What is Direct to Consumer (D2C, DTC) Business Model?
What is D2C? What is Direct to Consumer Business Strategy?
The direct to consumer business model is a very popular e-commerce strategy that is gaining momentum in all parts of the world. It is becoming a very popular choice for FMCG, traditional manufactures, and also the CPG (Consumer Packaged Goods) brands. With the help of the D2C business model, these brands are able to enter the market directly, at a much lower upfront cost, and most importantly without the help of a middleman.
What is the Direct to Consumer benefits? What is the D2T Business Model?
There are tremendous benefits of taking your wholesale online shopping or traditional manufacturing business direct to the consumer. One of the biggest advantages of doing so is that choosing the D2C route completely eliminates the barrier that is present between the manufacturer of the product or the brand and the end consumer. This crucial development empowers the manufacturers with an ability to have immense control over the overall brand, marketing, reputation, story-telling, and also the sales tactic of their product.
A long time ago if manufacturers wanted to sell their products online, they had a huge barrier of entry which also included getting in contact with hundreds of distributors, retailers, shopkeepers, and suppliers. The manufacturers and the new & upcoming brands could not sell or distribute their products directly to their customers because at that time the internet wasn’t as big as it is today and it was difficult to arrange for the logistics and shipping. But today, there are so many other ways to approach this business, one of the by far most popular methods is direct to consumer model. Adopting this new strategy completely eliminated the need for a middle man or a distributor. Never before did brands have such immense control over their marketing and engaging with their customers directly on a one on one basis gave them the ability to learn from their customers in a way that was never possible before.
How Does the D2T Model Work?
To know how the D2T model works, we can look at the example of some of the biggest brands on the planet who adopted this business model successfully. The huge luggage, products, and consumables manufacturing tycoon “Amway” has taken the leap and is now engaged in the direct to consumer business model and it has worked out amazing for them. They have now decided to have their own e-commerce website which delivers the products right from their warehouses to their customers’ homes. This has eliminated the need for a lot of distributors. However, they haven’t yet completely moved out of the distribution system. Since Amway is a giant company and they are well established in the distribution sector with thousands of distributors, it is unlikely that they would ever go full scale on the direct to consumer model. But doing so even partially has definitely added to their profits and success.
It does not take a lot of effort to get into the direct to consumer method of e-commerce business operation because the barrier to entry is very small as compared to the traditional supply chain distribution. All that companies have to do is create a stunning website that is attractive and tailor-made according to the target customer of the brand, which they can easily do if they spend some resources on their marketing efforts. They can add their products on the website and give the option to let the customers order them from the website itself. The only thing that the company then has to work towards is the shipping method.
What is Direct to Consumer Shipping?
After setting up the most important part of the direct to consumer business model which is the website, the next thing that the company has to focus on is finding good or most preferably multiple good quality shipping partners who can deliver the items and products of the company all over the world. There are various shipping laws, taxes, and customs duty to be paid to various governments if you want to learn What D2C is then you must get familiar with these shipping terms too. To know What is DTC and the common shipping charges and taxes around the world, you can add various plugins to your e-commerce website that automatically determine the total price of the product when a customer shop online from your online store., including the taxes, all by tracking the location of the website visitor.
What is the D2T Business Model Compared to Wholesale?
By now you must be familiar with the direct to consumer business model if you have been reading this article so far, but how does this new business model compare to the traditional wholesale or retail business model? The truth is that most manufacturers and especially the direct to consumer companies are not suited to supplying their products to retailers who display their products alongside their competitors on a shelf in their store for the customers to choose. Doing so does not inculcate the story, the marketing, and the branding of the product in a good manner. Sure, you might get a sale if your customer decides to pick up your product instead of your competitor’s product just because your customer is in a hurry and not that into making an informed decision, it could also be that you may just as well lose the sale because of it. But at the end of the day, you are losing the ability to build a relationship with your customer and to tell your story to them so that they can resonate even better with you and become a loyal customer and a patron of your brand for years to come.
Direct to consumer business model is spreading like wildfire among top brands now and it is doing so for good reason. It is a much better alternative to traditional retail marketing for most brands and manufacturing companies.