which gives him access to not only the different kinds of equipment but also the different manufacturers such as John Deere, Case and AGCO. This young man was learning all about the equipment and the business of farming ….at the age of 13!
This level of customer awareness is increasing in every vertical market. Any manufacturer can be reasonably comfortable that their end-customer is, or can easily become, well-informed about their product. Is it time for you to consider a D2C distribution model?
If you would like to know more about D2C market opportunities, I would like to chat with you.
Connect with me on LinkedIn.