Direct-to-consumer (or “D2C”) is an eCommerce strategy that allows manufacturers and brands to sell directly to the consumer, bypassing the conventional method of negotiating with a retailer or reseller to bring their product to market. In D2C, brands sell directly to the consumer, mostly online.
A D2C strategy has many advantages, one of which is competitive pricing, which is also positive for consumers. Direct contact with consumers also helps to better understand their needs, and it also means being able to experiment freely with new product launches to test them with your consumer base and get their feedback.
But what are the main differences when compared to B2C? And what does it mean to have a D2C strategy? Let’s take a closer look.
Differences between B2C and D2C strategies
B2C models move products through manufacturers, wholesalers and retailers before delivering them to customers. These models involve product price changes and negotiations at each stage. One of the key features of these models is the presence of multiple agents; this also has an impact on the time it takes to deliver the product to the end customer and reduces overall profit margins. Each stage moves hierarchically and customers never actively interact with the partners in the business chain.
The main idea of companies employing D2C strategies is to partner with different stakeholders along the product and supply chain to connect the company’s products directly to the customer. The Internet and digital marketing services make this possible. D2C companies can take orders, package them and ship them directly to the customer’s home using special logistics (3PL).
D2C eliminates some of the steps in the buying cycle and can often mean a more efficient customer experience. In a recent study, 66% of online shoppers claimed to have purchased directly from brands in the last three months.
Running a D2C strategy
But moving to D2C is not easy. It is essential to have a specific D2C strategy in place so that your target market listens and pays attention to you.
It also involves the brand finding its target audience and communicating with customers directly. It brings brands closer to customers and can give them a better understanding of who’s buying their products and why, however this also involves a high workload.
Another of the aspects moving over to D2C entails is that brands have to manage their own product stock levels and fulfilment, including logistics. The brand has to sort, package, and ship the product when it receives an order from a consumer.
D2C is not a new trend. Merchants have been selling their products directly to consumers for centuries. But with the evolution of the transportation, industry, and technology industries, businesses began to expand in order to reach a more geographically spread-out customer base. Today, with the focus on purchasing locally for environmental reasons and the rise of online shopping, D2C is having a comeback.
Initially, larger companies were slower to invest in their eCommerce sites and smaller companies adapted more quickly and found it easier to tailor their websites to their customers. The D2C model is changing traditional retail because it offers several competitive advantages.
Nowadays, brands can test how and where they distribute and what their retail relationships will look like, and whether they want to adopt a physical store approach or move to e-commerce. By using D2C, they can offer customers a modern experience tailored to their preferences and behaviors from start to finish.
Brand control
With D2C, brands are in total control of their products and have the freedom to choose to sell via several different channels. They are also responsible for presenting their products to the consumer, which means they can influence the sale, build a relationship with consumers, and gather data.
Innovation opportunities
D2C gives brands the chance to understand what customers want, produce what sells well, test out new products and make improvements according to feedback, whereas in a traditional brand-retailer relationship, brands are often restricted to producing what only retailers want.
Access to customers and their data
D2C provides more personalized contact and enables brands to collect email addresses, location, social media profiles, purchasing preferences, and post-sales information, giving an insight into who is buying their products, which can also enable them to optimize existing products and create new product lines.
Higher margins
By eliminating the middleman, brands can sell their products at the same price as retailers, which impacts the brands’ bottom line. In the era of supply chain concerns, selling directly is a clear advantage.
Stronger brand loyalty
Brands can offer consumers better service and support with a good D2C strategy. This level of engagement creates strong relationships.
Going global
Without retailers or distributors in certain countries, brands are no longer restricted by geography. Having a D2C strategy increases brands’ resilience in their market route. It’s a direct route, yes. But brands should also count on multiple routes between destinations.
Flexibility
Consumers can have unpredictable needs and having a closer relationship with them gives brands the opportunity to adapt to these more quickly.
So, it is clear that there are a number of advantages to having a well-planned D2C strategy and although it does involve a higher workload, it also comes with a number of benefits both for brands and for consumers.
