As times change, more B2B businesses are moving towards D2C e-commerce strategies.
What is D2C e-commerce?
Direct-to-consumer e-commerce, popularly known as D2C or DTC e-commerce, is a term for an e-commerce model where traditional B2B businesses start selling directly to end-consumers. Like for example, farmers selling directly to a customer who will consume their produce.
Difference between D2C e-commerce and a traditional retailer business model?
D2C e-commerce is where the manufacturer sells its products directly to end consumers from their e-commerce store. A more traditional retailer business model goes from the manufacturer > wholesaler > distributor > retailers > and then finally to a consumer.
The D2C e-commerce business model literally “cuts out” the middlemen. Research has shown that 55% of consumers prefer to shop directly with the brand manufacturer over retailers.
The traditional retailer model deals with bulk purchases, so for a manufacturer to start selling direct-to-consumer they’d have to start selling individual items. This essentially is why most manufacturers have not yet switched to a D2C strategy, as their entire business revolves around selling products in bulk.
What are the benefits of D2C e-commerce?
An omnichannel experience
One of the major benefits of having D2C e-commerce is that manufacturers get full control of all their activities, from packaging to marketing, which means they can create a true omnichannel experience for their consumers.
Control over brand reputation
In a traditional business model, a manufacturer has little control when their products are being sold by retailers. A D2C e-commerce strategy gives a manufacturer back control over its marketing efforts and sales strategies, and it puts the D2C brand directly in contact with the end-consumer. This gives a manufacturer total control of its customers’ experience over the entire purchase funnel.
Understanding the customers
Manufacturers who follow a traditional retailer model rarely interact with the end consumers who have purchased their products. So, they don’t have many opportunities to get to know their end-consumers, other than by conducting target market research to try to gain a better understanding of their likes and dislikes.
What are the challenges of D2C e-commerce?
Competing with retailers
With a D2C e-commerce strategy, the biggest challenge for manufacturers is having to compete with big retailers. Retailers already have experience in selling to consumers and a good understanding of their clients and the market.
Newly formed D2C companies often struggle with order fulfillment. Not only does a manufacturer have to ship their products, but they also need to compete with the likes of Amazon and other online retailers with one-day or two-day shipping.
Marketing, sales, and customer service
D2C e-commerce also means that manufacturers need to start looking after their marketing strategies and sales strategies. This often requires hiring a new marketing and sales team.
What does the future of D2C e-commerce look like?
D2C is the future of e-commerce. Especially during the pandemic. More and more manufacturers are turning to D2C e-commerce to sell to end-consumers directly.