Direct-to-consumer e-commerce in appliances

(8 pages)

Direct-to-consumer (DTC) sales have been a significant growth driver across various industries. Companies are recognizing the multitude of advantages that come with this approach, such as significantly improved customer loyalty and higher margins. Appliance companies are no exception, and new data show they have a large opportunity to increase their share of DTC sales. Recent analysis reveals that while 32 percent of customers visit manufacturers’ websites during their purchase journey, only 1.6 percent make an e-commerce purchase from them. As a result, it is no surprise that 80 percent of companies in the appliance industry have identified increasing their share of DTC sales as a priority over the next three years.

DTC e-commerce: The key to growth and higher margins

The DTC channel, specifically e-commerce, has proven to be a vital growth driver across industries. Companies have experienced significant improvements in customer lifetime value and higher margins due to this channel, which also enables new subscription business models and additional services. McKinsey benchmark research indicates that companies across various sectors are seizing this opportunity, with high aspirations for the DTC channel in the future. The appliance industry can follow suit and capitalize on this trend.

The direct-to-consumer (DTC) channel is a key growth driver across industries.

McKinsey’s DTC benchmark research indicates that, across industries, companies are embracing the DTC e-commerce channel.

Transforming the customer journey: From visitors to buyers

Although 32 percent of customers visit manufacturers’ websites during their purchase journey, only 1.6 percent end up buying from them. This glaring disparity signals that companies must develop an improved and seamless DTC e-commerce experience to convert these high-intent visitors into buyers. Today, the top reasons shoppers visit a manufacturer’s website are to obtain product details, reviews, and service information.

Today, 32 percent of customers visit a manufacturer’s website during their purchase journey, but only 1.6 percent buy from it.

Customers visit manufacturers’ websites primarily to get product details, reviews, and service information.

Meeting consumer expectations and differentiating offerings

For DTC e-commerce to become a significant channel for appliance sales, companies will need to meet consumers’ expectations of pricing benefits and delivery options on par with other retail channels. Services and accessories can also serve as differentiators, attracting customers with unique offerings compared to competitors and potentially fostering brand loyalty.

To convert visitors to buyers, websites must offer price and delivery options competitive with other channels and differentiate themselves on service and accessories.

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Overcoming organizational barriers to DTC expansion

While DTC sales for appliances have experienced considerable growth, several barriers to further expansion remain, including channel conflict: suboptimal e-commerce capabilities, lack of technology, and limited supply chain capabilities. To overcome these obstacles, it is crucial to invest in modernizing the e-commerce experience and technology, as well as in cultivating stronger relationships with suppliers to ensure an adequate supply of goods. Taking these steps can raise the potential for DTC appliance sales to new heights.

Appliance companies say there are three main barriers to expanding their DTC e-commerce sales.

A strategic and holistic approach to DTC success

Appliance companies must adopt a strategic and holistic approach to DTC initiatives to optimize their e-commerce success. Four factors have been identified as key to a successful DTC transformation:

Clear DTC strategy: Develop a well-defined plan outlining objectives and goals to serve as a road map to success. This includes a thoughtful pricing strategy in which price parity is key.
Distinctive customer experience: Focus on building and creating an optimized e-commerce experience that caters to customers’ needs and preferences, and commit to investing in the features and technologies that differentiate the shopping experience from that of competitors.
Cross-functional enablers: Encourage collaboration and alignment across various departmental silos within the organization beyond just marketing or channel sales. This needs to be a top company-wide priority to succeed.
Deep understanding of customer needs: Invest time and resources in researching and analyzing customer behavior and preferences.

In addition to current initiatives to expand their DTC e-commerce share of sales, appliance companies should focus on strategic planning for success.

Companies that make successful DTC transformations approach the process holistically, aligning on four key factors.

Scaling DTC involves a clear strategy, a distinctive customer experience, and cross-functional enablers.

Critical questions for companies to evaluate

Even with the above four key factors for successful DTC transformations, there is a series of critical questions that appliance companies will need to address and align around. These include:

What does the aspirational omnichannel journey look like? How might offline retail and omnichannel play complementary roles in the consumer journey?
How can DTC economics be optimized and integrated across channels—including post-purchase installation, services, and maintenance—rather than operate in silos?
What are the key points of differentiation between channels? What services and offerings could be made available on the DTC website besides sales-side commerce—such as configure-to-order, customization, and trade-in?
How does the DTC website leverage traffic from other content websites (seeding on YouTube, Instagram, professional review websites, online communities)?
How can the DTC website experience itself be a positive differentiator (for example, through live commerce or video)?