Selling D2C streamlines the distribution process by avoiding intermediaries (such as third-party suppliers and distributors) – allowing D2C companies to offer products at lower prices than brands that use traditional retail business models – and maintain end-to-end control over business operations. With the elimination of traditional retail retailers, advertising, marketing and direct-to-consumer activities are being used to differentiate brands. Imagine a consumer product. It doesn`t matter which item you`re thinking of exactly. Whatever the product, it starts its life with its manufacturer and ends with its user – or consumer. The space between these two endpoints is where things can get more complicated. This concept sells products directly to customers without the need for intermediaries, eliminating third-party customers in the middle of the process. In addition, he facilitated the administration of business without complicated recording of stocks, shipments or business transactions. It also allows small businesses to become competitive with large, successful companies and grow faster through this model. They can be competitive in terms of price, product availability and quality, as the cost is lower. [3] Direct-to-consumer brands are part of every interaction with a customer. By delivering an exceptional customer experience, you can build real relationships. This leads to loyal customers and high customer lifetime value (CLV).
That`s why many DTC brands work hard to create a community among their customers. However, that doesn`t mean retailers don`t have to adapt and evolve. With increasing competition, a seller must mitigate the advantages of its new competitors. In the case of competing with a DTC brand, this means that you are trying to get easy and convenient access to the products. It`s not just millennials who want fast and smooth experiences – they`re all modern consumers. There`s no reason why they should hesitate to buy from a multi-brand retailer if that company offers such an experience. The main risks associated with direct-to-consumer sales online are the growing risk of liability, cyber risk and the more complex supply chain. First, direct sales to customers expose a company to risks that are previously or generally borne by distributors such as wholesalers and retailers. For example, the company must take care of shipping, labeling or cybersecurity.
The latter is one of the main risks associated with running an e-commerce business directly to consumers, as the processing of consumer data is sensitive. Privacy and security have become one of the priorities, especially in e-commerce. The main concern is not only higher exposure to security breaches, but also issues such as the sale of personal data, etc. Finally, conducting e-commerce directly to consumers increases the complexity of the supply chain itself, which can create additional difficulties for the business itself. For example, the company`s shift from B2B to direct-to-consumer commerce means that you now have to sell the products to many individual customers instead of just selling to a few merchants. This means that the company is now responsible for delivering products to its customers` doorstep, which increases the complexity of the distribution chain and carries additional risks. [Citation needed] The advent of the Internet has greatly disrupted the direct-to-consumer model. Many types of goods and services were no longer a few blocks or miles away, but rather a few mouse clicks away. In addition, the number of the same product/service providers has further increased, thus reducing the differences in their services.
Now, companies had to go the extra mile to attract customers who had the power in their hands and to whom companies had to adapt even more. Additional efforts have been made in the area of marketing (consumer/market analysis, redesign of 4Ps, etc.), CRM, etc. necessary to stand out from the competition and get as much revenue as necessary to keep the business alive, as the costs of change for consumers have reached a historically low level. In this way, the direct-to-consumer model slowly took on a form we know today. [Citation needed] It was a mix of fun marketing (including plenty of influencer campaigns) and a subscription-based model that worked so well for Undies. Their risky advertising couldn`t help but grab the attention of new customers. Providing items through a monthly subscription made buying underwear an experience. Before you can understand the business model, it helps to have a clear idea of what the DTC means. But as various faster modes of transport appeared and villages expanded to cities, everything became much more interconnected. Before that, customers did not think about buying from companies in remote foreign villages, but then began to think about what would be more profitable for them, especially if local food/service suppliers felt that their businesses could not be disturbed by anyone else and abandoned their vigilance. Consumers wondered if the cost of buying local was still much lower than the cost of buying from a foreign farmer with better food. They wondered if it wasn`t worth spending extra resources on transportation to fix their shoes so they would last a long time without tearing, compared to repairing them every two months at the local shoe repair? In this way, the direct-to-consumer sales model eventually became much more dynamic and broader.
Part of the reason you want to continue working with – at least – some retailers is simple. Simply put, they are good at selling to consumers; That`s what they do. There are few things that are black and white in the commercial world. Most companies are located in an environment decorated in shades of gray. Every decision you make has both disadvantages and advantages. This applies to choosing a DTC approach as well as everything else. The transition to direct-to-consumer sales presents significant challenges. The next trio is one of the most important to consider.
A recent report found that 48% of manufacturers plan to create DTC channels. This does not mean that they will abandon traditional wholesale distribution. Instead, it means they want to add DTC channels to their existing models. Such an approach to the DTC makes perfect sense. DTC is an important avenue to explore if you want your brand to keep pace with the modern world. Consumer demand for frictionless experiences has triggered a distinct trend toward the model. .
