Direct To Consumer
Strengthen your Brand by Building Meaningful Customer Relationships
BOOST CUSTOMER LOYALTY WITH DIRECT-TO-CONSUMER SELLING MODEL
The Direct to Consumer (DTC) via FBG model offers a cost-efficient method for brands to sell products on Amazon without retailers. Utilizing GRITR’s resources and capabilities, brands can manage their entire catalog, including listings and returns, with transparency. This allows them to understand all costs and benefits without disrupting current partnerships.
WHAT IS THE DTC THROUGH FBG or Direct to Consumer through fulfillment by GRITR:
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GRITR manages everything from listing to returns with full transparency, allowing brands to see all costs and benefits without impacting existing partnerships.
DTC VIA FBG IS AN EFFECTIVE STRATEGY FOR:
- Building a full catalog representation
- Overcoming tight margins that turn off retailers
- Market testing new products with uncertain pull-through demand
- Efficiently clearing discontinued products and conduct clearance sales
- Testing the DTC model prior to in-house investments in personnel and resources
BENEFITS OF WORKING VIA DTC THROUGH FBG
All-in-one Amazon Sales Management
GRITR takes care of everything for you on Amazon: inventory storage, fulfillment, marketing, listing optimization, returns and customer service. Focus on your core business and grow your brand on Amazon with GRITR.
Complete Control Over Your Amazon Presence
You have full control over overpricing, product listings, inventory management, and advertising campaigns. This ensures brand consistency and alignment with your marketing strategies.
Higher Profitability and Brand Growth
Set the retail price you want and capture profit from the wholesale price plus a share of each sale (double margin). Allocate more resources towards marketing and advertising for faster brand growth.
KEY STEPS OF THE DTC VIA FBG MODEL
In short, GRITR handles everything for DTC sales on Amazon, similar to FBA but with a 15% commission and leaving brands with a net margin of 27-30%.
DTC VIA FBG IS AN EFFECTIVE STRATEGY FOR:
- Amazon Brand Setup
GRITR builds and optimizes brand’s Amazon listings & Amazon store (if no store exists). GRITR launches and manages Amazon advertising (optionally).
- Inventory
The brand sends selected inventory to GRITR on a consignment basis. GRITR takes physical possession, but the brand retains ownership. No payment obligation is recorded at this point.
- Pricing Strategy
The brand communicates pricing at which products are to be sold. This can be MSRP/MAP for standard products or discounted prices for clearance items.
- Logistics
GRITR stores inventory strategically across their warehouses and potentially relevant Amazon fulfillment centers (no direct sales to Amazon).
- Order Fulfillment
GRITR manages the entire order fulfillment process, from picking and packing products to delivery and handling customer returns (if necessary).
- Payment Process
The remittance of payment occurs on a monthly calendar cycle. GRITR provides the brand with full accounting for every product sold and all expenses associated with each sale.
WHAT YOU GET WITH OUR DTC THROUGH FBG SERVICE
FULL CATALOG REPRESENTATION
Problem: Traditional retailers tend to focus on the top-performing SKUs in a brand’s portfolio, adhering to the 80-20 rule where 20% of products generate 80% of the revenue. This limits brands’ ability to expose their full product range to customers, especially for those products in the long tail of their catalog. While Amazon is an incredibly important platform for consumer interaction, the lack of inventory support from current retailers restricts the customer experience and doesn’t fully serve the brand’s interests.
Our Solution: By setting up fulfillment for 80% of the less popular SKUs through the GRITR fulfillment platform, your D2C brand ensures customers get exposure to the full catalog. GRITR takes care of everything from ASIN creation, content optimization, and product logistics to advertising management, sales support, and returns management. This comprehensive service frees up brand managers to focus on strategic decisions, enhancing both brand visibility and customer experience.
CLEARANCE/DISCONTINUED PRODUCTS
Problem: Brands often struggle with clearance or discontinued products. The common solution is to heavily discount these items for retailers to buy and resell, which can distort product value and create an expectation among consumers to wait for discounts before purchasing. This leaves retailers vulnerable to inventory risks, especially if multiple retailers are involved in the closeout.
