Do you want to free your brand from the constraints of old-fashioned retail partnerships? Then you should consider shifting your business to a Direct to Consumer (D2C) model.
Over the last few years, the convoluted world of business has been dramatically shaken up by the emergence of a new eCommerce model, aptly named Direct to Consumer.
This popular strategy, which allows businesses to sell directly to consumers via their website and other platforms, has been a massive hit for some of the globe’s biggest brands, including Dollar Shave Club, Graze and Harry’s.
Why? Good question. There are a wide variety of reasons why many brands are switching to a D2C model, such as increased authority over pricing to name one.
However, before we get into the plain facts of why you should consider following in the footsteps of brands like Dollar Shave Club, you must first understand what D2C is and why it might not be the best model for your particular brand.
What is D2C?
In a nutshell, a Direct to Consumer model ultimately puts all the power in the manufacturer’s hands.
When working under the D2C model, brands can sever ties with retailers and resellers, often referred to as the middlemen of the business sphere, and sell their products directly to consumers via ecommerce websites and platforms, such as Shopify.
Unsurprisingly, brands have become tired of following the out-dated, traditional retail journey.
Therefore, in a quest for a better alternative, brands are opting for the much more straightforward D2C model, which can put products into the hands of consumers within the click of a button.
However, tighter control over logistics is just one of many reasons why brands are taking the plunge to transform their entire business model.
Benefits of D2C
Reduce Costs & Increase Profits
Besides reducing the number of steps needed to sell a product, brands are also moving to D2C for financial reasons.
When following a Direct to Consumer strategy, a brand not only reduces the amount of money that they spend on distribution, but they also make higher profits on the products that they sell.
Retain Control Over Product Lines
In addition to this, D2C brands are also able to establish more authority over their product lines: a) because testing is made much more accessible and b) because brands can develop stronger relationships with consumers, who are more willing to help with market research.
Build More Meaningful Connections With Consumers
Speaking of relationships, brands using the D2C model of business have historically been able to fuse much more meaningful bonds with their consumers, largely because they both share an equal chunk of the buy/sell relationship.
Additionally, as businesses that follow the D2C path effectively own the entire consumer journey, they decide how they want to promote their brand without interference from external forces.
Whether it is to do with products or customer service, personalisation is paramount when constructing digital communities today, and D2C accommodates this style of marketing more than any other retail model.
Take Glossier for example. Through high-quality, relatable content and memorable offline experiences, such as pop-up shops, the make-up brand has been able to build a community of loyal super fans who await their every move with bated breath.
Although the wholesale model will provide your brand with a ready-made audience, the D2C route most certainly allows you to target a more connected audience, as you aren’t competing for attention in a wide-open marketplace.
Therefore, it is no surprise that a lot of forward-thinking brands are switching to D2C and that the modern-day consumer is all for it.
In a study carried out by Astound Commerce, it was found that 55% of consumers preferred to buy products directly from manufacturers.Astound Commerce
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How Can You Shift to D2C?
Make Sure The Move Is Right For Your Brand
Firstly, deciding to operate on a Direct to Consumer basis is a bold move for any business owner to make, especially if the traditional model is all you have ever known and it is working to some degree of success.
With that in mind, before you make your move, you must ensure that it is the right thing to do and that you are ready for the changes it will bring.
Flipping your entire business model could be a fatal move for your business, so it is vital that you research D2C brands, put plans in place and set realistic goals for the future.
Secondly, you must also ask yourself another all-important question: are you shifting your business to D2C for the right reasons?
Although money is the lifeblood of all brands, you must see past the pound signs when looking to adapt your business model in such a fashion.
Yes, moving to D2C will allow you to make financial gains in the long run, but you should be focusing more on how the move will help you to optimise your buying journey in the short term.
Also, many brands switch to Direct to Consumer without considering the practical implications that the decision has on internal processes.
Whilst it is desirable to retain full control over elements like distribution and marketing, it is important to remember that you are now responsible for every step of the retail process.
Consider A Subscription-based Model
If your line of business allows for it, you should consider operating your D2C brand on a subscription-based model.
Cancel-any-time subscription packages have worked excellently for recipe-box providers Gousto, who have built a community of loyal followers and have obtained a high-retention rate whilst doing so.
Prioritise Consumer-led Marketing
When it comes to marketing a D2C brand, you should look to use relevant data, storytelling and influencers to promote your products online.
However, what makes a D2C brand unique from a traditional wholesale brand is the relationship that they have with consumers, so you should look to make the most of this by prioritising customer-led marketing campaigns.
User-generated-content (UGC) has been instrumental in the growth of D2C pioneers Gymshark, who leave the majority of their content output in the hands of their athletes and fans.
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Whether your business uses a Direct to Consumer model or is more of the traditional kind – speak to us about your growth plans.