From manufacturer to buyer without going through intermediaries. This is the Direct to Consumer business model, which is increasingly being exploited by large and small brands to increase their online sales. In this in-depth article, we will try to better explain what D2C eCommerce is and how to make the most of it for your online store.
What is D2C
First of all, a clarification needs to be made, because there is often a tendency to confuse the D2C model with the more traditional B2C model. Every D2C sales channel is also B2C, since it sells to the consumer, but not vice versa. Not all B2Cs are in fact producers, but most only act as intermediaries. What changes in concrete terms? With the direct-to-consumer model, a company produces and sells a product directly to consumers via its online shop, physical flagship shops or social profiles (thanks to so-called social commerce), but without going through a third party. In other words, the production, packaging, distribution and shipping of products do not involve any intermediary between the brand and the end customer.
Sectors in which the D2C model is most widespread
Actually, D2C is nothing new in the eCommerce world. Already many brands, especially in the fashion sector, are exploiting the potential of this business model, but it can work for any sector, so much so that more and more brands in the Food & Beverage sector are also starting to open their own direct sales channels without going through wholesalers or supermarkets. The wine commerce sector, for example, is very active in this regard, and several wineries around the world have started to sell their products online through single-brand eCommerce sites.
In Italy, some emblematic cases of food brands that have started this practice are, for example, Granarolo, Riso Scotti and Mulino Bianco, from whose websites it is possible to order products directly without going through the supermarket.
Why the D2C model works
One of the main reasons for the success of this model is linked to a number of trends that we have already discussed on this blog, including social commerce and mobile commerce, which enable small artisanal brands in particular to make direct contact with users by referring them to their own eCommerce site for purchases. Large brands, however, are also increasingly approaching this business model. Suffice it to say that the likes of Nike and Adidas have announced that by 2025 half of their sales will be generated through D2C alone, i.e. through purchases made directly in their flagship shops or on their eCommerce sites.
The benefits of D2C
This switch by many brands is motivated by several advantages. Let us discover them below.
1. Increased profits
Thanks to the direct distribution of products, intermediation costs are inevitably cut to the advantage of the manufacturer’s profits.
2. Customer loyalty
Cutting out the middlemen also means building a more direct relationship with your consumers and offering them opportunities they would otherwise not be able to take advantage of, such as the ability to try a product free of charge before purchase or to personalise it, thus improving the customer experience and increasing the chances of loyalty.
3. Increased speed
By managing sales channels directly, products can be brought to market more quickly, without constraints from third parties.
4. Data collection
By managing the customer relationship directly, it is possible to collect as much information as possible, both on one’s own users and on their online behaviour. Data that can subsequently be used to calibrate your marketing strategies and optimise the customer journey.
5. Greater sustainability
By being able to manage orders and shipments, you can more easily make choices oriented towards the environmental sustainability of your eCommerce. For example, you can provide packaging made of sustainable materials, or give your customers the option of picking up products via Locker and Pick-up Points.
Disadvantages of D2C
Choosing to sell your products through the D2C model, however, entails significantly higher costs, especially for small brands, both because of the shipping and storage costs for the person setting up the business, and because of the creation of the eCommerce sales channel. With this in mind, if you are thinking of starting your own eCommerce business, you will find some useful tips on how to choose the best CMS platform for your online store in this in-depth article.
In addition, you will have to work harder to increase your online visibility and reputation.
If you have an eCommerce store using the D2C model and want to integrate a nationwide Network of Pick-up Points and Lockers, GEL Proximity can help you! Discover our services and plans, or contact us for more information now.