Why D2C: All You Need To Know About The Rising Direct-to-Consumer Business Model

Did you hear the term D2C ecommerce strategy?

Known as the Direct-To-Consumer business model, it has emerged as one of the ecommerce trends that focuses on the expansion and transformation of business by cutting the middleman equation.

What is the D2C business model?

Direct-to-consumer or D2C strategy enables manufacturers to have control over end-to-end marketing and selling techniques through digital channels. This model takes out the middleman and offers brands competitive advantages over traditional retail strategies. It allows them to interact with consumers from engagement to final purchase. It enables them to collect customer data without any involvement of the intermediary retailer.

The COVID-19 pandemic proved a boon for the ecommerce industry. It was the time to test the supply chain in which the e-commerce giant was unable to deliver good service. This hit on the supply chain emerged as a challenge for end-to-end operations. D2C brands took advantage of this condition, reduced cost for consumers and increased ROI.

A study by Invespcro revealed that 78 per cent of D2C brands spend on the marketing budget as compared to 60 per cent of traditional retailers.

This ecommerce strategy is on the rise because of the win-win module for consumers and manufacturers. Direct marketing through social channels makes it convenient and frictionless for both. Consumers expect to interact with the brand instead of resellers or retailers. This new approach has become a steadily growing niche, estimated to bring tremendous change in the future market.

Benefits of Direct-to-Consumer Ecommerce Strategy

Increased Power Over Brand Marketing And Consumer Engagement – Traditional supply chain restricts manufacturer to control their brand marketing. After handing over the goods to the retailer, manufacturers were no longer involved in the marketing process. They may spend on advertising, but they never get the opportunity to engage their consumers own self. D2C ecommerce strategy gives them a chance to engage their end-consumers directly through social channels. This control over sales and marketing activities develop brand awareness in the market. It results in an enhanced customer’s experience starts from product research to the final purchase.

Increased Opportunity to Innovate & Understand the Targeted Customers – Gone are the days when retailers used to set a selling standard. This standard used to decide the product manufacturing. The D2C ecommerce trend allowed the manufacturer to launch and test it with selected demographics & acquire consumer’s feedback. This opportunity enabled them to understand their customer’s desire, produce hot selling products and improve their experience. It allows them to have a direct touch with end-consumer throughout the sale process.

Consumer Buying-Behavior Learning for Better Insights – Today, consumer behaviour, attitudes and business-driving decisions have risen because of the mobile, social and cloud technologies. D2C ecommerce allows manufacturers to have access to direct consumers, buying behaviour and trends. It allows delivery of the services as per their expectations and gets a chance to create a smooth customer journey through the insights. It doesn’t only let the consumers feel connected to the brand but also results in brand loyalty.

Omnichannel Commerce Ensures Expanded Market – D2C ecommerce strategy opens the door for the brands to begin potential selling through Omnichannel commerce. Today, it plays a significant role in the global marketplace. Integrated buying experience through omnichannel selling leads to better brand visibility that ultimately grows greater customer loyalty. Implementation of Omnichannel strategy delivers a unified platform through a range of communication channels. Adoption of the D2C strategy assists in getting a prosperous financial and operational perspective that paves a way to understand the unpredictable needs of consumers in future.

Higher Profit Margin With Reduced Distribution Costs – Serving end-consumers with no intermediaries enhance the brand’s ability to increase profit margin in return. Implementing this strategy allows earning profit while decreasing the distribution inefficiencies & cost.

Will the D2C Trend Change The Future Of Ecommerce?  

“The D2C ecommerce trend has been rising rapidly for several years, which is estimated to grow 19.2 % development in 2021.”

Due to the COVID-19 pandemic, the D2C ecommerce trend has developed drastically and enabled manufacturers to control the supply chain. Big brands such as Heinz and Pepsi Co adopted the D2C strategy for a new channel of communication with their customers and a direct relationship with them. It allows a customer-centric business module with reduced processes and friction throughout the purchase cycle.

Today, hundreds of brands per category have turned retail commerce more crowded and ultimately increased competition. Moving to the D2C model for a brand or manufacture is proven a great idea to compete by persistently focusing on the customer experience. It strengthens the brand voice, product distribution and eventually customers as an achievement.

Consideration Before Adapting D2C Ecommerce Strategy

Before stepping into a new business model, make sure that there is a space for the D2C business model. Many things need to be analyzed before we finalize the adoption of this rising strategy. Remember, it is quite an enormous approach that needs to be followed carefully.

  • Scale capabilities to support strategic change.
  • Check if your business partners & logistic are ready to adopt a new strategy.
  • Analyze the altering customer expectations & market trends.
  • Is there any possibility to foresee the company with a perfect product launch and engaged customer?
  • Are IT systems & operation procedures aligned well to support the plan?

For D2C operations, the system will look after the order management as well as payment options, payment gateways, sales taxes, single item dispatch and item returns and so on. After finalizing the strategy, pay consideration to the infrastructure aligned for the effective plan implementation. Make sure you’re going to soft launch an approach to complement the existing sales channels.

A Guide to Direct-to-Consumer Strategy & Tactics

Planning and implementing a D2C strategy can be daunting for a brand. But some elements can help to address the procedure. Find below-mentioned core categories that will help you to run the D2C approach smoothly:

  • Product Strategy
  • Sales Channel Strategy
  • Customer Support
  • Operational Support
  • Marketing Strategy
  • Technical Support

This definitive guide will assist you in getting depth knowledge of the strategy implementation for a brand.

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