It was a big shift in fulfillment strategy when the Dollar Shave Club started shipping single packs of disposable razors direct to consumer doorsteps. Products like that were on your grocery store list or part of a Target run. In the past few years, companies selling consumer packaged goods (CPG) began to leverage the direct-to-consumer channel as their biggest growth opportunity.
With the acceleration of ecommerce and online shopping, DTC ecommerce has become the go-to fulfillment method and the biggest way brands are staying competitive in the market.
Here are three ways CPG brands can stay competitive in the DTC market.
The best way you can keep your customers coming back is by getting products to them quickly and accurately.
If your customer orders your sweet and salty granola bar pack, but gets the spicy pack of in the mail, and they arrive later than expected… you better bet that customer is going to shop somewhere else next time. But if your customer gets your sweet and salty pack of granola bars before they would otherwise be doing a grocery shopping trip, they will be pleased with the speed of your product and likely come back for more.
“If you can’t get your products to the customer in an efficient way—not damaged, sent on time—then it honestly doesn’t matter. We recognize that there must be a symbiotic relationship between our branding and our fulfillment. What’s most important is that everyone gets the whole picture for the customer.”
To achieve this, you need more than just great marketing and a great product. You need an expert and experienced fulfillment partner or 3PL. You’ll want to seek out a 3PL with modern tools and an integrated approach to fulfillment. They should have a proven track record of success with products similar to yours. The best kind of 3PL support will be a catalyst to help your brand grow and scale without sacrificing any accuracy or customer satisfaction.
Adding a loyalty program or subscription option will not only retain customers, but there’s a high chance it will increase average order value (AOV) as well.
Introduce a Loyalty Program
A customer loyalty program is an incentive strategy where customers who purchase or engage with a brand are rewarded in some way. Cash, discounts, free products, are some examples of rewards.
A few of the most popular types of loyalty programs include:
- Points. Let your customers accrue points that correlate to the amount they spend with your brand. Let them redeem points by ordering specific products or getting a discount in their cart.
- Tiered Milestones. Allow access to certain rewards (giveaways, exclusive with a celebrity endorser, limited edition products) when customers spend a specific amount of money or buy a certain number of products with your brand.
- Membership. Set an annual membership price for VIP customers. Give those who pay the membership special access rewards (first peek at a new product line, early sales discounts).
DTC ecommerce brands can easily implement any of these as a short campaign, or long-term strategy.
Loyalty programs work best if the rewards feel obtainable, even if they are a slight stretch to get. No one wants to accumulate points if it seems like it might take years to reap any reward.
There are many other loyalty program systems, like punch cards (which work better in person) and collaborative programs (which require partnerships with other brands). It’s important to pick the one that fits best with your customers, your marketing campaigns, and your growth strategy.
Make it a Subscription Service
With a subscription, a customer pays a fee at set intervals (monthly, annually) and receives a set amount of products at regular intervals. The main types of subscription models are:
- Access: The classic example is news periodicals, with a monthly or yearly subscription, customers have access to a daily, weekly, or monthly news publication. Other examples of access subscriptions are Netflix, Spotify, and Amazon Prime.
- Curated: A subscription that has flexibility within the products is called a curated subscription. Some are personalized by the customer, and some are chosen by the subscription seller. A weekly meal kit (different each week), or a monthly box of office snacks (different each month) and both examples of a curated subscription.
- Replenishment: This is where CPG brands have a large share of the market. Replenishment subscriptions offer the same products delivered at pre-determined intervals, when the products might be used up. Diapers, pet food, and toothbrushes are all examples.
The ecommerce boom has driven many different verticals to online selling. Because CPG brands sell products that are consumable or disposable, they lend themself to using a subscription model to retain customers.
Benefits of introducing a subscription service:
- Consistent, predictable order flow and revenue stream. Smaller CPG brands often need to meet a certain order volume to outsource fulfillment to a 3PL. If you are looking to get a consistent bump in your sales volume, try adding a subscription service. You’ll appreciate the regularity of the incoming profits as well.
- Get to know your customers better. A subscription model entails a membership. By gathering more information from your customers you’ll have a larger pool of first-party data to use for more targeted marketing efforts.
- More loyalty! That’s the name of the game, if you lock in your customers to a regular subscription, you have insurance that they will stay for a period of time.
If your brand is gaining traction in the direct-to-consumer market, and you want to keep your customers engaged, there are proven ways to keep retention numbers up. Be sure to talk to your fulfillment providers before implementing any new strategies. If you partner with an 3PL experienced in CPG fulfillment, they’ll have a good sense of how to make it work to keep customer satisfaction high.
If you’re looking for a 3PL with fulfillment centers in cities across the US, we own and operate facilities in The Bay Area, Los Angeles, and Kentucky. Use DCL’s national footprint of warehouses to distribute your inventory across the country to reduce transit times and save on shipping costs. If you need fulfillment or shipping support and want to partner with DCL Logistics, we’d love to hear from you.