The rise of DTC (Direct - to - consumers) eCommerce – why brands love it?
Customers nowadays have high expectations that the companies they do business with would provide them with a satisfying experience. To meet this demand, many well-known companies are going where their target audience already congregates: directly to them. Let’s check it out more closely.
Altering distribution strategies that cut out intermediaries are causing waves in the retail industry. Many companies are adopting a direct B2C approach to foster a more personal connection with their customers.
Direct-to-consumer (DTC) marketing uses digital commerce platforms to connect directly with customers. This type of marketing typically results in improved usability and satisfaction for end users.
One’s business can reap several rewards by switching to a DTC approach. Brands may stand out from the crowd and sell more of their products by adopting a direct-to-consumer marketing strategy. Direct-to-consumer (DTC) marketing also builds brand-customer relationships, increasing client loyalty.
Concord commerce defines direct-to-consumer marketing in this article, explores its many advantages, and discusses how your brand can use it to connect with its customers more personally and effectively.
Let’s understand the term DTC eCommerce.
Brands that have typically dealt with merchants as their point of sale have traditionally handled merchandising and sales to end users. The consumer knew that a given store was the only place they could get a particular product brand.
Direct-to-consumer (DTC) is distinct from the eCommerce platform since it eliminates the middleman. Direct-to-Consumer (DTC) marketing and sales are conducted through an established channel between the brand and the customer.
When a company engages in direct-to-consumer (DTC) sales, it not only reaches out to customers using its marketing resources but also has more control over the buying process.
Differences between Direct-to-Consumer and eCommerce Fulfillment
Since the rise of online shopping has been so rapid, direct commerce platform fulfilment and eCommerce platform fulfilment are sometimes considered the same. As “direct-to-consumer eCommerce fulfilment” has quickly become the most talked-about retail trend, it is essential to clarify the critical distinctions between the various fulfilment models.
For retailers to fulfil orders placed through an eCommerce platform need to maintain an online storefront. However, D2C fulfilment doesn’t always work this way.
That adorable shop around the corner? A business is still considered a “direct-to-consumer” (D2C) retailer even if it handles its supply chain.
Many digital native D2C companies opt to launch physical locations when they reach their development potential online. While online selling is essential for eCommerce platform fulfilment, it need not be direct sales through a virtual try-on software like the one that once fueled online sales. While selling on marketplaces, Data-driven eCommerce would be an example of eCommerce fulfilment; it wouldn’t be considered direct to consumers.
The presence or absence of intermediaries is one of the most notable distinctions between eCommerce and digital commerce platforms. Direct selling is so called because no middlemen (retailers, distributors, or wholesalers) are involved in moving goods from manufacturer to consumer. Each enterprise must handle the logistics to ensure that products are successfully purchased, sold, and delivered to customers.
The merits and cons of this approach are not hard to see. While direct-to-consumer (DTC) fulfilment can help firms reach more customers, it also comes with a lot of responsibility if your order volume increases quickly.
Because of the time and effort required to set up an in-house fulfilment system, many new Data-driven eCommerce opt to employ services such as drop shipping instead of selling directly to consumers. However, this comes with a cost in brand building and losing control over crucial touchpoints in the consumer experience.
The ability to access and analyse client information
Information about customers may seem unrelated to shipping and receiving at first. But it’s crucial to make fulfilment a competitive advantage that improves the customer’s experience after purchasing.
Consumers often learn about direct-to-consumer businesses through word-of-mouth, social media, or digital commerce platforms. Which content is engaging with viewers and resulting in in-store visits can be determined by measuring engagement and click-through rates (CTR). Salespeople can learn which pages on the website a customer is most interested in by using tracking cookies; this allows companies to provide customers with more helpful, relevant information that is shown to increase conversions.
Ecommerce marketplaces run by third parties, on the other hand, can be a bit of a mystery. It’s impossible to know the exact path customers took to buy your product (or why some didn’t) if you don’t have direct control over the channels they used to get there.
In addition, if you have a high client turnover rate, it may be due to some aspect of the post-purchase process that is difficult for customers. But without this information, it’s tough to figure out what adjustments should be made to the fulfilment procedure.
A necessity for outsourcing
One thing, however, unites direct-to-consumer and eCommerce fulfilment. Inevitably, brands will need to explore outsourcing fulfilment to meet customers’ demands for frictionless, trouble-free interactions with the brands they support.
Why? Because as order volumes increase, firms that rely on self-fulfilment must make difficult choices. The company can choose between two strategies for meeting customer demand:
Get serious about funding their fulfilment center and workforce.
Collaborate with a third-party logistics provider (3PL) to handle the order fulfilment.
However, most firms can’t justify the cost of investing in a more extensive in-house fulfilment operation. Due to a lack of adaptability, investing in extra warehouse space and training employees on Warehouse Management Systems will probably not pay off during periods of lower sales activity.
Brands can benefit from a partnership with a seasoned fulfilment provider in two ways: the provider’s superior infrastructure and skills and the true scalability with which to deal with peak and demand valleys.
In DTC, what does it take to be successful?
Achieving success as a direct-to-consumer brand can go in any number of directions. However, there are a few constants among the most successful consumer brands:
Promote only top-notch, game-changing items.
