The D2C (direct-to-consumer) business model or use case, is one in which a brand or manufacturer sells their wares directly to their consumers online. It means that brands don’t sell through a distribution channel, wholesaler, retailers, or a third-party marketplace. Naturally, having this sales approach as one of your strategies does not exclude using the other channels. Rather, we have long seen the successes of the Apple Store, Nike Store, and other similar direct-from-brand models working in parallel with more traditional retailing and channel-centric models. D2C ecommerce for manufacturing and brand companies is yet another use case model to diversify your revenue-generating channels.
Is D2C Ecommerce for Manufacturing Important?
Besides being a new buzzword for consumers, D2C is growing in both acceptance and importance. Consider that, by 2023, Digitalcommerce360 expects D2C ecommerce for manufacturing to transact $175 Billion USD. That's up 35.6% from $129 Billion USD in 2021. In addition, is 69% of consumers familiar with D2C brands already purchased directly from the manufacturers rel="noopener noreferrer" this past year (src: Diffusion PR research).
In short, a growing number of consumers actively want to buy goods directly from manufacturers and brands. In effect, consumers are looking for that direct customer relationship with their favorite brands.
Why Sell Directly to Consumers?
There are a host of reasons manufacturers would want to sell directly to consumers, including:
- Expanded reach (to new consumers)
- Greater Margins
- Stronger control over your brand
- Ability to test products with ease and cost-effectively
- Cutting out the middleman (shorten time to market, increase margins)
- Reduced 'on-shelf' competition
- Increased inventory sell-through
- Offering ongoing subscriptions (increasing customer lifetime value - LTV)
As consumers shop online more and more, brands and manufacturers need to embrace new marketing strategies—and a direct sales channel to capture their attention, wallets, and loyalty. Besides the myriad reasons for selling directly to consumers, manufacturing needs to consider the additional factor of truly owning their end consumers. This means marketing to them, selling directly to them, and establishing a deeper connection to the brand. Given that 73% of retail consumers use multiple channels to shop, it is a smart move to ensure that your brand adds the D2C model to the mix of shopping channels.
Challenges of D2C Ecommerce
Admittedly, selling D2C is often more difficult than selling through a third-party retailer or distributor. For example, you have to establish your own website, manage customer service, and handle order fulfillment. As a result, many brands have a hard time figuring out if D2C is right for them. That said, there are still ways to overcome these challenges and ensure that your D2C ecommerce business is a success. Here are a few ways you can drive growth with D2C.
- Establish your own website: First and foremost, D2C requires that you have an ecommerce presence. It is particularly important to build your website and online shopping presence on a robust platform like Salesforce Commerce Cloud. You don’t want to limit your sales due to outages or system failures common with many other platforms. For a fast way to get such a system up and operating in as little as 2 weeks, consider options like Quick Start D2C solutions from OSF.
- Manage customer service: Even if you have an established ecommerce business, you still have to manage your customer service process. This includes order fulfillment, shipping, and any handling issues that customers may have. However, remember that doing so allows you to best control your brand and the brand commitment you make to your customers.
- Handle order fulfillment: D2C sales often denotes handling order fulfillment, which can be a challenge for some brands. Two options can help at this point in your digital transformation journey. Part of your D2C strategy may evolve into a B2B2C use case. The B2B2C use case is one in which the brand maintains ownership of the customer, marketing, and market presence. However, the brand fulfills through the standard supply chain, or through a direct to retailer model (bypassing distribution and wholesalers). A subsequent post will delve into more details on the B2B2C use case. Alternatively, the brand may set up a delivery center or link its ecommerce platform to a 3PL (third-party logistics).
Conclusion
D2C ecommerce for manufacturing can be an important step forward for your brand, but it can also be tricky to get started. Getting it right is important to ensure you are providing the customer experience that consumers expect from your brand. If you are wondering about where to begin your D2C journey, connect with us at OSF. We are pleased to offer our experience and advice in developing hundreds of enterprise-grade ecommerce solutions and to help guide you on your path to success.
