Food and beverage companies, ask yourself these three questions:
Do you want to open up a profitable sales channel?
How about increasing customer engagement?
What about improving your customer experience and satisfaction?
Yes? Yes and yes? Good. Because you can knock all three of those out by implementing one sales strategy alongside your efficient business systems. By going direct to consumer, also known as DTC or D2C. There's a lot to consider between B2B vs B2C, including what is an LLC.
Truth be told, it’s only a matter of time before most profitable companies, even successful B2B business, integrate some form of direct to consumer sale (see D2C meaning).
Here are some statistics that show just how great an opportunity DTC food is—especially for businesses already in the food and bev game--and why it's the future of eCommerce growth.
DTC Food Statistics
Metrilo released a direct to consumer business model food study that broke down ecommerce KPIs around selling food directly to consumers. Here are some takeaways and what each means for running a DTC food business in 2021 and beyond.
Top 3 DTC Food Acquisition Sources
- Organic search. Search engines like Google drive more DTC food sales than any other channel. This makes the digital storefront, headless ecommerce site, online marketplace, or B2B wholesale marketplace you choose for DTC food sales the most important decision you’ll make in the process of going direct to consumer. Your products should be selling on an established platform with high search engine visibility. This is an area where DTC shines compared to B2B marketing.
- Direct traffic. The second most effective acquisition channel for DTC food sales is consumers coming directly to your brand’s website. This channel is a great sales-driver, but it only works if your company has a recognizable brand. And a fair amount of mindshare out in the market. Otherwise, your best bet is to lean into organic search. Rely on third-party marketplaces that rank higher in Google than your site (and your competitors’ site).
- Paid search. When you see a link in Google search results badged as an “Ad,” that’s known as paid search. Paid search results are more similar to traditional DTC advertising. Companies pay for the privilege of being included in the search results of specific keywords and queries. That’s as opposed to all the other search results which don’t say “Ad,” known as organic search results.
DTC food customers don’t make most of their buying decisions because of emails they get or social media posts they see. They fire up their internet browsers and use Google, first and foremost.
Any successful DTC food operation is going to have visibility on search engines. If your company’s website doesn’t have that, you have to use a third-party marketplace or storefront that does.
Top DTC Food Conversion Rates
Wine has the highest conversion rate of all DTC item types with a whopping 13%.
Here are the full results from Metrilo:
The average eCommerce website conversion rate in the U.S., across all industries, is 2.63%. Even the lowest vertical included in this DTC survey, tea, blows that out of the water.
So this much is clear:
eCommerce + DTC food = A massive opportunity
DTC Food Customer Lifetime Value
Here’s another feather in the cap of DTC wine. Far and away the customer lifetime value of selling wine directly to consumers dwarfs other item types.
Look at this:
Not only does wine win big again, but tea’s on the bottom of the heap again. There seem to be some direct to consumer trends and 2022 food trends you can count on, and there's never been a better time to learn how to ship alcohol. Even B2B sales have trouble keeping up with those numbers.
DTC Food vs. General eCommerce
Now let’s take a look at some higher-level DTC food statistics. That’ll give us a feel for the opportunity that DTC food presents in the context of eCommerce in general.
Data from Metrilo and Statista.
Not to belabor the point, but DTC food is a unique opportunity in eCommerce. And it’s an especially attractive option for hospitality businesses who are already experts at navigating the commercial food and beverage supply chain. Learning how to start a subscription box business may be a good opportunity to expand your reach.
Direct to Consumer CPG
Large-scale consumer packaged goods (CPG) companies are joining the digital arena, too.
Which could prove a bit of a shock to the traditional retail system. CPG companies are, of course, some of the most entrenched players in brick-and-mortar sales.
But it all depends on the approach direct to consumer CPG companies take. Some keep the D2C industry at arm’s length. They acquire successful D2C companies (see Unilever’s acquisition of Dollar Shave Club—one of the best direct to consumer brands ever) and let them do the heavy lifting.
McKinsey identified four approaches established direct to consumer CPG companies can take when opting to go direct to consumer.
Each approach answers the question, “What do you want your D2C channel to be?”
- An insights and innovation engine. This approach treats the D2C channel as more of a market research tool than a sales driver. It treats D2C as an engagement platform that solicits users’ preferences, opinions, past experiences, and desires. Let’s not forget that “direct to consumer” mustn’t only mean selling. It also means engaging in direct conversations and directly reporting user behavior and web analytics. The more a company interacts with its users, the more it learns about them. And that knowledge goes a long way toward insight and innovation.
- A platform to control the user experience. This D2C approach is primarily concerned with the company brand. Success in branding is as much about consistency as it is about resonance. By going direct to consumers, companies control the communication of their brand story from every angle. Distributors and retailers can’t deliver inconsistent messaging because they’re not part of the process anymore.
- An omnichannel DTC marketing and direct to consumer sales engine. Here CPG companies will primarily use their D2C channel as a way to drive engagement within a larger ecosystem of partners, retailers, and content. They’re not concerned with making the sale on their website; they’re concerned with eventually making the sale somewhere. So they use their ability to connect directly with consumers to drive engagement, but not toward brand consistency, toward conversion somewhere at some point.
- A pure sales driver. This is equivalent to a producer effectively deciding to become a retailer. The manufacturer leans heavily into their eCommerce website or digital storefront and goes all-in on converting prospects right then and there. The focus is on closing the sale and work on cross selling other products. This is a great move for wholesalers (see what is wholesale) looking to expand or with excess wholesale items to sell.
Though, of course, regardless of why a business chooses to open a D2C channel, all of the above strategies are available to them.
DTC Food 🦀
Making the jump from food company to a direct to consumer food company isn’t all that difficult. Not when you partner with an established food tech company that provides an online marketplace or digital storefront. A subscription box business is a great choice for this, so you can invest in a slew of profitable subscription box ideas. Just make sure to invest in custom subscription boxes for the best return.
You’ll get the benefit of search result visibility that only an established, optimized site can provide. And you’ll get a streamlined ordering and payment process.
Check out BlueCart Digital Storefront if you’re a food and beverage business thinking about making the DTC leap. You’ll be happy you did and can still keep selling wholesale all in one platform.