You must have heard of B2B, B2C and now D2C. These are all ways in which businesses conducts their business based on their preference. In this article we discuss the D2C model.
What is D2C?
This is a way of doing business where all mediators and middlemen are removed and the manufacturer deals directly with the customer .Thus making this model known as Direct-To-Customer or D2C.
This is opposed to the traditional models where businesses go from manufacturers to wholesalers to distributors to retailers and then finally to customers.
Brands that sell directly to customers are also known as Digitally Native Vertical Brands (DNVBs).
This model gives producers and innovators more control over their products sales and engagement with customers. They are now responsible for maintaining the whole supply chain process.
To be able to conduct their business efficiently and to reach a wider audience, businesses wanting to use this model have to develop a portal to facilitate the engagement with customers. This can be in the form of a web or mobile app.
Did you know? By 2025 the global direct-to-consumer (D2C) market size is projected to reach $1.5 trillion.
Benefits of developing a D2C portal
There are many benefits that the D2C model brings. Below we highlight some of them:
- Cuts middlemen and therefore leads to increase in profits.
- Direct access to customer data gives a clear picture of buyer behavior making it easier for the business to offer personalized experience.
- Higher control over brand reputation as you are in charge of your product.
- Build and nurture relationships with your customers as you deal with them directly.
- Marketing products is faster meaning more room for product testing, feedback gathering, and customizing products as per market demand.
D2C ecommerce Examples
This model is relatively new but we already have brands that are already leveraging on it. Let’s look at some of these brands that have put this model to use.
-
Dollar shave Club
This brand deals with men grooming products like shaving razors. They cut the middlemen and adopted a D2C model that is subscription based. To become a subscriber customers had to buy any product at a minimal cost of $1. They managed to develop a direct relationship with their customers from day one cutting off any third parties.
-
AWAY
Away is a luxury luggage brand. They researched and found out distribution and mark-up charges were making the prices of luxury suitcases more expensive. Hence they took the D2C strategy. Using this model they offer luxury suitcases at cheaper rates as compared to others without compromising on quality.
They are also able to communicate with their customers directly hence knowing the areas to improve and those to maintain.
Other Brands using the D2C model include:
- Casper
- Warby Parker
- Glossier
- Blue Apron
What you need to create a Direct to consumer platform
Below are some of the things you will need to create a successful D2C platform.
-
Business plan
This will include knowing your target audience, defining your niche, studying the products that already exist in the market and the responses consumers have towards them. It is also important to look for the problems customers are facing and come up with solutions to them.
-
Customer Relations Management
Customer purchasing behaviors change over time. To be able to keep in tabs with them, a customer relationship management system will be important so as generating valuable customer insights and help you better understand your customer behavior.
-
Technology
For startups for example, you may not be able to build multiple locations at a go as you begin. This is where technology will come in to help you serve your customers. Using right eCommerce technology stack will help you scale up your operations rapidly and reach a wider customer base within a shorter time even when on budget constraints.
D2C portals on websites and mobile apps will go a long way in making the business successful.
-
Subscription based model
This model works well for creating recurring customers and increasing the retention rate. Recurring customers saves you consumer’s effort, time and money .This leads to the overall growth of a business over a short time.
Features of D2C Portal development
After deciding to apply the D2C model, next you come up with a project requirement document. This document will elaborate on the features your portal will have.
Below are some of the basic features that your portal should have:
- Customer registration/Login
- Homepage
- Product categories
- Search bar
- Filtering
- Pricing
- Discounting
- Order history
- Payment options
- Shipping details
- Recommendations
- Returns process
- Security
Reasons to move to D2C
There are many benefits associated with selling D2C. It unlocks a better customer relationship with your customers and gives you control over your product. Below find some of the main benefits of using this model.
-
Reduce dependencies
Dependency and reliance on distributors and retailers is removed. The pandemic for example showed us how dependencies on distributors and retailers can hurt businesses when most physical establishments were forced to close down. Most brands dealing directly with clients were able to continue seamlessly.
-
Know your Customer Data
When selling through distributors or retailers you are shielded from your customers. D2C brings you closer to them and you are able to get data such as their preferences, purchasing behaviors and patterns.
This helps you in creating strategy and coming up with customized experiences for your customers.
-
Control Your Brand
D2C gives you complete control of your brand as opposed to using distributors and retailers where you lose partial control of your brand. Having control of your brand helps you differentiate your brand from others so as to stay ahead of competition. Dealing directly with your consumers plays a critical role in ensuring overall success of the business.
-
Expand your territory
With a good product and a strong marketing plan, the D2C model doesn’t have boundaries as to where the product can be sold. This is opposed to using third parties that may be confined to physical locations.
With the right delivery strategy in place customers can be reached wherever they are in the world.
-
Reduced Costs
Retail locations rely on in-person interactions. This translates to costs such as rent and wages. With D2C in-person interactions are reduced and thus costs associated with them also made away with. Self-service consumers do the bulk of the work as you concentrate on improving their customer experience.
Conclusion
Although it is a fairly new concept the Direct-to-Consumer model is the way to go for many brands that want to deal directly and have complete control over their customers. This is because the middleman is done away with and among other things reduces the costs of their products due to removal of distributor and retailer’s mark-ups. But before diving into it make sure you have a proper understanding on how to go about developing your portal so to achieve maximum benefit from it.
Lastly, connect with eCommerce development company in order to know more about D2C eCommerce development.
Also check: C2C Marketplace Development Guide