An international study was found that Childcare costs in Britain are by far the highest in the Western world. Insurance firm LV has valued the total expense for raising a child until they are 21 at £229,251, which is more expensive than buying a house in some cities.
As we can see above, Force Engineering.com parents spend much on their child who is between 1 and 10 years old. For the reason that, apart from the childcare, parents also need to spend money on the baby goods and toys for their child during this period. However, the prices of the baby good are increasing and this has seen a 13% rise in spending between 2008 and 2010 and now accounts for 30% of all spend on baby goods and toys.
However, why baby stuffs are so expensive?
Let’s take baby car seat as an example and see where these high prices come from.Let’s break it down.
The vast majority of the value is captured by the markup that goes to the middleman, the retailer. Sometimes there is only one middleman, but often there are many. Therefore, everyone in business is looking for ways to cut out the middleman to save costs and the Internet has made it easier for companies to go directly to the consumer.
What is Direct-to-Consumer business mode?
Direct-to-consumer business mode allows manufacturers to sell directly online to consumers without excluding their distributor or dealer network. This enables the company eliminate the cost of the wholesalers, distributors and retailers so that the price could be lower than its competitor’s product with same quality. Also, consumers can visit the manufacturer website, make a purchasing decision, choose which distributor or dealer they want to fulfill the order based on inventory and/or geo location, the distributor and/or dealer fulfills the order and gets the appropriate proceeds according to the manufacturers business model.
Today, many direct-to-consumer e-commerce companies, like Glossier, Away, Plated, Harry’s, and The Honest Company, market, sell and ship their high quality productsat much lower prices by themselves, without middleman.
Take Glossier as an example. This beauty blog birthed a hot product line. It raised £7 million in Series A funding six weeks after launch. Founder Emily Weiss invested the money in data and analytics technology to determine how well each product performed on social media. That move is clearly paying off. Glossier saw 600 percent year-over-year growth from 2015 to 2016, has a massive, engaged fan base, and just raised £45 million in Series C funding, bringing its fundraising total to £77 million. Also, co-founder of travel company Away, which has raised £25 million in funding and sold more than £17 million worth of luggage after adopting the Direct-to-Consumer business mode. Also, Milly’s direct-to-consumer line lauch only in Milly stores and online, which has lower prices, shorter production cycles and trendier designs. In the Direct-to-Consumer business mode, company could drive low-cost manufacturing out of the market and offer the best items at affordable price.
Direct-to-Consumer model for baby brand
Now, this new way of doing business is extending to different sectors of the market. For example, baby goods and toys. Every parents want to provide best things to their children. However, as baby stuffs are expensive in UK, parents may have so much pressure on buying baby goods. The Direct-to-Consumer business mode could help much of the families save a large amount of money on baby products.
Recently, Ealingbox, a typical Direct-to-Consumer baby goods e-sellerin UK, links the consumer directly with 300+ reliable manufacturers in order to provide the high quality baby product but in lower prices. As its official website was launched, its sales increase 50% within two months. Angelina, a mum of a 3-year-old baby, said:” This website is gorgeous. I can easily find many new creative and high quality products, which prices are around 20%-50% lower than other baby retailers. Because of Ealingbox, I have more budget for the family trips in this summer holiday”.