The Direct-to-Retail model is fading away

If you know anything about direct response marketing, you know that it’s been around for awhile, is currently the rage, and looks and behaves little like it did just ten years ago. In 2008 direct mail had already taken several hard hits and was in decline. Direct response space advertising had begun to wane but the frequency and effectiveness remained strong. People were still watching cable and satellite TV and Netflix was still shipping out DVD’s and Hulu was only just born.

A great deal has changed since 2008 including changes in the ways people consume information, buy products, and view media in general. Add to this the continued rise of Amazon as a buying platform and you can see how direct marketing has itself been disrupted. Recently two longstanding direct response industry associations have been either absorbed or disbanded, i.e. the DMA – Data and Marketing Association better known as the Direct Marketing Association was absorbed by the ANA (Association of National Advertisers), and the ERA – Electronic Retailing Association no longer exist. This did not seem possible ten years ago.

For many years when launching a product via direct response television, radio, direct mail, or space, it was common to consider the product a ‘success’ when it went to mass retail. There still might have been direct response advertising even after the product had gone to retail, but it was as much a drive to retail as a drive to a direct sale. And buying ads at direct response rates is always less expensive.

Twenty years ago fulfillment of direct response product orders took weeks not days. Managing data was far from easy, and remarketing to direct response buyers was by mail and phone. Think about that. Going to retail was SO much better.

Today, launching a product via direct sale is very en vogue. Companies like Dollar Shave, Harry’s Razors, Warby Parker and Bonobos are examples of direct response launched companies that have some brick and mortar retail outlets. Here’s a list of 19 from Business Insiderhttp://www.businessinsider.com/online-direct-to-consumer-brands-with-retail-stores-locations-2018-2 . But the bulk of the sales for those companies all remain direct response. And that’s the way they want it since those direct sales are substantially more valuable than selling through a third party brick and mortar or online retailer like Amazon.

It’s also understandable that for most companies where there’s already a third party retail model (think Wal-Mart, Costco, Target, etc.) in place, a discussion on how to get more direct sales is ongoing. The direct response buyer is clearly more valuable to the bottom line than the retail consumer. Of course that’s only true if companies can keep those consumers coming back!

The convenience of online ordering and shipping has been the tipping point. Pricing differences to the consumer at retail versus direct response are becoming minimal. This allows the consumer confidence in not worrying about price in one channel versus another. Another huge advantage of driving the retail customer to buy direct is the ability to re-market to these customers via email, SMS, or other direct messaging platforms. Finding the right messaging cadence and frequency isn’t easy but it’s worth the effort.

Retail brick and mortar stores will not disappear from the landscape. But it’s clear that the amount of retail outlets will diminish for most brands. Brands having retail showrooms will continue to be the next wave. Going direct-to-consumer is the future if not the present.

 

 

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Direct marketing, Direct response, Direct Response Television, Direct sales, Disruption, E-commerce and tagged , , , , , , , . Bookmark the permalink.

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