Everything You Need To Know About D2C E-commerce

Over the past few years, the e-commerce industry has taken a toll with an outstanding rise of the D2C (direct-to-consumer) business model. According to Statista, the overall revenue of the D2C model crossed 128 billion U.S. dollars in the USA. This revenue is further expected to reach 213 billion U.S. dollars by the end of 2023.

What’s more interesting about D2C e-commerce is its whopping transformation among Generation Z. Almost 50% of youngsters today prefer to purchase from a D2C brand rather than a traditional store. While future generations have been showing greater interest in this model, it is time for retailers to rethink their business plans.

Since the pandemic has changed our lives forever, retail has been modified too. To help business owners stay afloat with this emerging business model, here is a detailed guide to help you know about D2C e-commerce. Let us start with a brief introduction to help beginners understand things easily.

What Is D2C E-Commerce?

At a basic level, D2C e-commerce is a type of digital business model that takes place when a manufacturer sells its products or services directly to the consumer. In this strategy, business owners tend to cut out the middleman, which means sellers do not involve a distributor or a retailer to connect with their target audiences.

While more than 12,000 stores closed all over the USA last year, D2C serves as a key to staying in the market. Also, it is an easier approach for entrepreneurs who wish to enter the industry rapidly at a lower budget. To understand the importance and benefits of this model, you can look around the top three retailers currently operating as a D2C.

As of now, Dollar Shave Club is a leading brand that originally started as D2C. Alternatively, PepsiCo is an existing brand that increased its market share by entering in the D2C market.

The Rapid Growth of the D2C Business Model

According to a report by TechCrunch, the COVID-19 pandemic accelerated the e-commerce industry with an almost five-year shift. With every passing year, the number of online shoppers keeps increasing. These changes are forcing brands to shift to the D2C business model as soon as possible.

When focusing on the USA, the number of online shoppers is expected to grow by 100 million this year due to D2C brands. On the other hand, Europe is expecting a 25% increase in its D2C e-commerce market this year.

This business model is easier and more affordable. Retailers can quickly analyze their selling abilities in the market with no unnecessary expenditure.

The Benefits of D2C E-Commerce

The number of e-commerce buyers is most likely to cross 2.71 billion by the end of 2024 and 2.77 billion by the end of 2025. Regardless of this, a huge number of retail stores are closing every day. This change is a golden opportunity for retailers to sell their products directly to consumers.

Below we have mentioned a few prominent benefits that may force businesses to turn to the D2C e-commerce business model.

An Omni Channel Experience

D2C e-commerce provides manufacturers with the opportunity to embrace an Omni channel experience. Rather than paying a part of their earnings to retailers and distributors, companies get a chance to handle everything from packaging to delivery. Customers encourage shopping from D2C brands because it helps them to receive their favorite products without the need to connect with third parties.

This type of commerce strengthens the bond between buyers and sellers. By supporting an Omni channel approach, businesses help their audiences to purchase from them through multiple and their preferred channels. It may include text messages, smartphones, social media, emails, or any other communication channel.

Better Customer Interaction

When working in a conventional retail model, business owners are always a step away from their consumers. 

However, D2C e-commerce helps manufacturers to understand their customers better. Due to a direct interaction with no involvement of a third person, businesses get a chance to learn every minor detail about their audiences.

By understanding the choices of preferences of your customers, you can easily provide them with a personalized experience. Nowadays, websites that offer a more personalized experience can easily get repeated visitors and higher conversions. Also, it helps to plan better strategies for future products.

Not to forget that, D2C e-commerce increases data privacy and security. Most people enjoy shopping from a brand that promises to protect their personal details in a better way than others.

Better Control Over Business

Business owners who collaborate with third-party sellers often risk their brand image. It is because retailers or distributors may not appreciate the worth and quality of your products and services.

They will not pay attention to the placement of your products and services. Also, the third parties cannot express a brand's motive ideally which may directly impact the brand's standards.
When working as a D2C business, you have complete control over these aspects. Company owners make sure to market their products on authentic and high-quality platforms. They get an opportunity to handle the communication and branding in a far better way than third parties. It helps businesses to focus on customer service and boost brand loyalty at a higher level.

Enter The Market Quickly

Business owners looking for retailers or distributors are bound to delay their launch unless they find a suitable third party. It often expands an entrepreneur's journey to the market and further to targeted audiences. However, for a D2C brand, such roadblocks are nowhere to be found.

