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Looking at the recent history of the global retail marketplace can tell us a lot about its future. In the last two decades, brick-and-mortar businesses have closed by the thousands, with record numbers continuing to shutter each year. The rise of e-commerce and web-based retail has generated momentum toward a direct-to-consumer (D2C) model of sales that prioritizes speed, convenience, and real-time service. This structure creates an environment where brands of all kinds can compete for consumer interest through direct marketing and creative forms of advertising.
In 2019, e-commerce sales rose above 10% of total US retail sales, and they’re projected to account for $5.5 trillion in revenue by the end of 2020. Following that trend has been the rise of D2C brands, which are capitalizing on a thriving online environment that makes it easy for customers to connect with brands and get what they need fast. Much of this shift is driven by increasing consumer frustration with big-box retail and impersonal, faceless brands that don’t deliver compelling shopping experiences and are often lacking in customer service.
In short, the online ecosystem has never been more favorable for direct-to-consumer brands, as customers flock to e-commerce retailers where they feel a greater sense of trust and responsibility from the brand. By now, you’re probably familiar with some D2C brands; Warby Parker, Casper, Dollar Shave Club, and Glossier have exploded in popularity over recent years, fueled by streamlined shopping experiences and personal engagement with audiences.
Direct-to-consumer brands are companies that sell the goods they produce to customers without the middleman of a retail shop or brick-and-mortar store. This style of business removes the need for distributors and other intervening steps between consumers and the products they want — it’s the same brand managing the entire process from manufacturing to marketing, selling, shipping, and service.
D2C brands are almost exclusively digital-first, focusing on their web presence and online shopping environment as the primary point of engagement with consumers. That’s not to say that all D2C brands operate only in the e-commerce category — many D2C brands have launched physical retail stores that allow consumers to see and try products before buying. D2C retail has all the advantages of traditional selling — local storefronts, building brand loyalty — but without the financial and practical obstacles.
There are a few key reasons why an upstart brand with an exciting, original product might choose to launch with a direct-to-consumer business model.
For many brands, the most compelling reason to operate as D2C is trimming away the costs that come with third-party interactions. Selling a product through traditional retailers means having to restrict your pricing and product design so that the business selling to the end consumer can mark it up and sell for a profit. When you can sell your products without going through a third-party, you’re bound to generate higher profit margins. This option also leaves your brand with more flexibility to change prices and attract more customers.
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One shared trait of many D2C businesses is that they focus their marketing energy on telling their story and building brand perception. When you’re the sole brand involved in selling to consumers, you don’t have to rely on other retailers marketing your brand effectively. Your story is your own to tell, and with D2C retail, you can craft a compelling brand identity, knowing that consumers are getting their information straight from the source. That means you get to adjust the narrative as you go, tweaking your branding strategy as you learn what your target audience values. This process can make your brand appear more authentic and caring for consumers.
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It’s much easier to position your business as an authority in its industry when you can control every part of the customer experience. From crafting a digital ecosystem to immerse users in your storytelling to the shopping experience, the purchase decision, and post-purchase customer service, the D2C model allows you to give your particular target consumer everything they could want or need. Should issues arise, customers know exactly where to go for help, and you’ll be ready to respond quickly and impress consumers with your attentiveness and service. The feedback you receive from customers is also more valuable in a D2C model since a bad experience with a third-party doesn’t sway commentary and criticism.
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A D2C business doesn’t have to rely on third-party distributors or retailers to offer its products to consumers. Instead, customers can shop for your brand any time, in any location where you ship your products. Direct-to-consumer means much greater flexibility in pricing, promotions, product line, and marketing, giving you the tools to interact directly with customers and dominate both digital and physical retail environments.
When you survey the landscape of D2C retail, you’ll find a recurring set of characteristics that seem to be shared by many direct-to-consumer brands.
So, what is D2C? The core of direct-to-consumer retail is the connection that brands forge with their customers. By offering a more streamlined shopping experience where consumers can find the information and products they need all from one source, D2C brands build relationships with their audiences that spur brand loyalty and encourage repeat business. For D2C companies, there’s nothing more important than a marketing strategy that centers the customer experience and fosters a positive shopping ecosystem for consumers. Ultimately, that’s what makes D2C retailers stand out from the crowd.
Last updated on December 21st, 2022.