The traditional supply chain includes a supplier, manufacturer, wholesaler, distributor, and retailer. The sales model often involves lengthy negotiations at each stage of production or delivery, and it typically results in a long lead time for product launches and an even longer wait for the customer feedback loop to kick in.
Direct to consumer ignored that traditional standard. Companies decided to cut out the middleman, the wholesalers, and the distributors and instead harnessed the power of the cloud and the rise of e-commerce to sell their products directly to end consumers. If you could dream up a new product, produce it, build a website, and get people to buy it, you could, in a matter of months, imagine a new consumer brand, launch a product, control a brand's story, and build a million-dollar D2C brand from scratch.
Direct-to-consumer companies commonly have several (if not all) of these eight characteristics:
They are entrants to a low-barrier-to-entry industry.
They are capital flexible and/or can lease and rent part of operations.
They are extremely passionate about their customers.
They have experience harnessing first-party data and analytics.
They cut out the middlemen so they can ship directly to consumers.
They understand the importance of communicating directly with consumers (utilizing CRM software).
They have more pricing flexibility than legacy retailers.
They illustrate an increased use of digital marketing (especially email and social media).
How D2C can make you Stand Out in the market?
Length of the supply chain
Supply chain is shorter in D2C business model with no intermediaries like wholesaler and retailer. It, therefore, reduces the time for the product to reach the customer.
Control over Branding
D2C allows brands to really take their branding to the next level as they are now directly selling to customers. Offers can be given even at an individual level.
Impact on the relationship with consumers
Brand’s relationship with customers is strengthened as the middlemen are removed. It also boosts long-term customer relationships.
Utilizing Digital Space &
D2C brands rely heavily on digital traffic to make their sales. Their digital advertising is heavily targeted. D2C brands can hyper-personalize their products to service various types of customers.
Pricing Models & Collecting Customer Data
D2C Brands usually use a subscription-based pricing for their business. It creates a consistent revenue stream. D2C brands can easily analyze data collected through direct sales.
Identifying unmet customer needs
D2C brands can actually get direct feedback from customers. They can ask shoppers about their unmet needs.
Is direct-to-consumer worth it?
You might be wondering if it's worth it to go through the hassle of switching your business to a new model. And it’s a good question, because you certainly can’t make the change on a whim or decide to do it without having all of your stakeholders on board. It’s a significant shift in strategy for any business, one that entails a different set of skills that will necessitate input from tech, sales and marketing, data, and operations.
That said, the majority of our economy is now internet-based, and the lifeblood of that economic engine is data. So if you want to keep up and reach more customers in more parts of the world in a more relevant way, you’re going to have to make the change.
According to a recent IAB study, over two-thirds of consumers have come to expect direct access to a brand, and about 67% of customers have used a company’s social media for customer support.