Customer needs are evolving significantly. It’s now become pretty apparent that businesses must mix up traditional B2B/B2C models to increase their revenues.
One such way to achieve that end is to focus on a solution that combines B2B and B2C to sell directly to the consumer.
Direct-to-consumer (D2C) eCommerce is a rising force in the industry. The rise of the COVID-19 pandemic has made manufacturers worry about the customer experience. In a regular setting, such a concern would have been non-existent.
However, manufacturing and distributing businesses are now taking a customer-focused approach.
We’ve observed the rise of D2C with close interest. There are plenty of benefits you can gain from using this eCommerce approach. In this post, we’ll be discussing them in detail and provide you with an overview of the growth of the platform. Lastly, we’ll discuss how businesses can enter into this market.
Before we begin, however, let’s lay some groundwork.
D2C eCommerce Explained
In layman terms, D2C is simply “cutting out the middleman.” It’s a new breed of B2B that aims at selling directly to the consumer post-manufacture.
In traditional B2B, you’re selling directly to the consumer who sells to the consumer, which converts the buyer into a seller. That’s the conventional flow. D2C mixes things up with the manufacturer, also becoming a consumer-facing entity. It does so through an eCommerce website.
The simplest case of D2C can be found in agricultural produce. Post-harvest, a farmer decides to sell his harvest to the local consumer.
Traditional Retail vs D2C
A D2C business sells directly to consumers; that much has already been established. Now, let’s look at how it differs from the traditional retail model.
To illustrate, this is the traditional eCommerce model.
Manufacturer > Wholesaler > Distributor > Retailers > Consumer
In the D2C business model, you’re either embodying the role of wholesaler, distributor, and consumer or removing it altogether. The end goal? To sell more to the consumer.
We’re not just discussing hypotheticals here. More than 50% of the consumers prefer to purchase products directly from producers instead of buying through a middleman.
The trend is still not widely accepted by manufacturers. There are two reasons behind it:
- The costs incurred in setting up a D2C eCommerce ecosystem while maintaining regular manufacturing practice.
- Selling D2C means selling individual items to the consumer.
Both the former and the latter present an identity crisis to the consumer, which puts the manufacturer from going forward.
But there is still light at the end of the tunnel. With the right eCommerce platform and correct investment of resources, both manufacturers and the distributors can benefit from D2C and hopefully avoid the identity crisis.
Let’s look at what those benefits are exactly.
How You Can Benefit with D2C eCommerce
With a d2c eCommerce system in place, the producer/manufacturer is in the driver’s seat. With full control of every activity, manufacturers can manage every aspect of the trade. It enables users to create an omnichannel experience for their brand or business.
Brand Reputation Management
When you’re the one who manages the production line, you’re responsible for managing your brand’s perception.
Marketing through the D2C channel makes sure you have control over the branding and marketing activities. You’re also the one who is receiving customer-feedback, which puts the company directly in touch with consumer sentiments.
Customer Relationship Building
With the traditional model, you’re just a business entity selling products through a third-party. The connection between the customers and the manufacturer is rare, if ever.
Having a D2C business gives your operations life and allows you to connect with the customers. The statistics that come from such a connection aren’t just numbers. Then, they’re data that’s built from the preferences of your consumers.
Apart from the opportunities, there are some challenges associated with D2C.
D2C Ecommerce is a Challenging Environment
When you’re going D2C, you’re competing, as a manufacturing entity, against veterans of the B2C game: retailers. These businesses have been focused on B2C longer than you, and competing against them in product quality, marketing, and sales become a considerable challenge.
Order fulfillment from POS to delivery is a challenging task for a newly formed D2C business. Like the preceding case, companies have to compete on shipping with giants like Amazon to provide quick delivery.
Marketing and Brand Management
This is a resource-based challenge since going D2C involves hiring a new team of marketers and brand strategists dedicated solely to D2C eCommerce. It can prove a challenge in terms of the powers that already be in the retail industry.
Before you enter, make sure you have a plan at the ready to avoid roadblocks in the future. This means you and your teams should be in coordination with one another.
How Much is D2C Ecommerce Growing?
Middlemen are on their way out. Many businesses have already started to cut them out of their supply chains. Last year alone, a third of consumers purchased directly from the consumer rather than through a third-party.
This has helped manufacturers improve their bottom line. It has also allowed them to connect with their customers at a deeper level than before.
The most important thing for a business is the customer. D2C allows manufacturers to build healthy customer relationships that can prove as a brand reputation management tool.
But that doesn’t mean that distributors are out of the equation. All of the individuals involved in the supply chain have benefited from selling directly to the consumer. Such a trend is expected to continue further into the future by all estimates.
Getting Started with D2C Ecommerce
With the right eCommerce platform at your behest, you can start with D2C eCommerce in a minimal amount.
Other than that, your focus should be primarily on the consumer. Optimizing your store for the buyer’s journey can positively impact the bottom-line of the company and help establish yourself as a D2C brand.
To reiterate, the competition will be severe since you’re going against veterans of the retail trade. With the right tools and resource allocation, you can take your business to the next level.
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