D2C is a term used to describe the efforts of companies to move beyond the traditional distribution channel. D2C business model, also known as the direct-to-consumer business model, has grown in popularity because it cuts out the middleman and allows companies to engage with their customers directly online. This is largely due to the rise of digital marketing and social media platforms that allow for more customer engagement on a personal & deeper level.
D2C brands skip traditional wholesalers or retailers, by selling directly to their consumers through online marketing. Companies ranging from FMCG, Fashion, Food & many more are embracing this model to simplify their distribution & operation strategy.
Companies can find success in this model by utilizing technology, social media, and the Internet to connect with their customers. D2C brands show their customers how much they care about them through personalized customer service and feedback.
Many apparel, small consumer durable & ayurveda brands are taking this route by cutting the middlemen to reach directly to the customer. This way it can increase the company profit and customers can get products at lower prices.
Some examples of D2C brands are H&M, Converse, and Levi’s.
Why is D2C business model successful?
There are multiple benefits that come with the D2C business model.
The main advantages of D2C model is that it eliminates the middleman or the retailers and that results in higher profit margins for the company.
- It minimizes the efforts of sales and distribution through marketing & business automation tools & processes.
- D2C companies can maintain tighter control over their brand image than they would with other distribution channels.
- It offers greater Inventory control & order management.
- With the rise of e-commerce, it has become increasingly apparent that brick-and-mortar stores have very tough competition with the online retail. Now is the time to make a transition to D2C businesses by offering your product online.
- Comparitively low Set up cost & lesser manpower is required, when compared with brick & mortar or retail model.
- Higher chances to make your business scale globally with D2C business model.
- Great opportunity for small businesses to strategize & scale.
What are some challenges of running a D2C business?
Running a D2C business brings both benefits and potential risks as with convenience comes greater responsibility.
- Potential risks such as hackers & fraudulent transaction
- Increase in rapid & aggressive online competition & market saturation
- Consumers are more dependent on big marketplaces like Amazon, Walmart, Etsy, etc.
- Return, Replacements & increase in cash on delivery transactions
How do I start my own D2C company?
- Select a niche or find a problem that you intend to solve through your product by identifying the target segment & markets
- Create a marketing plan & strategy
- Identifying correct logistic partners for delivery and payment partners for collecting payments online
- Create a strong brand & social media presence
- Select from a wide range of e-commerce platform that is easy to manage & is economically viable to create your online store
- Fast servers, efficient CDN, website backup & security are to be considered while selecting your E-commerce platform or Hosting plan, if you are selecting a SAAS based Ecommerce platform then these features are inbuilt along with hosting.
- Form a company by registering it
- Create an IT infrastructure & invest in business automation tools & marketing.
- Focus on increasing sales, reducing CAC & increasing LTV by remarketing
Factors that create a successful D2C brand ?
- Listening to your customers & offering what they want
- Identifying & creating the perfect product-market fit
- Develop UX & UI that works for your brand
- Come with a launch offer that is different and gives momentum to the traction
- Value partnerships & customers for repeat business
- Building community on social media & social selling model through customer engagement
- Focus on growth hacking tactics & marketing strategy
- Complying with tax regulations, where the company is registered or where the business is done
- Having a clear refund, replacement & privacy policy in place along with adherence
- It might look easy to start a D2C brand but it’s hard to sustain in long term, however, companies who stick by strategically emerge as winners
- Branding & repeat purchase are the key to the success of any D2C brand
- Business analytics, website analytics play a crucial role in making decisions that are backed by data insights for business decisions.
- Building the first-party database & collecting emails
- Turn customers into your brand advocates through referral sales, loyalty discounts & word of mouth campaigns
- You can also run an affiliate program or influencer marketing campaigns to increase sales
Some mistakes to avoid before launching your D2C brand
- Don’t spend all of your budget on pre-launch marketing
- Don’t forget to plan for shipping and returns
- Don’t make the mistake of thinking you can fix everything post-launch
- Evaluate the correct E-commerce platform before the launch of your brand
- Neglecting Social Media, retargeting & remarketing in your marketing strategy
- Not implimenting UX, UI & CRO in your sales strategy
Important broad elements for creating & running a successful D2C brand are
- A great Product-Market fit
- A right E-commerce platform that can be easily managed and integrated with CRM, vendors & suppliers
- Efficient logistics & payment partners that ease & automate your operation process & Inventory management
- Working on your marketing strategy along with customer-centric policies like refunds or replacements or improving every aspect of your value chain that creates a strong D2C brand
- Adherence to rules & regulations.
To summarize the above mentioned article, a successful D2C brand has a strong online multichannel or omnichannel presence with a unique business or product strategy that has a great product – market fit.
It differentiates itself from competitors by continuous improvement in its value chain and is accompanied by an effective digital marketing strategy as a critical component to success.
It is important to keep in mind that creating a successful D2C brand is not easy, but it can be done effortlessly with the assistance of a D2C marketer.
Please add your views in the comment box, if I have missed on something.