Direct-to-Consumer (D2C) is an e-commerce strategy where manufacturers have end-to-end control of creating, marketing and selling their products directly to consumers via digital channels. Compared to traditional retail, which relies on distributors and wholesalers, the D2C model takes out the middleman, allowing manufacturers more control over their brands. This business model is disrupting traditional retail because it offers several competitive advantages over traditional retail strategies, including:
Increased control over brand messaging and consumer engagement.
The traditional manufacturer-retailer relationship leaves little room for manufacturers to control their brand. While they do have control over packaging and other marketing activities, once the product is handed over to retailers, manufacturers can no longer influence the sale, build a relationship with consumers or gather data. Manufacturers may spend a lot on advertising, but it’s ultimately the retailers that present the product to the consumer.
More opportunities to innovate.
Most retailers follow a set standard when selling. They often shy away from selling products that are new and have no track record of being a “hot-selling” item. Manufacturers are then restricted to producing what retailers want. D2C allows manufacturers to launch new products at a smaller scale, test with selected demographics and gather feedback. This way, manufacturers can understand what their customers want, produce what sells, and improve where applicable.
Direct access to customers and their data.
Direct contact with customers through each stage of the buying process — including post sales — allows the collection of their email addresses, location, social media profiles, purchasing preferences, etc. Learning consumer buying behaviors helps manufacturers optimize existing products and, possibly, even create new product lines.
Gain higher margins.
Manufacturers achieve higher margins by eliminating the middlemen from the picture. A middleman selling their products means they only make profit on the markup from cost to gross sale. D2C allows brands to sell products at the same price as retailers, positively impacting their bottom line.
Stronger brand loyalty.
Manufacturers have more autonomy in terms of providing their customers with better service and support with D2C. They can exploit their connection with consumers to establish strong relationships and drive retention through targeted marketing campaigns.
Expanded market opportunities.
Manufacturers are no longer restricted by geography when selling D2C. They can go global by just selling to the right customer segments, in the right market.
Adopting a D2C strategy is beneficial from a financial and operational standpoint. However, it is always a good idea to create forward-looking plans to ensure that the model remains consistent in delivering what the consumers demand. Therefore, it is important to continuously disrupt the strategy to always cater to the unpredictable needs of consumers and effectively scale well into the future.