These businesses can quickly launch their brands without the need to depend on others. Also, many recognized brands appreciate marketing the services and products of a D2C brand without worrying about their shelf space or retailer ship. D2C businesses get a chance to share a limited quantity of products with other sellers in a long-term partnership. It simplifies the process of entering the market with fewer hurdles.

Higher Customer Targeting

A retail-dependent business model can keep you from expanding your territory. You are bound to limit your circle in accordance with the retailers or distributors you are working with. It negatively impacts your competition and prevents you from entering your competitor's space.

As a D2C brand, you can sell your products and services to whomever you like. Customers are available all over the globe once you start looking for them. It helps you to expand your customer circle as far as you like.

The Challenges of D2C E-Commerce

While D2C e-commerce brings an array of benefits to business owners and entrepreneurs, it has its challenges too. This business model turns out to bring the two biggest challenges for a professional.

1.  Fulfillment of Orders

Whenever a traditional business transforms into a D2C brand, fulfillment of orders can become difficult. It is because such manufacturers find it difficult to work without third parties in a limited time. In today's digital era, customers are more likely to have higher expectations for smooth order fulfillment and delivery.

According to research, more than 45 customers more than 45% of online customers check their order status every 24 hours. Moreover, almost 60% of online shoppers expect their order status to be updated within a few hours of placement. It brings a big challenge for companies who are willing to maintain their brand image while working through a D2C strategy.

2.  Impact on Retailer and Distributor Partnership

When an existing brand plans to switch from our traditional model to a D2C brand, things can turn out unpleasant for their partners. It is because not every retailer or distributor will appreciate a brand's efforts to market their products all by themselves. Rather, competition may arise between your business and other distributors or retailers in the market.

In this case, D2C businesses must do their jobs very cunningly and smartly. They have to think twice about existing partnerships before switching to this type of business model. For instance, many distributors and retailers welcome D2C businesses by promoting a limited amount of their products or services to the market. Such parties do not intend to compete with your brand.

However, there may be plenty of others who start competing with you to make sure you keep depending on them.

How to Get Started As A D2C Brand?

There are many challenges for an existing brand to start as a D2C business or for a professional entering into this model. However, things can be promising if you pay attention to the following details.

• Plan a Process Strategy

Starting a business with a D2C strategy requires planning. It is because you are the sole controller of your products and services. As a result, you alone have to handle your business from packaging to delivery with no further help from any third parties.

Also, starters require a proper budget plan and a well-designed time frame to make sure things work accordingly. By having a proper process plan, you will find fewer hurdles in operating your D2C brand.

• Empower Your Product Quality and Brand Image

As a D2C brand, you are bound to give more attention to your products and services. Since you are not able to grab customers through third parties or market them with the help of other brands, quality, and purpose matter. Make sure to work on something that serves as a need for your customers.  

You must know what product your customers want and why they want it. Only then you will be able to sell your products at a higher rate. Also, try your best to build your brand image as it will help you grow your business.

• Strengthen Your Digital Presence

In today’s fast-forward market, building a strong digital image is mandatory. Though plenty of businesses today do not understand the scope and importance of a business website, make sure not to make the mistake. As you are competing with recognized brands with no marketing team as theirs, try to establish yourself on multiple platforms.

Make sure to optimize your website and join popular social media channels. The more you become popular among people, the easier it is to communicate with your customers.

• Understand Your Audience

For the growth of a D2C business, you must understand your consumers well. From their needs to their wants, make sure to know everything. Once you understand where your customers are more likely to purchase, retailing gets easier.

Try to analyze the shopping behavior of your buyers to provide them with a personalized experience. Work on the optimization of your website as it hopes to grab loyal customers and make it easy to connect with your target audiences.

• Provide Competitive Costs

The greatest benefit of working as a D2C brand is having control over your costs. You can easily make sure to provide a price plan that is competitive against your target competitors. Also, try to provide promotions and advertisements on your products and services whenever you need them.

Do not rely on the market for your prices and discounts. Take every necessary step that may benefit you and increase your sales.

Get Started With Your D2C Business Today

With so much to know about Direct-to-Consumer e-commerce, are you ready to launch your brand? Step into the D2C industry and experience the benefits that may help you establish your brand quickly. It is easier to step into this business model with a lower budget. For a start, do not invest all your savings and look around for an affordable business plan.

Work on your target audiences and enter into your target market like a pro. Let things make way for you by giving attention to the details discussed earlier. The future of D2C looks promising if you look at the current statistics. Hence, the market is prime for you to enter as a D2C brand today. Do not wait anymore and give your business a fresh start now!