These days D2C (direct-to-customer) is trending. And even though the recent data suggest only 4 percent of millennials prefer D2C brands over traditional retailers, it makes up a whopping 40-45% of the new generation. This shift and digital transformation of Gen-Z’s shopping habits are causing the D2C market to flourish.
Ever since the pandemic hit the world, consumer behaviors have been trending online, and there were a record 12,200 retail stores that closed in just one year. The brands which previously sold their products via traditional retail methods require to pay attention.
This article discusses the many benefits and challenges and much more about D2C. So, let’s begin:
Understanding D2C e-Commerce
Regardless of their size, businesses today have started to notice D2C as a practical model to enhance their relationship with customers and are keen to incorporate D2C into their business strategy. By going the D2C way, businesses sell their products to the target audience directly without involving third-party entities to retail their products and services. However, that is not to say that the D2C strategy means you ignore the retail element. In fact, in D2C e-commerce models, brands handle multiple aspects, not just product manufacturing but also retail, distribution, marketing, customer experience, and sales.
What Are The Benefits Of D2C e-Commerce?
It is beneficial for businesses to shift from a distribution-only model to a D2C marketing strategy. After all, shoppers turn to online shopping upon closing retail stores (as happened during the pandemic). Hence, it can be beneficial to sell products directly to consumers, allowing businesses to diversify and opening up a new revenue stream. This way, the revenue is not dependent on the rise & fall of the retailers or distributors but a fate controlled by the business (you) and the effectiveness of the marketing strategy. Speaking of the many benefits, they are:
1. Offers An Omnichannel Experience
With D2C, manufacturers get total control of all the activities, starting from the packaging to marketing. The manufacturers can create an omnichannel experience for the end consumers.
2. Total Control Over Customers’ Experience
Manufacturers don’t have much power when retailers sell the products in the traditional retail business model. However, with the D2C strategy, manufacturers can have that control back over their marketing endeavors and sales strategies, which gives the manufacturing company complete control over the customers’ experience from the research phase to purchase.
3. Get A Better Understanding Of Your Customers
Manufacturers with a traditional retail business model hardly interact with consumers who purchase their products. This way, they do not get the chance to know their end consumers better. However, that comes easily with D2C, where they directly interact with their customers.
4. Allows To Market Faster
In the traditional sense, launching a product meant finding a distributor & retailer who’d readily give up their shelf space to make way for your product. This made the whole process of going to market cumbrous and met with many roadblocks. With D2C, there is no dependency on others to launch your product in the market. Many popular brands use D2C to introduce experimental products to market without putting their retail partnerships at risk. Instead of asking for the shelf space for a trial run, with D2C, brands can test out a limited product for long-term viability.
What Is The Difference Between D2C And Wholesale?
There are two common ways to sell in e-Commerce, which are D2C and wholesale, and here we explain how they are different:
Direct-to-consumer (D2C) involves directly selling to your customers and the end-users via a marketplace or your website. Like eBay sellers or Shopify stores, customers can go and place orders, enter coupon codes, sign up for the brands’ newsletters, and do much more.
On the other hand,
Wholesale is when you sell in bulk to your buyers. Here your buyer could be a marketplace, for instance, in first-party selling, or a reseller with plans of adding your products to their catalog.
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What Are The Challenges Of D2C e-Commerce?
D2C offers many benefits for numerous brands; however, transitioning to a D2C strategy comes with a few risks, which is specifically true for the brands planning on implementing a hybrid approach to D2C and traditional retail models.
1. Competing With Retailers
When a adds a D2C option for their products, massive brands, in a way, are competing with the retailers & distributors. It can result in complicated relationships with long-term partners. After all, not all retailers would be like the idea of brands opening their virtual shops. The best way to deal with such a scenario is strategy and diplomacy. For instance, some brands only launch limited edition or pilot products through their D2C channels to protect their retailers. There will be no direct competition between a brand and its retailer.
2. Order Fulfilment
For many brands that previously relied on traditional distribution & retail approaches, switching to D2C can impact the smooth fulfillment of orders. And present-day customers have high expectations for order fulfillment. Research conducted by OSM worldwide states that 55 percent of the online shoppers expect the updates regarding their order status to be current, of a few hours ago. And 40 percent of online shoppers cited that they check their order status at least once a day until it is delivered. Hence, it is crucial for the companies considering a D2C e-Commerce strategy to be ready to handle the fulfillment process as the inability can tarnish the brand’s image.
However, even though the D2C market comes with a set of risks & challenges, the brands that perform well will attain great success in the coming years. And with the Gen-Z flocking to D2C brands, companies must start creating a framework for a D2C strategy.
Emizen Tech is a leading a e-commerce development company that can help you build an e-commerce website that could stand the test of time. So, if you have a requirement then do get in touch with us.