When the bedding market contracts, the question always comes up..."should manufacturers sell directly to clients?"
There are a few schools of thought on this subject. Some people believe that bedding manufacturers should sell their products directly to clients in order to better control the quality of their product and ensure that customers are getting what they expect. Others believe that selling through third-party retailers gives manufacturers a wider reach and can ultimately lead to more sales.
There are pros and cons to both approaches. Selling directly to clients gives manufacturers more control over their product, but it also limits their reach. Selling through retailers gives manufacturers a wider reach, but they have less control over the product.
There are benefits and drawbacks to both approaches, so it is important to weigh all of the options before making a decision.
Advantages for Manufacturers Selling D2C
1. There is more control over the final product: Retail organizations may ask for product modifications that a manufacturer may not believe are best for the consumer, but those changes are made to satisfy their request. D2C allows manufacturers to deliver the products they believe in.
2. There is more connection with the end user: Being a level removed from the customer often creates increased dissonance and less understanding of what consumers really want. Working with them directly gives the requisite feedback to create improvements in the product.
3. There are higher margin opportunities: By "cutting out" retail, there are less mouths to feed and the price points are dictated by the seller. Where manufacturers may have received $200 - $400 per mattress in retail, they may be able to double or triple that margin if selling directly.
4. Less reliance on retail channel: Retail partners being the sole source of revenue for a manufacturer puts all of the eggs in their baskets. A diverse strategy may mitigate the concern for a dip in retail execution.
Being a level removed from the customer often creates increased dissonance and less understanding of what consumers really want.
Disadvantages for Manufacturers Selling D2C
1. Risk retailers abandoning your products: If retailers believe you are cannibalizing their market, they may either not promote your products or drop your line altogether.
2. Customer service challenges: It's easier to manage 100 stores than 100,000 clients. Retail outfits are often invested heavily in customer support and these resources are built to handle large consumer bases at scale.
3. The costs can be significant: Manufacturing business's core competencies are generally not building sales funnels, running ads, and executing a digital sales strategy. The cost to learn this or bring in people who know what they are doing can be very high!
4. It may take time: Marketing directly to consumers is an iterative process that takes trial and error and adjustments. Expect to lose money before you learn what your clients are wanting, price points, and best messaging and promotions to create consistent conversion.
The costs of setting up a d2c bedding company can be significant. There are the initial costs of setting up a functioning website and developing an e-commerce platform, as well as the ongoing costs of running digital marketing campaigns to drive traffic to the site. This is true whether selling through a website or a 3rd party site like Amazon, Walmart Marketplace, etc.
In addition, bedding manufacturers will need to invest in good quality product photography/digital asset development and possibly even video content to show potential customers what they are buying. All of these costs can add up quickly, so bedding manufacturers need to be sure that they are prepared to make the investment before embarking on a d2c strategy.
There are also some operational considerations to take into account when selling d2c. Bedding manufacturers will need to manage inventory levels carefully to avoid overstocking or running out of popular items. They will also need to have a good returns policy in place, as customers may want to return items if they are not satisfied. Overall, the costs of setting up and running a d2c bedding company can be significant, but there are also potential rewards if the business is successful.