The Pros and Cons of Retailing Direct To The Consumer

If you are a purely wholesale brand thinking about adding a retail channel to your business, we have some points for you to think about. Like any big decision, there are pros and cons to doing this.

Let's first look at the benefits. Retailing direct to the consumer offers:

• Better margins than wholesale
• Direct contact with target audience
• Increased opportunities to create or build upon brand personality
• Faster turnover of inventory
• If your brand is known through stockists, your launch into retail should be accelerated
• Search engines will favour you above other stockists, especially if your domain name includes your brand name.

All good stuff! And all valid reasons to enter the retail arena. So let's just consider some of the possible downsides:

• Possible damage to wholesale relationships as you will become a competitor
• You will need a retail-specific website if you are taking orders online. This may involve investment, and will certainly incur extra running costs
• Increased admin and customer service requirements
• Increased customer returns, and adherence to consumer purchasing and returns legislation
• Different skills required to manage retail customers
• Potential changes needed to packaging, storage, carriers and dispatch process. Fulfilling lots of smaller parcels as opposed to bulk orders.
• More complicated book-keeping and accounting due to the increase in orders.

This is not supposed to put you off direct retail, but just raise awareness of all the changes it will bring about. Check out my other posts for more advice on growing and developing your wholesale business.