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A consumer purchases goods or services directly from the manufacturer? This is commonplace in the D2C (direct-to-consumer) sector, where the focus is on direct sales without intermediaries. Whether marketing, sales or customer contact – all come from a single source. In this way, the company gathers valuable information about its customers and can tailor its product lines to their needs. Table of contents
What does D2C stand for?
Direct-to-consumer or direct-to-customer (D2C) is the modern way of selling products and services directly to consumers. The focus is on the business relationship between the consumer and the supplier – eliminating the middleman. D2C ecommerce examples are direct sales via a shop or an e-commerce platform such as Amazon. This is a win-win situation for both parties, as the company’s growth lever is shifted and customers are provided with a better customer journey.
Process of D2C marketing
In D2C direct selling, companies cut out the middleman or other intermediary. To ensure a smooth process, companies need to expand their online presence and use direct selling to sell their goods to their target audience through their own online store or marketplaces such as eBay.
D2C sales
When selling their own products, each company sets the price independently, which means the end consumer can benefit from lower costs compared to middlemen prices. In addition, the profit margin for brands increases, and they remain independent of retailers. Nothing is left to chance here: Customer service, product development as well as presentation – all under one roof.
Today, thanks to digitalization and countless possibilities, it is easy to create your own online store. Moreover, the pandemic has shown that online retail is more important than ever before. If potential customers can only find a single product in the city center, a brand is more likely to be at the back of the pack in the face of strong competition from rivals.
Earning customer trust is the recipe for success in D2C ecommerce. To prepare for this, future shop operators need a precise business plan, and they can get started. For large, already established brands (consumer brands), this is often a long way off, as they are less agile and often have no freedom of action regarding existing business partnerships. However, the rapid growth of digital commerce is forcing more and more brands to rethink and act. Rethinking old, entrenched strategies is necessary. While direct sales may offer lucrative profits and lower margins, the increased effort should not go unnoticed.
Marketing strategy
The key to success lies in communicating with the end consumer. Through appropriate marketing channels, communication is always at eye level and a close relationship with the consumer is fostered. TV campaigns or commercials have a lower weight in the overall marketing mix.
Social media channels, on the other hand, are the absolute favorites for addressing potential customers in the D2C sector – transparency and a friendly, competent manner are an absolute must! Social Commerce: The sale of products via social platforms, should also be actively used here.
5 decisive advantages of D2C strategy
Digital commerce is booming, so it pays to seize the opportunity and set up an online store. In addition, the turnover of online trade continues to rise and will exceed 80 billion euros by 2020, according to the German Federal Statistical Office. A big advantage in D2C is that company owners are always in control! From the design of the product packaging and product photos to the design of the website and direct customer contact. Customers are offered a true omnichannel experience, which is one of the secrets to success. The advantages are primarily economic – both the consumer-oriented perspective and customer satisfaction play an elementary role.
Brand image
In traditional business models, entrepreneurs have little control over when and how retailers sell their products. Not so in the D2C space. From production to purchase, the decision-making power lies with the company itself – independence and increased control lead to a more positive brand image. The trust factor of the customer also improves the image of the company and increases the recommendation rate.
Better customer journey
The close relationship between the business and end user allows business owners to get to know many facets of their target audience and actively engage with them on the issues that matter most. The customer journey improves rapidly and the opportunities to interact with potential customers increase.
The target group is only vaguely known? E-commerce platforms offer their users a variety of ways to
Increase in brand awareness
Is your brand getting lost in the shuffle? In D2C ecommerce, all doors are open to share important information and product news directly with buyers. The mix of online store and other marketing efforts is the perfect foundation for increasing your own reach.
Business growth
The combination of marketing and the sales channel is the key to success in the D2C sector: Conversions are easier to measure than in the B2C sector, the product portfolio can be expanded and online retail can be conquered. Customers become aware of a business through increased brand awareness. This has a positive effect on their buying behavior. The focus is on building your own supply chains and responding to current marketing and D2C ecommerce trends. The potential for cross-selling and up-selling is particularly high, as customers are more likely to spend money again if they are fully satisfied.
Individual shopping experience
When shopping online, the number of sites can be overwhelming. Exclusive offers and personalization help in the D2C space, attracting prospects and existing customers. Exclusive merchandise and sales are a real draw, and prospects are much more likely to connect with a brand when they feel directly addressed.
Tip: Even if a company does not implement all the steps at once, any start is better than none at all. An online store allows you to be creative and bring your ideas to life. The initial investment may be higher, but it pays off with the right e-commerce strategy up your sleeve.
Challenges in D2C ecommerce
The first and biggest hurdle for companies: Taking the step towards D2C and understanding what the requirements are. One of the challenges in direct selling is to compete with other established brands and get a good reputation! Intermediaries often play on their reach as a strength because they have the contact to the customer. In D2C marketing with their own shop and direct customer contact via social media channels, shop operators can play this ace. But despite these advantages, the fight against the existing sales structures of intermediaries is a tough one.
New D2Cs face the following challenges:
Meeting consumer needs: How do I meet my customers’ needs? This is a question entrepreneurs should ask themselves before entering the D2C space.
Competitors in the market: Who are the strongest competitors for one's own products? This provides insight into which products and services work and where there are gaps in the market that should be filled.
Product requirements: What does the target group expect from the products? Here, it is important to actively communicate with potential customers in order to develop the most important factors.
Structure in online marketing: The structure in the marketing processes is a significant part on the way to success. The online presence is an elementary part in the D2C market that should be actively used.
Focus on all areas: In some cases there is a strong focus on one area, e.g. production, while sales is neglected. It is significant to keep a cool head and keep an eye on all the details.
Learn new skills: How do I handle logistics, returns, service requests, etc.? Customer satisfaction and a smooth buyer journey are critical. Who takes care of what, does the business need outside help? Getting it wrong can waste valuable time and money.
Solutions such asShopware help business owners achieve a flawless and personalized store design – including foolproof operation. But setting up one’s own online presence is not the end of the story: constant optimizations are necessary to analyze buyer behavior, increase conversions and ultimately benefit from a higher profit margin.
Differentiation from B2C
From a marketing perspective, the D2C approach is closely related to B2C marketing. By having direct access to customers, companies benefit from a new perspective on their marketing concepts and the consumer behavior of their customers.
In the B2C sector, wholesalers or retailers sell products or services to consumers, hence the term business-to-customer. They specialize in the distribution of products and have perfected marketing. D2C marketing completely eliminates these intermediaries, also called third parties, and opts for direct sales.
FAQ
What does D2C mean?
D2C stands for Direct-to-Consumer and refers to the direct sale of products or services from a manufacturer to the end user.
What are the benefits of D2C?
When successfully implemented, the key benefits of the D2C marketing journey include higher profit margins, increased brand awareness, improved brand image and buyer journey.
What are the challenges of D2C?
Intermediaries often have a large network of contacts and have built a reputation. Therefore, it is important to be well positioned in the market to compete with the strong competition. Another challenge is that everything comes from a single source, so all processes have to run smoothly to satisfy the consumer.
