Manufacturers vs. Retailers: Who will reign supreme in the D2C e-commerce

Retailers have been the focal point of much of the buzz surrounding digital transformation; however, it is essential to recognize manufacturers' indispensable role in this shift. In the face of increasing demand, supply chain disruptions, and the rise of direct-to-consumer models, manufacturers are revamping their businesses with digital advancements shaping the consumer experience and redefining digital commerce expectations.

For retailers, the pandemic prompted a wake-up call, needing to adapt to the new demand for e-commerce rapidly. However, manufacturers have long managed multiple stakeholders, including retailers and marketplaces. With the advent of the direct-to-consumer business model, they must also contend with new channels and logistical structures. This diversification has presented growth opportunities but has necessitated reevaluating the data management tools used to connect these disparate systems. Such a reevaluation ensures that internal teams, partners, and customers can seamlessly engage with these systems.

The relationship between manufacturers and retailers is changing

Unsurprisingly, manufacturers experienced some teething pains when it comes to the increased stress placed on them at the onset of the pandemic, following the surge in demand initially directed towards retailers. These sudden changes in consumer behavior, combined with a volatile economy's rapidly changing data patterns, caused undue strain on insufficient digital systems.

For instance, order management structures proved to be ill-equipped to manage the sudden increase in orders on the back end. Additionally, customer-facing service architectures left customers in the lurch when accessing simple answers regarding their order statuses. In response, manufacturers quickly learned they needed to connect their various inventory management, logistics, and sales systems to provide customers with the necessary information without involving customer support agents.

To achieve this, manufacturers utilized cutting-edge AI-powered tools. Retailers have created customer-facing service infrastructures that enable more intuitive order tracking by implementing next-gen search tools that use natural language. These tools help retailers to provide customers with the answers they need, drawing data directly from manufacturers to deliver up-to-the-minute, contextualized information on order statuses. This system has eliminated the need to involve customer support agents, who can now focus on critical tasks.

In e-commerce, the ability to sift through and make sense of data is a game-changer. By implementing improved search systems, retailers have tapped into a treasure trove of valuable information about customer preferences and inclinations.

With this newfound knowledge, retailers have become more adept at communicating with manufacturers to anticipate and accommodate the vagaries of demand. With search serving as a key leading indicator of what will eventually be purchased, retailers attuned to the data are better positioned to stay ahead of the curve.

This ability to accurately forecast spikes in demand provides a clear competitive advantage. With 2-6 weeks of lead time on production and shipping, supply chains can be proactive, ramping up production and ensuring ample inventory is in place to meet customer demand when it arrives. In short, better data leads to better preparation, and that preparation can translate into a distinct edge in a crowded market.

Customer experience-driven digital innovation transforms the manufacturing industry

The retail industry has been experiencing a significant transformation over the past few years, driven by the increasing shift to online commerce. As a result, manufacturers have also been forced to adapt to the changing landscape, taking on a more prominent role in the direct-to-consumer marketplace. Meanwhile, retailers have been exploring new avenues of growth by venturing into manufacturing, creating private-label brands that blur the once-clear lines between the two sectors.

The onset of the pandemic further accelerated these changes, bringing the need for agility in manufacturing to the forefront. This led to the disintermediation of retail channels faster than would have otherwise been possible, as manufacturers took on a more direct role in serving customers.

However, this has been a relatively recent development for manufacturers that have shifted their focus to D2C offerings. Unlike retailers, who have built their online presence for the past two decades, manufacturers have traditionally focused on supplying retailers with products. This has forced them to reevaluate their go-to-market strategy and invest in developing their e-commerce infrastructure.

Despite the undeniable advantages that come with being a first-comer in any industry, it's not always the case that latecomers are doomed to failure. In the world of e-commerce, the pioneers may have had an early advantage with their established online footprints and infrastructure. Still, the industry's evolution has brought its own challenges. Over the past two decades, retailers have had to navigate a rapidly changing landscape as new platforms and technologies have emerged. While early adopters may have been able to ride the wave of success, they have also had to adapt constantly to stay ahead of the curve. As a result, many established retailers now find themselves grappling with a complex patchwork of outdated and confusing systems.

A blessing in disguise

For latecomers, this may be a blessing in disguise. By entering the e-commerce space later, they have been able to learn from the mistakes of their predecessors and take advantage of the latest technologies and best practices. Rather than being burdened by outdated systems, they can build their infrastructure from the ground up with the latest tools and strategies.

Manufacturers shifting to direct-to-consumer (D2C) sales have a unique advantage over established retailers. While retailers have had to navigate the complexities of e-commerce for years, manufacturers are starting with a clean slate regarding logistics and order management. Using the latest tools and innovative strategies, they can build their e-commerce infrastructure from the ground up.

In addition to having a clean slate, manufacturers are arriving at a time when customer experience (CX) tools are more advanced than ever. This means they can offer a seamless, user-friendly shopping experience largely devoid of the baggage established retailers have had to overcome.

For example, imagine a retailer who began its e-commerce offerings ten years ago, using a primitive version of WordPress. Compare this to a manufacturer entering the D2C space now, in the era of Shopify and other advanced e-commerce systems. The manufacturer can leverage a better suite of services, including search tools that leverage AI and order management systems that enable the best possible customer experience.

By starting fresh with the latest technology, solutions, and tools, manufacturers can create a truly modern and streamlined e-commerce experience for their customers. They can also differentiate themselves from established retailers by offering unique products and services that cannot be found elsewhere. As the e-commerce landscape continues to evolve, it will be interesting to see how manufacturers continue to innovate and adapt to meet the changing needs of their customers.

Manufacturers have the chance to raise the bar

In addition to providing a better customer experience through advanced tools and strategies, manufacturers entering the D2C space have a built-in advantage regarding customer trust. Unlike retailers, who may rely on third-party information, manufacturers can provide validated and trusted information about their products straight from the source.

Manufacturers can further build trust with their customers by utilizing better search tools, support engines, and information organization. They can use their website data to improve the customer experience across all digital channels. This can be achieved by deploying AI-powered tools, knowledge graphs, and search tools that use natural language queries to connect disparate information databases. With these technologies, manufacturers can provide customers with a more personalized and engaging experience.

Furthermore, manufacturers can control their brand image and messaging more effectively when selling directly to consumers. This means they can tailor their marketing and messaging to specific audiences and demographics, ensuring their brand message resonates with their customers.

Although manufacturers may be relatively new to the direct-to-consumer (D2C) game, there is no denying that they can become the industry leaders in customer experience in the coming years. Manufacturers are well-positioned to deliver a remarkable experience thanks to their ability to use cutting-edge technologies and tools, cultivate customer trust, and maintain control over their brand image. It will be interesting to watch how manufacturers continue to develop and push the limits of what is feasible in the D2C arena as the e-commerce industry evolves.