Recently, with the influence of digital technologies and the internet, the market has more traits on consumer buy-selling behavior, and the industry of eCommerce has seen a humongous shift. Businesses prefer to sell or buy things directly from the shop to the consumer without any middleman. Known as D2C eCommerce, this method has increased online spending in the market by 35%.
In the eCommerce industry, with the growth in the market needs and the demand for ready-to-get products, it has become crucial for the existing traditional industries to adopt quick solutions to serve their consumers.
With digital involvement, the reliability of a single marketplace has been reduced. The e-commerce players now approach the direct-to-consumer D2C on websites, applications, e-stores, and social media to sell their products. Many top brands adopt the D2C models, such as Tesla, Bose, Dell, FisherPrice, GoPro, Lenskart, BoAt, Google (for their services), and Microsoft (take their products for instance), and Ola, bringing inspirational services with extraordinary value to the marketplace.
Let’s discuss more what direct-to-consumer is and how it brings positive significance to the existing retailing market. Let’s get started.
- What is D2C eCommerce?
- Difference between B2B vs B2C vs D2C Ecommerce
- Difference between the Traditional Retailer Model and the D2C eCommerce Model
- Benefits of the D2C eCommerce Market
- Challenges with the D2C eCommerce Industry
- Examples of D2C e-commerce Business Model
What is D2C eCommerce?
In simpler terms, D2C is the direct-to-consumer business model. Under the D2C ecosystem, the manufacturer sells the products directly to the consumer, on its own channels, leaving behind any role of middle retailer or reseller. Here, the point of contact is directly the online platform.
The model serves flexible options to the existing eCommerce market. For example, GoPro sells professional cameras for sports photography and videography enthusiast. The company focuses heavily on video content marketing and works with sports and action influencers who produce thrilling action videos using GoPro cameras. GoPro promotes its businesses on social media to generate ROI and increase traffic.
In the day-to-day time, we get to hear about the common similar terms like B2B and B2C, it sounds somewhere confusing, so let’s understand the key differences between them here to more clarity on it and how it is different from the D2C model.
Difference between B2B vs B2C vs D2C Ecommerce
Now when it is clear “What is D2C eCommerce”, let’s understand the difference between D2C, B2B, and B2C. In the B2B model, there is a mutual collaboration between the businesses. The businesses sell out their products to other businesses to make a profit and help out each other. For example, an IT company gives its services to an automotive company, while keeping all the requirements in a loop.
The B2C model follows a seamless chain from manufacturer to distributor to end customer, and every one of them is a part of this model, earning some profit for their individual services. For example, Amazon is an e-commerce platform that runs on a B2C model, selling the products to the customers, while distributor and reseller have their separate roles within it.
While in the D2C or DTC (direct to customer) model there is no significance of the third party and only one point of contact exists for the customer for communication. For any of the interrogation, the customer directly connects with the website or online channel and enquires their queries or purchases the items.
For example, Tesla’s D2C model encourages selling directly from its online platform, this helps to foster its services which results in great customer relationships. This is how tesla is following the D2C commerce model.
Difference between the Traditional Retailer Model and the D2C eCommerce Model
In the eCommerce industry, the traditional retailers are the wholesalers who have the entire ecosystem to manage the overall process; they have their own manufacturers and distributors and deliver the quality and demand to the consumers in time. In this model, the distributor is different; the seller is situated somewhere else, working in sync to handle the end product to the consumer.
While there is such no multiple dependent need for the businesses when catering their services directly to the consumers, they need to worry about the behind strategies and workload. They simply avoid any overhead and just serve the demands of the consumers.
(1) Customer Relationship
In traditional retailing, there is no means of communication with the customers. So it could surge a few loopholes without understanding the intention of the consumers and their needs. While in the direct-to-consumer model, the whole model lies around the consumers and, henceforth, the needs and demands of the customers with assurance.
(2) Multi-Dependency on Branding
The eCommerce market runs on multiple chains, the stakeholders mutually working in sync to avoid any delay on the services, which reduces the manufacturer and consumer connection directly. In the D2C, the transparent working model removes any such halt of communication with the consumer, hence reflecting a successful control in branding.
(3) Pricing Factor
Due to the lack of understanding of branding, and the inconsistent functionality of the traditional models, the stakeholders and retailers have faced bad pricing options to run their revenue. In the D2C model, which is fully automated and responsive, the business feels comfortable and generates a great source of revenue with the pricing model.
(4) Virtual Advertising
The traditional model is not used to monitor its sales and revenues through digital platforms, and most of its revenue is generated from retail stores. While the D2C model works on a digital platform, it would lead to an impactful source of income for businesses and marketers.
(5) Custom Personalization
In the old retailing business, there is less chance for personalization, and hence it runs on a monotonous working style without much scope and offerings. In the D2C business model, brands deliver custom services to their consumers due to data analytics, which allows the brands to understand better specifications of the existing market and consumer behavior. Hence the D2C model offers a level of personalization to businesses.
(6) Profit to businesses
D2C offers great benefits and profits to the brands. It helps businesses to eliminate the involvement of third parties. In traditional methods the profits are distributed amongst different multi-stakeholders, so the profits are reduced.
