In the early days, it was very clear that manufacturers will make the product and Retailer or Wholesalers will sell the product, with the introduction of online shopping gave rise to a host of online retailers which fundamentally didn’t affect the model of the brick and mortar world and manufacturer to retailer largely remained intact. The modern customer wants to interact with the brand directly to have all the information at their disposal so that they can compare prices, read product reviews, provide feedback, and much more. To meet these expectations manufacturers need to rethink their relationship with and dependence on the retailers and wholesalers for getting their products to the consumers. D2C model enables manufacturers to take the responsibility of selling and marketing their products in their own hands.
What is D2C?
Direct to Consumer or D2C is simply selling directly to the consumer by eliminating the middleman. The internet has eliminated the need for middlemen from today’s economy, it is time for companies to adapt to D2C to make better profits and provide even better customer experience at a lower price making it a win-win for both companies and consumers.
7 major reasons why the companies should shift to a D2C model are:
Increase Revenue: Leverage the Demand for your Product.
Every brand has 3 types of customers:
1) The consumer who finds your product at a retail store while they’re looking for something.
2) Those who have had a great offline experience with your brand and go to the store to buy a specific product of your brand.
3) The ones who shop with the brand simply because they like the brand.
In the case of the 2nd and 3rd types of consumers. You already have built a demand for your product, it makes sense to sell directly to the consumer to fulfill that demand. This move can make a dramatic difference in your revenue and increase your profits. Since your brand is not paying commissions for any purchase.
Provide the Best Customer Experience and Build a Direct Relationship with Your Customers
Customer experience is very important. It allows brands to build relationships with customers. Having full control means brands can customize their customer experience for their audience.
Most Brands are built upon the message and stories and retail stores fail to convey the same. Customers do not buy the commodity but the experience that is delivered by the brand and expect a direct link with the brand itself. Moreover, customers tend to trust the product more if they buy directly from the brand.
When there is a middleman who is selling your products, you have very little say on “how the product is sold”. You have to rely on the middleman to convey your message or story to the end consumer so that they leave the store with satisfaction, also the post-purchase experience can be handled better by the brands as compared to the middleman.
Understand your Customer Better
Before the D2C model, manufacturers didn’t really interact with consumers. Sure they did do market research by testing the target market and conducting tests on focus groups.
Ideally, Brands need to have a direct relationship with the consumers at every stage of the sales process, this includes the post-purchase communication and feedback on the services which are hard to test on focus groups.
This direct relationship will help you to understand your target audience better and create lucrative offers that attract repeat customers while generating actionable insights that will help you grow your business.
Improved customer engagement and customer loyalty
“One-third of consumers visiting a brand’s website with the intent to make a purchase prefer to buy from the brand,” – Forestor.
Direct and authentic engagement helps you understand the “why” behind the purchase that helps the brand tap into emotions and increase sales.
Customers love to be directly in touch with the manufacturing brand, a D2C store enables the same not only this it also provides better prices. The organic engagement of the customers allows a brand to grow with word of mouth and generate trust among the community members thus increasing the customer base.
Showcase a wider product range on your Own D2C Store
Brands have a risk of losing shelf space due to competitors not only this retailers don’t tend to keep the spare parts or the accessories that a consumer might need to save the shelf space which harms the brand’s customer lifetime value since not knowing about the availability of the spare parts increases the risk of purchase of that particular product. Limited shelf space means consumers get access to only a limited range of your products that too with a risk of losing to competitor brands in the same space.
D2C approach overcomes this by allowing you to showcase the entire portfolio to the consumer with detailed information about the product that helps the consumer to make an informed decision. It also enables you to upsell or cross-sell the related products to the consumer increasing the overall cart value. Not only this, a D2C model limits competition by zero since you only display your products and you focus the messaging on assisting the customer with the purchase.
Optimizing costs and prices
With no middleman, brands save up a lot of margins which in turn can be utilized by them to give out attractive discounts that attract a large number of customers with intent to purchase. When you control what you sell and what products you show next to the main product you have overall control to create unique offers and combos that increase the profit margin and also give you the ability to clear out the stock faster.
Sell to anyone, anywhere using D2C
Another reason to shift to the D2C bandwagon is that it helps you sell your product without any geographic restrictions. Online marketplaces and websites help your brand to sell your products across the border which will help you explore the demand in multiple markets helping you grow at a faster pace.
Shifting to the D2C model makes sense for the brands. It offers great potential to grow sales, improve margins, and be a direct link to customers. Apart from the reasons we discussed, adopting the D2C approach can help brands improve overall brand control and brand messaging, access to the customer data can help them personalize their advertising campaigns.
With so many benefits the question is not of “if” but “when”. In short, the opportunities in the D2C model are endless. However, every brand has to be careful while planning their shift and should not stop looking for additional channels to grow their business rather than just relying on the Direct to Consumer channel.
If you have read till here, you are probably interested in starting your own Direct to Consumer business. Here’s a guide you need to succeed in 2021 in D2C industry.
We here are at Yelo have developed the turnkey solution you need to get started and turn your business idea into a mean profit-making machine.
How do we do it? We do this by enabling you with technology that provides you with functions like order management giving you the ability to update your catalog anytime and your customers the ability to order anything from anywhere using their phone within some simple clicks, marketing ecosystem which will help you with hyper-personalization of your brand messaging and engage with your customers at a deeper level using promo-codes, referral programs, custom push notifications and real-time analytics that provides you with actionable and valuable insights that help you tap into customer behavior and come up with a unique and attractive offer.