Benefits of Adding a Direct-to-Consumer (D2C) Channel
Shopping behaviors have dramatically changed in what feels like an overnight pace, with a turn towards alternate channels and serving the needs of the modern shopper. You may have read from Gartner’s recent report about the emergence of more B2B sales this year, however Direct-to-Consumer (D2C) has taken its place among the eCommerce contenders. Research shows 55% of consumers prefer to buy from brands directly, while a further 40% of shoppers say they will purchase from a D2C brand in the next five years.
Eliminating negotiations between retailers or resellers, D2C alleviates what can be crushing cost passed onto the consumer but with relatively low barriers to entry. Popular takes on the D2C strategy have taken form in CPG brands, like Harry’s; whose shaving products are sold direct via a monthly subscription service. Warby Parker disrupted the eyewear industry back in 2010 by eliminating much of the expense of purchasing glasses strictly from the doctor or optometrist. (With far trendier frame selection and the genius mail order try-on service).
So what are the benefits of the D2C model?
You’re opening another sales channel just like B2C or B2B but with minimal effort and/or risk. No more middleman standing in the way of higher margins.
More Customer Data
Through the direct relationship with the consumer, you glean insight about who’s buying; with information such as location and purchasing history, the possibilities are endless when it comes to product development and testing; more opportunities for personalization (that lead to sales) arise when you know more of your customer’s shopping habits and preferences.
You Own Brand Awareness
When you control how the product is marketed and sold, you have greater control over the customer experience from end to end. In a more traditional retail model, the presentation, and the timing of how a product hits the shelves are not up for debate. From discovery to purchase, the D2C model allows for a high level of autonomy in sales and marketing.
Speed to Market
Quick launch (with a widget, a website, and a shipping method), and you are free and flexible enough to make changes as your customers’ demand.
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One of the key tenets of a customer experience is building trust. When you engage with a shopper in meaningful ways on their terms, they’ll more than likely return and tell everyone about their experience. Ratings and reviews are among the most sought-after elements of a shopping experience and are known to increase conversions by as much as 270%. Consider this about today’s shopper and the power of personalization:
- Fifty-one percent of consumers want a personalized shopping experience through the brand’s various channels and consider it a vital part of the business strategy
- A whopping 54% of total consumers expect to receive some personalized discount or offer within the first 24 hours of contact with the brand
- Fifty-seven percent of shoppers will share their information if they receive personalized offers
- Eighty percent of people are more inclined to purchase from a company that provides tailored experiences
Meeting the Shopper Wherever They Are
Herein lies another D2C benefit when it comes to customer experience; many shoppers don’t have the time, or just absolutely loathe being in-store. In the past two years, shoppers were forced to stay put during pandemic restrictions and closures. The D2C model solved that problem. From a week’s worth of meals to dog toys and treats, to affordable glasses, and even big-ticket items like mattresses, shoppers can have a customized experience from wherever they are – oftentimes with same-day delivery – without setting foot in a storefront.
Are there drawbacks to D2C? A few, but certainly manageable…
Competition is Fierce
You can expect more and more players to enter the mix. As customer demand for an online omnichannel experience rises, so do the companies vying for their piece of the pie. To stay relevant in the market, you’ll need to respond and flex as your customers call for it.
Be Ready to Spend
Advertising plays a major role in standing out among your competitors, in a sea of products and vendors your messaging matters particularly in the mobile space. Social media influences buyers now more than ever before, so be prepared to leverage it with your budget.
Bear in mind when you shift to a D2C model, you’ll need to secure a fulfillment partner. Sorting out orders and making sure they get to their destination is squarely on you and there are rules and regulations to follow. The good news is there are many vendors who fit the bill, just take the time to research and see who works best for you and your market.
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