Our Solution: Our DTC through FBG service offers a more effective approach. By sending closeout products through GRITR, the brand does not have to offer a huge discount to the retailer but instead can offer a small discount to the end consumer and spend a small portion of the margin on additional direct advertising. This increases traffic to the discounted product and exposes more consumers to the brand. With GRITR not working off margins in this scenario, brands can adjust their discounts according to their financial objectives, minimizing any potential harm to their brand equity. As with all our services, GRITR handles everything from ASIN creation and content optimization to logistics, advertising, sales support, and returns management, enabling brand managers to focus on strategic decision-making.
TESTING MARKET DEMAND FOR NEW PRODUCTS
Problem: Brands may occasionally introduce new products without established demand, which can be risky. Building up demand in an unfamiliar product category takes time, and existing retailers may hesitate to stock these items.
Our Solution: With our DTC through FBG service, brands can directly market their products through GRITR, allowing them to test the market response with targeted advertising campaigns. Since GRITR doesn’t operate on margins under this DTC arrangement, brands can allocate more of their own margin towards these advertising efforts. This method provides quick market feedback, helping brand managers gauge the success of new products effectively.
TIGHT MARGINS THAT TURN OFF RETAILERS
Problem: A brand may find itself in a predicament during product development. The market price for the product does not leave much room for the brand to sell the product to a retailer, who in turn would sell it to the end consumer. This often happens with heavy or bulky products, where the cost of freight and logistics is likely to erode margins for all participants in the channel of commerce.
Our Solution: DTC through FBG solves this challenge. As GRITR operates on a commission basis rather than margins, brands can bring products to market while maintaining a healthy profit margin.
DTC MODEL TESTING BEFORE IN-HOUSE INVESTMENTS IN PERSONNEL/RESOURCES
The 1P approach is more hands-off, requiring minimal time and effort from the seller as Amazon handles most processes itself. Those include pricing, fulfillment, customer service and returns.
FINANCIAL MODEL
DTC through FBG is a win-win for all involved. Here’s why. To you, the model offers a 33% increase in gross profit over the standard model. GRITR trades inventory risk associated with the brand for a lower gross profit. However, this trade-off is balanced by the opportunity to sell long-tail products from the brand where competition is significantly less, resulting in a much higher overall volume.
| INPUTS | STANDARD | DTC | |
|---|---|---|---|
| Price | - | $100 | $100 |
| GRITR Comms | 10% | - | $10 |
| Amazon Comms & Fees | 20% | - | $20 |
| WHS COGS | 40% | $60 | $20 |
| MFG COGS | 70% | $60 | - |
| GRITR Profit | - | $20 | $10 |
| Brand's Profit | - | $30 | $40 |
FAQ
DTC (a.k.a. D2C) stands for Direct-to-Consumer, a business model where companies sell their products or services directly to customers, eliminating the need for intermediaries such as wholesalers or retailers.
While both B2C (Business-to-Consumer) and D2C (Direct-to-Consumer) involve selling to end consumers, there's a key difference. In a B2C model, a business may sell through various intermediaries such as retailers or distributors. However, in a D2C model, the business sells directly to the consumer, eliminating any middlemen.
Since DTC brands don’t work with intermediaries, they have the potential for higher gross margins and can offer lower prices. Their supply chain management is more streamlined. DTC brands also have more control over their branding, marketing, and messaging and can establish direct relationships with customers.
Our DTC through FBG service covers a wide range of services, including full catalog representation, clearance of discontinued products, and market testing for new products with uncertain pull-through demand. We also handle products with tight margins that may deter retailers. Additionally, our service allows you to test the DTC model before making in-house investments in personnel and resources.
Our custom DTC strategy positions your products in the channel with the largest “eyeball” exposure at the lowest possible cost. Your customers can engage with your entire product catalog while you invest minimally in its management and maintenance.
Instead of working off margin, we work based on commission on products sold. This approach enables your brand to introduce products to the market while still maintaining a healthy profit margin.