Nevertheless, the market of eCommerce is facing high fluctuations, and there is high time for them to not only rely on these traditional practices. Else there is always scope in the digital benefits, which helps to save cost and time. Let’s understand more about the direct-to-consumer market, its benefits, and adversaries.
Benefits of the D2C eCommerce Market
With the boom in the eCommerce market, the stats are submissively filled with plenty of services to direct customers. Over the last decade, the explosive growth in the market has confirmed the place for the newcomers and the existing players to invest in this new trend of direct selling to the customers.
Direct to consumers, D2C offers opportunities to the various brands to build customer relationships and gives the capability to the businesses to deliver direct selling at the store; which results in maximizing the brand value and innovations.
According to the latest stats, the D2C brands are estimated at a new height with a 40% CAGR and welcoming new entrepreneurs and business tycoons to enter this market. Let’s look at some of the insightful benefits the D2C eCommerce industry serves to the market.
(1) Integrated solutions for better command
In the traditional method of retail, generally, the retailers do not have a swing of control and much power. The resources are outdated and not compatible with the demand of the eCommerce market. While the D2C business model caters good control to businesses and to the manufacturers to fulfill their endeavors. It helps businesses to get a detailed understanding of the market and deliver customization to the customer. With the advanced analytics tool, digital platforms like D2C assure eCommerce business with consumer behavior tracking and personalization.
(2) High-end visibility to consumers
One big advantage of D2C eCommerce is that it runs digitally. The digital platforms are highly functional and revamp the eCommerce market branding, which results in more visibility and more innovative outcomes. With the interaction with the technical medium, it is to be assured that the results are superlative.
(3) Long-term life of the product
In the retailing market, the life span and the product quality are minimum, as there are a whole lot of dependencies of the product where there would be the chances that the product may be found contagious. This risks the entire quality of the product. However, D2C eliminates all of the dependencies on the outside, which results in quick installation and meets with customer satisfaction.
(4) Customization of the products
The D2C model works on customization. Using this model, the eCommerce business prepares a strategy that is highly consumer behavior based. The custom tools allow the business brands to develop a consumer-made model for fulfilling the demands of customers in real-time. For example, in the direct-to-consumer approach, by adding subscriptions the eCommerce business serves real-time customers and runs ROI.
(5) Omnichannel approach
With the D2C model, the retailer and manufacturers have full control over their activities, from packing to launching. This entire phenomenon serves as an omnichannel experience for the end consumers.
The industry of D2C is fascinating, but every industry has some ups and downs. There may arise some challenges faced by the retailers, or producers in functioning in the eCommerce industry.
Challenges with the D2C eCommerce Industry
Despite the above fact, there are some key challenges the D2C eCommerce market has faced in recent times. The biggest challenge in the eCommerce market is the distribution of the products to the final destination. Right from manufacturing to selling, the D2C market required a large infrastructure to sustain itself. It is crucial for manufacturers and retailers to focus on branding to increase the consumer’s visibility. Let’s discuss here some of the common challenges e-commerce businesses are faced;
(1) Maintenance of Technical Infrastructure
The technical infrastructure is cost imperative for the D2C commerce business. But with the dependencies and involvement of multi vendors and resources requires a proper plan to execute. This would be an expensive factor for the new and small D2C companies, as they are just beginners and short of money.
(2) Faster Order Fulfillment
For the traditional brands and businesses, serving the orders as per the requirements of the consumers would be a real struggle. Real-time insight and delivery are suffered due to a lack of usage of digital assets. However, it’s not an issue with the D2C. Using this flawless model, the business retailers and marketers enable quick deliveries. They can either keep an eye on how the infrastructure and overall model run. The eCommerce platform involves large logistics. They require the involvement of digital sound mediums like D2C to deliver each order on time. This . As per the research, the D2C marketplace is used by 55% of online shoppers to check their online status at least once a day. With the technical integration and D2C business model now the companies have fulfilled the customer’s needs and requirements.
Examples of D2C e-commerce Business Model
In the past few years, many brands are chosen D2C methods for their e-commerce brands serving their products seamlessly to bridge the gap between customers and the market. Brands like Ola, iVoomi energy, Tesla, MVMT, and many more give challenges to the existing e-commerce models.
- BoAt, known as the electronic consumer with a market worth of $30B adopting the D2C business model; brings style to its customers.
- Tesla: Tesla, the automobile manufacturer industry giant, gains its momentum using the D2C business model; different from the other automobile manufacturers, to improve its online sales.
- iVoomi energy: following Ola, iVoomi energy recently launched its D2C platform to deliver its e-scooters direct to consumer’s home
- MVMT: the brand works the d2c model to sell its watches directly to the customers. MVMT branding its products on social media like Instagram for promotions and offers.
The market of eCommerce is risky and outrageous at first. But in recent years it has seen tremendous outbreaks and success the businesses and performs well on the consumer end. With the involvement of flexibility and real-time monitoring, it would become easier for brands to self-handed their workloads and come with great outcomes in return. With us, we let you assure to revamp your eCommerce business to the newer heights with D2C. You can hire our e-commerce developers to pursue your brand satisfaction and build a great identity.