Mwah, *Chef’s kiss*, to our favorite wholesale strategy

Data-Driven Marketing and Growth Insights (10/30/2024)

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In the last few weeks, we have covered the industry developments of  Meta, Google, and Snapchat. But, this week, we are going to deep-dive into something new: one of our favorite strategies for wholesale-first, retail, or franchise organizations. 

Everyone thought that direct-to-consumer was going to be this fantastic breakout channel that destroyed in-person shopping. 

I don’t know how many times we heard the following:

“We’re gonna go D2C, have a huge profit margin, cut-out the middle-men, big-box companies like Walmart and Target, and all of these people and companies that stand between us and our customer.”

Here’s what actually happened: the middle-men never left. 

They just changed identities. 

Now, we call them Meta and Google.

You now have to pay these players to get your customers onto your website.

So, instead of going to Target, you get them to purchase on your website through Meta, Google, and other advertising platforms. 

And so, the idea of D2C as a super-profitable channel has slowly faded. 

But here’s an unexpected turn of events. 

At SeedX, we’ve seen that D2C is the best leverage for wholesale development, retail, and franchise growth.

You see, these types of businesses struggle to advertise for these two reasons:

First, because they lack attribution. When people purchase through Target, for example, or your business is running a giant  TV or radio ad… you pray that it worked for your source. Of course you can set up advanced analytics tracking and run casual impact analysis and other lift studies, but that also is difficult and costs brands a lot of money. 

Second, the payback time is more difficult. In off-line channels, a company has to wait months or some other indeterminable period to get paid back for their media investment. In contrast, a company in D2C gets paid back instantly (generally between 1-7 days depending on the product) and is significantly more agile. 

So, here’s where it gets interesting.   

What if you can use D2C as a free marketing channel?  

What if instead of thinking about D2C as this uber-profitable channel, you think of it as this growth engine that drives lift across every channel you have? 

We’re doing this with several companies now.  

We’re utilizing their direct-to-consumer channel, maximizing growth overall instead of focusing just on profits. While we are still profitable on this channel, but it is not the sole aim of the channel. 

Where the magic comes in — this strategy provides an insane lift to their retail and franchise locations or their wholesale business lines. While their D2C channel is growing 100%, their other business lines are also growing 50-100% in-line with our marketing efforts. 

When we start to drive massive ad spend on the consumer side, we are not only capturing on-channel customers, but we are driving sales across all business lines. 

What is magical about this is that while the D2C channel is not as profitable as you would like, you are now growing the other business lines essentially for net-zero marketing dollars. 

So, is D2C is potentially the best tool ever created for wholesale, retail, franchises, and other offline businesses? 

I think, yes.

These are notoriously difficult and expansive channels to invest in. Now you can be growing your entire direct-to-consumer channel at even (hey, maybe even make a little profit) and be super-fueling the rest of your business in a way that you could never do if you were just off-line focused.

So, not only are you getting new customers trying your products, you’re making a little profit, AND it’s fueling the growth of your largest business line segments.

And, you can you do that without forking-out investments you are unsure will payback or investing in complex data science teams.

Mwah, *Chef’s kiss*, to our favorite strategy that happened to fall into our laps from experience.