Direct to Consumer (DTC/D2C) is an eCommerce strategy that existed for a while. However, Consumer Selling received more recognition during the pandemic just like people started preferring Spectrum cable TV bundles for a better in-home cable experience. The B2B approach has followed by most manufacturers. We all know how that goes – wholesaler to distributor to retailer to consumer. The DTC model is different. Here, the manufacturer is actually the seller. They use their own channel (which could be social media or website) to sell their products to consumers without involving an intermediary.
DTC Is Thriving
Over the past years, it appears that more and more companies have switched towards Consumer Selling their products via self-owned digitally operated channels. Amidst the COVID pandemic, this model proved more beneficial. Factories were closed in Europe and Asia. This made brands cancel orders and it disrupted their supply chains. In this situation, direct to consumer became the most effective and convenient solution to access a brand’s products. And so, this model outperformed other channels during these trying times.
What’s It All About
When it comes to direct-to-consumer brands, you will find businesses operating on different tactics and values. One example is the digitally native DTC brand/company. It’s born online and acts as a retail disruptor. These are the brands that are changing the way a retail company approaches and engages with its customers.
The focus of such brands is to build strong and direct relationships with their social communities (both before and after the release of the product). They rely on social media to connect with millennials and Gen Z. DTC businesses are not always perceived as luxury brands. However, they still manage to create hype around themselves, which lets them take a portion of the luxury market for Consumer Selling.
DTC companies have some characteristics in common, which are:
- It’s a capital flexible endeavor. You can rent parts of the operation
- These brands are highly passionate
- They harness first-party data and analytics
- There is no middleman. They directly ship to consumers
- Customer communication happens directly
- Prices are flexible
- They highly rely on digital marketing
Example of a Real-Life DTC Business
Let’s check out the example of a brand that is utilizing the DTC business model. The Clear Cut, launched in 2018 is a diamond business. This brand has disrupted the way millennials are buying diamonds. It’s averaging 108 percent quarter-over-quarter growth. She has used paid advertising to some extent. Majorly, she is selling diamonds on social media via DMs.
The founder, Olivia Landau, says their growth has been organic. She started by creating a blog, which was meant for her friends. She used to share information about the dos and don’ts of buying a diamond. Then, she moved towards creating engagement rings (since she had connections with the diamond industry). People started reaching out to her via Instagram to design rings for them. The next thing she knows, she started getting orders from across the country and so, The Clear Out was formed.
She communicates directly with her consumers on making that perfect ring. The buying process is simple too, which has allowed her business to outperform those operating in the traditional market.
How is DTC Beneficial?
The benefits of a DTC business model are many. Right now, let’s focus on these:
You Are in Control of Your Brand’s Story
Ask a business owner and they would say when they ship their T-shirts to a third-party distributor or ask a retailer to sell them, it feels like they have lost control over their brand. This is because eventually, you are handing over the marketing control to another company.
On the other hand, if you are selling directly, you are responsible for the Four Ps of marketing yourself. You can increase or decrease the price, no retailer or wholesaler can control you. Based on the customer data, you can control the sales tactics and offer promotions. Plus, you know how your product is being presented to the customer.
You Are Everywhere
D2C allows you to control the products via various marketing techniques. You can offer flash sales whenever you like or beta test a new product and get direct feedback. Apart from selling the product through social media, you can create a website, sell via cold calling or email campaigns. Basically, it’s possible to be everywhere all the time.
Market and Expand Fast
Suppose you are selling customized stationery and you want to go national or global. This means holding long chains of discussions with your wholesalers. And spending time finding national distributors. It could take years to expand on Consumer Selling.
Things are pretty simpler in a DTC model. Since no middleman is involved, you can reduce the time to market. Once you have launched your website, technically, you can sell anywhere, even worldwide. Amazing, right!