Nothing to see here, folks. If you want people to recommend your items to their friends and family, you better have something worth recommending, like a digital commerce platform
. Give people a reason to talk about your product if they aren’t already.
For your brand to succeed, you must have a firm grasp on what makes your target demographic happy. This goes beyond providing a quality product and includes excellent customer service, special packaging, and tailored responses.
To become well-known in direct-to-consumer sales, marketing is essential. A “Wow!” element is required. Today’s most successful direct-to-consumer firms speak with their unique tone and actively engage in C2C marketing to strengthen their bonds with existing customers and attract new ones.
The Benefits of Adopting a Direct-to-Consumer Approach
Provide the services desired by your clientele.
Customers need data to learn about a company and its products to make educated purchases. Using a direct-to-consumer strategy, companies can modify and individualize the information they present to buyers.
Delivering suitable material to customers will assist inform customers and promote customer loyalty. This can range from behind-the-scenes sneak looks at new items to product lessons to simply hilarious movies that give a glimpse into the brand’s personality.
Brands can strengthen relationships with customers and exert more influence over the quality of their experiences by delivering content directly to them at every stage of the customer lifecycle.
Many companies are putting more resources into direct-to-consumer marketing because they recognise the loyalty benefits of catering to consumers’ wants and interacting with them directly.
Strengthening Brand Connections
Many social psychologists argue that a consumer’s emotional connection with a brand is more important than the goods themselves when making a sale.
When consumers identify with and have faith in a brand, they are more likely to purchase that brand repeatedly. Because of this, firms, especially those partaking in direct-to-consumer electronic commerce (eCommerce platform), must prioritize relationship building over everything else.
Direct-to-consumer firms have the upper hand in terms of client relationships. As a result, they can tailor their offerings to each individual using data-driven eCommerce strategies.
Brands can develop closer bonds with their customers than when customers buy the same things through a retailer since the brand is in charge of the story and their interactions with each client. This is a significant benefit of DTC for both companies and consumers.
The quality of the customer’s experience has emerged as a significant market motivator. There are plenty of other brands out there, all vying for consumers’ attention and dollars, so if they have a terrible experience with one, customers may easily switch to another.
Direct-to-consumer brands are in a prime position to design and implement a stellar service for their customers. Brands, whether online or in a brick-and-mortar store, can develop the consumer experience by following their vision rather than compromising with a retailer’s goal.
Suppose the company is in charge of the customer experience (and the associated customer journey) rather than a middleman retailer. In that case, the experience can be tailored to each customer and give the brand a unique look and feel. This style is consistent throughout the customer’s interactions with the brand, which helps them feel more attached to the company. Brand loyalty rises as a result.
Lift income levels.
While direct-to-consumer (DTC) marketing is most helpful in launching a product and ensuring that it is consistently represented positively in the minds of customers, it can significantly increase sales for an established brand.
As we’ve seen, DTC can do wonders for fostering connections, improving service, and shaping the entire customer journey. Since loyal customers typically make repeat purchases, all of these advantages of DTC also lead to more revenue.
In addition, brands can be resourceful in using direct-to-consumer (DTC) marketing to generate revenue in unexpected ways. Fashion retailers like Other Stories, a staple of the high street fashion industry, feature online-only collections of clothes. As a result, customers have more reason to interact with the business directly rather than going through an intermediary.
The Direct-to-Consumer (DTC) business model raises many obstacles.
However widespread its use, DTC still has significant limitations. It’s not uncommon to encounter problems like:
You have no choice but to increase your readership.
Any retailer faces the difficulty of trying to expand, but doing so solely can be extremely scary. You’ll have access to their preexisting customer base if you sell through a third-party store. On the other hand, independent selling requires persistence and time spent cultivating a new clientele from scratch.
Extreme levels of competition exist.
Every market has dozens, if not hundreds, of direct-to-consumer brands vying for consumer attention. It’s not easy to grab people’s attention. This is particularly true when other businesses have access to the same technological and promotional resources as your own.
Time and money are at a premium.
Plenty of day-to-day efforts are involved in the DTC business model. Assistance to clients. Managing Stock and Promoting Sales. The examples are endless. It’s not easy to keep all the plates spinning when your brand is responsible for every process step.
The Role of Data Collection in Direct-to-Consumer Electronics Commerce
As mentioned above, DTC allows marketers to learn more about their customers through personal encounters. Marketers can glean information through the DTC eCommerce platform, which is beneficial for audience segmentation, shopping trends, and general customer comprehension.
Brands can better tailor their marketing and advertising to individual consumers by compiling helpful information from each purchase, such as customer trends, buying patterns, demographics, and other insights. They may tailor their communication with clients and provide material that will resonate most strongly with the people they hope to reach.
Direct-to-consumer sales provide access to valuable customer information that may not be available through traditional distribution channels, giving brands an edge in the marketplace.
The Final Thoughts
However, if you can find your brand’s voice and effectively express it to your target audience, in that case, direct-to-consumer firms still have much room to grow in the market over the next several years, even as competition increases. Now that you know what direct-to-consumer trends are, Concord commerce can help you start planning how to use them in your own business, whether that means expanding internationally, experimenting with a subscription model, or focusing more on targeted marketing.