Ever wonder how any product these days gets delivered from the manufacturer’s facility, straight to your doorstep? People no longer need to visit physical stores to look for a product and try it. Today’s population, mostly (but not always) the younger generation, feel the increasing need to order and try products online. Why is that? Why did traditional in-store shopping change to this more direct method?
With technological developments and the brands increasingly making their consumer’s shopping experience simple, effortless, time-saving, and enjoyable, most brands are shifting toward the direct-to-consumer (DTC/ D2C) model. By going direct, brands can eliminate the need for any intermediaries to which they need to pay a dividend on the sale of each product and eases the customer’s buying process. Potential customers can easily access these brands as they operate through websites and mobile apps that list their entire product catalog.
What is Direct-to-Consumer Marketing?
D2C marketing is a brand marketing its services and products directly to consumers. While this may sound similar to B2C, it is slightly different as B2C involves manufacturers relying on third-party retailers to sell their products to consumers.
B2C isn’t as preferred as D2C by brands these days as brands lose control over the shopping outcome. Customers shopping from third-party retailers are affected by several influencing factors. For one, customers have several products to choose from, which could result in your brand’s product not being bought. This loss of control is also applicable to other influential factors such as customer engagement, customer experience, and brand positioning.
Image as seen on the COREDNA
Direct-to-consumer marketing models enable brands to provide their customers with end-to-end brand experiences. In adapting to a D2C model, the brand retains complete control as the brand is responsible for product manufacturing, effective marketing, delivery, and presiding over communications with customers throughout their purchasing journey.
Direct-to-customer models bypass traditional negotiating methods with third-party retailers and use e-commerce models that are comparatively cheaper and easier to launch. It is the reason why most D2C brands are online stores. It is a disruptive business model across multiple industries and has transformed the way people purchase products and services.
Primary D2C Brand’s Target Audience? Millennials, Of Course!
Since direct-to-consumer marketing leverages technology and the internet to appeal to potential customers, who could be a clearer target than the generation that uses this combination the most? After all, shopping from e-commerce websites is second nature for most millennials today.
The DTC model has greater traction towards millennials than traditional B2C marketing models as millennials are more open to opting for upcoming brands over large, established retailers. This model is in-sync with their preferences of authenticity, convenience, lower costs, and an enhanced shopping experience. Another point that promotes e-commerce-focused D2C brands is that millennials are studied to make more than half of the purchases online (according to a study by InvespCro.com).
Another distinct advantage that direct-to-consumer brands possess is that they can offer quality products at affordable prices, which also works well in targeting other age groups and generations, such as Gen Y shoppers. While wholesalers and retailers up the product prices to include their margins, suppliers marketing directly to consumers are most definitely preferred by consumers. It enables brands to generate the same profit while the customers save on money without sacrificing product quality in the process.
D2C marketing allows brands to innovate unique products that win over customers and stand apart from the other offerings in the market. This marketing model also enables brands to gather customer data and work to address the different customer pain points. Moreover, direct communication with the brand provides customers with an enhanced shopping experience.
Advantages of Direct-to-Consumer Marketing
While DTC marketing provides multiple advantages, the main pros of this marketing model are as follows.
- Customer Data Collection
D2C marketing enables brands to collect customer data that is essential to understand customer behavior and accordingly create more conversions. More conversions equal better business, and this is only possible through the customization, and customer experience personalization.
- Develop Real Relationships
Probably the biggest plus point of all, D2C marketing allows brands to create and mold customer relationships. This helps brands develop a sense of customer loyalty and create a community around their products or services, which helps the brand in improving processes based on customer feedback.
- Gain Control
As brands market and communicate directly with their customers in DTC, they gain control over their offerings, customer service, and market reputation.
Disadvantages of Direct-to-Consumer Marketing
Nothing is perfect and neither is this marketing model. D2C marketing brings along certain challenges that may pose as disadvantages for some brands. The main disadvantages of DTC marketing are as follows.
