As marketplaces struggle to fulfill customer orders and retail stores remain shut, consumers have started to turn to the brands’ websites or online stores directly to buy products. This has given rise to the D2C eCommerce sector in India.
What is D2C?
A direct-to-consumer (D2C) is a business model that allows businesses to take control of their product distribution by eliminating middlemen, wholesalers, and retailers.
It allows brands to sell their products online to consumers directly. Even major brands like Loreal, PepsiCo, and Nike have adopted the D2C model to meet changing market needs.
But are these companies making the jump to D2C now?
Businesses are taking a direct approach for a simple reason – to stay competitive.
According to Insider Intelligence, between 2016-2019, online D2C sales grew 3-6 times the rate of overall sales and is expected to reach an estimated 103.4 million by 2022.
Selling directly gives you full control of the end-to-end journey of your product. You have direct contact with your customers, providing opportunities to deliver value, address pain points, and create a standout brand experience.
99% of leaders of consumer goods companies are investing in D2C sales, as per the Consumer Goods and the Battle for B2B and B2C Relationships, Salesforce Research.
5 ways your business benefits from D2C channels
1. Personalized customer experience
When a middleman sells your products to the end consumers, only they have access to that customer data. Whether they are retailers or a marketplace like Amazon, they tend not to share what they know.
Instead, if you decide to sell products to consumers directly, you collect that first-party data and know more about your customers. This data will help your brand to cross-sell and upsell. You can acquire new customers more easily by using what you know about your current customers.
2. Direct feedback
With a direct connection to customers, you can learn more about their experiences and about their needs. through online surveys. It allows you to improve your products based on customer feedback. You can find out what your customers like and don’t like about your products and develop new iterations quickly.
For example, the KIND snack company sells products directly to consumers and offers a subscription service and the opportunity for individuals to choose their snacks. This lets customers try out new products before making a bigger commitment. Therefore, the company quickly learns which new products are a hit and which might need some adjustments.
3. Better customer relationships
The ability to develop direct customer relationships is one of the biggest benefits of going DTC. Your digital channels can provide valuable insights into your customers’ attitudes, shopping data, and preferences. Using this data, you can build stronger relationships with customers at every touchpoint. It allows you to create the experience that your customers have been looking for.
One real-world example: A leading bicycle maker opened a D2C channel. They collected data from their customers and learned that gender-differentiated sizes were unnecessary since every rider was unique. They saved millions of dollars by eliminating male and female-specific bikes.
4. Expand sales
You no longer have to depend on distribution partners to give you more shelf space. By going direct to consumers, you can reach consumers who don’t live near a retailer and offer your products. This also solves the problem of customers not having access to your product when the retail stores run out of stock. You can fill the gap with your very own D2C eCommerce channel.
5. Improve profit margins
Distributors purchase goods at significant discounts while other intermediaries and marketplaces charge a commission. Through a D2C channel, you can capture the entire amount your customer pays. That means a higher product profit margin for your brand!
Although selling direct has many benefits, there are quite a few challenges one has to overcome when adopting a direct model. Before adopting a direct-to-consumer channel, you might want to ask yourself these questions:
- Is your brand ready for DTC sales and marketing?
- Do you have enough warehouse capacity?
- Are there any legal restrictions or limitations?
- Will you be selling the whole product line or just a limited set?
- Are you going to use it as a marketing tool too?
- Should you have a subscription service for your regular customers?
Now that you’ve asked yourself all these questions, let’s take a look at some tips that will help you build a successful DTC brand.
3 tips to build a successful DTC brand
1. Leverage user-generated content
The first step for any DTC business is to capture the attention of shoppers. User-generated content is an effective, budget-friendly marketing technique to drive awareness to your brand, encouraging customers to buy and share your product and sparking engagement with other prospective customers.
Take BarkBox for example. BarkBox leverages a highly effective user-generated content strategy. They encourage customers to share unboxing videos from their curated dog treat subscription boxes, which helps them gain positive exposure.
2. Take a Customer-centric Approach
The customer-centric approach is key to building a successful brand. It is one of the factors behind Glossier’s success. Their online beauty publication Into the Gloss curated content on social media helped their community to come together in the beauty space. This customer-centric approach has led to new product ideas and helped improve their online sales.
3. Keep Customer Engagement After the Sale
It’s easy to lose a customer’s attention after a sale is made and they may navigate away from your site. Retain customers and keep your brand at top of your mind by creating a post-sale communication strategy.
Bloomscape is an indoor plant seller that supplies a rich library of videos, plant care guides, and a unique kit to help customers care for their houseplants. This engages customers and opens the door for building loyalty and gaining repeat customers.
To conclude, Going D2C is your opportunity to know your consumers in ways you never have before. They help tap into new opportunities to build relationships, expand reach to new audiences, and grow sales.
Brands can even use their D2C channels to test new products and collect first-party data that can help them improve their business.
Want to hear it from an expert? We went LIVE with Arjun Vaidya, D2C Founder and Angel Investor, to know more about the secrets to setting up your own D2C channel online.
Watch the full video here
Thinking about going direct to consumers but don’t know where to start? We are here to help you at every step of the process. Sign up with Instamojo now.