- Post-Trial Period Conversion
Most direct-to-consumer brands offer their products at exceptionally low costs and even free trials in some cases. The key to survival for such brands is the potential customer conversion once the trial period is over. It is an essential factor that D2C brands need to work on, as many consumers often discontinue or cancel subscriptions at the end of their trial.
- Smart Thinking
Since this marketing method is all about gaining customers quickly, developing unique products, shipping them in time, and constant customer communication, DTC businesses need to gauge their current processes and perform at every step. While such businesses usually start with a few people and their ideas, it is important to understand and act when the business needs more people or outsourcing some processes.
- Supply Chain
Direct-to-consumer businesses are sometimes so involved in delivering their products to customers that they often neglect the supply chain. The production quantity, depending on sales, needs to be studied and accordingly increased or decreased or focused in certain areas more than the others.
Should Brands Consider Direct-to-Consumer Marketing?
Business owners are generally cautious about changing their marketing strategies and D2C is more than just a marketing strategy; it is a complete transformation of how brands conduct their business. Business owners need to be well informed rather than take a leap of faith into D2C marketing. Some of the main questions that businesses have before shifting to the DTC model are as follows.
- Will customers prefer the D2C model in the future?
- Can retail brands regain their market share?
While the answers to these questions are essential for any brand, the most important question is whether D2C marketing will work for their brand in the long run? Some brands are still skeptical about the DTC approach and believe that direct-to-consumer marketing is nothing more than a passing fad.
D2C is most certainly the favored marketing method of the present and almost everywhere you look, a new D2C brand pops up. However, this isn’t something that can be considered as a fad. The reason for the explosion and success of D2C businesses is that they address customer requirements better and provide personalized and unique experiences.
The desire for a better and more personalized shopping experience can’t be considered as a passing fad and is most certainly here to stay. The significant factor that differentiates a brand from others is the customer experience, not the price or product quality. Of course, the D2C model today will be different from the one in the future. Therefore, the only answer to the question is to evolve the brand’s D2C marketing model overtime to keep level with current market trends.
Brands That Have Leveraged the Direct-to-Consumer Marketing Model
To understand the reach and effectiveness of D2C marketing, take a look at the way these brands have leveraged this model to grow their business through customer-centric processes and personalized experiences.
- Dollar Shave Club
Dollar Shave Club understood the need for a cost-effective razor for men and developed an affordable one accordingly. To mitigate production costs and increase profits, the brand cut out the middleman and sold the product directly.
Image by Dollar Shave Club as seen on the Website
While Casper started off as an e-commerce, online store, continued success has enabled the opening of about 200 retail stores. The brand is valued at about USD 1.1 billion and is one of the most successful D2C brands today.
Image by Casper as seen on the Website
- Warby Parker
This D2C brand took ‘unique’ to another level with its immensely popular ‘#warbyhometryon’. The hashtag encouraged potential customers to post images and feedback of its products on social media platforms. This acted as a word-of-mouth marketing campaign mixed with user-generated content (UGC) and helped brand growth.
Image by Warby Parker as seen on the Website
- Blue Apron
Blue Apron noted a 500% increase in sales leveraging influencers, podcast advertisements, and bloggers. This helped gain a strong footing in the social media space, which is essential to increase visibility and brand awareness.
Image by Blue Apron as seen on the Website
While the Glossier initially started off as a beauty blog, upon gaining popularity, it transformed into a beauty brand. Glossier already had its customer base established and took advantage of a content-first approach.
Image by Glossier as seen on the Website
Direct-to-consumer is all about meeting customer expectations in real-time with personalization. Every brand has the option to create advertising and branding strategies that enable customers to understand that they provide the better and more direct option instead of heading to large retailers.
As D2C brands are online-first businesses, they can offer the most convenient, streamlined, and simple shopping solution, an attractive alternative for a physical retailer. With the level of control that DTC brings, brands can evaluate and tweak their processes to the finest margins to generate maximum positive outcomes.