The e-commerce market has gone through several transitions since its inception. It has been responsible for thousands of online brands and various business models. These models represent the company’s core and enable them to sell products and services to customers with specific prices and selling methods. Also, each model caters to a target audience distinguishable from the other.
An entrepreneur chooses from the following – B2B (Business-to-business), B2C (Business-to-customer), C2C (Consumer-to-consumer), and D2C (Direct-to-customer) options to run their e-commerce store. As much as they revolve around audiences and sellers, they play different roles for both. In this article, we will discuss all about D2C and how it helps businesses fulfill the buyer’s needs.
What is D2C eCommerce?
The D2C or direct-to-consumer business model involves two parties (seller and end customer) in the direct pact of manufacturing/selling and delivering the product to buyers. Unlike other models, D2C has no role of a middleman or third-party players. Brands with this strategy can have complete control throughout all operations, including marketing, customer experience, and sales.
Selling directly to consumers can be immensely advantageous through cost reduction and faster shipping. It also helps target customers directly, sell at your price, and go at your own pace. Here are a few benefits of D2C.
Benefits of D2C eCommerce
D2C has several benefits that allow businesses to stand out on their own. Let’s have a look at them.
1) Price decision-making
The pricing aspect is an integral part of e-commerce because it either pushes away your customers or convinces them to buy from you. Business models that have intermediaries in the equation always have added extra payment responsibilities. Because of this, the price gets distributed among a few or more players other than the seller and end customers.
Following that, a seller has to increase the product price to be able to meet the profit margin. When the product’s price hikes, most customers avoid making the purchase. With D2C, you set competitive prices and product costs according to your choice and acquire more buyers.
2) Responsibility over brand reputation
Companies rely on third-party suppliers, distributors, and operational teams for internal responsibilities. This makes the intermediary players get a divided share of the brand reputation. For example, if an enterprise-grade business uses FedEx to look after its logistics and supply chain, the shipper takes half the attention and money from the brand.
However, when it comes to D2C e-commerce, a business of any size or scale can claim full responsibility for its ownership of all supply and distribution-related tasks like personalized messaging and product positioning on the website.
3) Direct access to all data
A lot of brands remain deprived of customer data handled by the middleman. It helps those who want to improve aspects and areas in their venture. For example, a business that sells its brand outputs on a third-party website has the disadvantage of data accessibility because it remains.
Online sellers use D2C eCommerce software and marketing platforms like Reddit, Twitter, and Quora for retargeting audiences for marketing. It allows them to connect directly with the consumer and make informed decisions based on their feedback and concerns.
4. Sell products at your own pace
A D2C brand must perform trial and error exercises by testing its products on a niche audience. It takes away the immediate need to make profits while giving them the time to prioritize more on individual customer needs. Selling products at your own pace can help build brand loyalty and relieve themselves from external pressures.
D2C Ecommerce companies in India leads to openness to accept made-to-order products and cater to the unpredictable demands of consumers. This flexibility encourages merchants to remain relevant among their buyers and counter stagnation.
Challenges of D2C eCommerce
Establishing a D2C venture and running it takes a prior understanding of all its facets. Here are a few challenges to know about as well.
1) Competition with other sellers
Sellers that have adopted other business models may have more experience in the e-commerce realm. Perhaps they are in the high chair with product sales and exceptional shipping partners. A D2C business, on the other hand, lacks the dependency of such players due to their supervision of business operations. For a new D2C brand, it can be back-breaking to match up to the competition, especially in the initial years.
2) Visibility and exposure
Direct-to-customer sellers can face visibility and exposure hurdles. While most D2C ventures start small operations with their fleet and have limited resources, traditional businesses have a significantly greater customer base and a large stock of products, unlike D2C.
The only way these customer-centric businesses can get exposed is through a solid marketing strategy where customers can get much clarity by shopping directly from a D2C seller.
3) Fulfilling orders
Order fulfillment can be a tricky affair in the D2C journey. Most of them struggle to meet customer needs due to faster delivery requirements and reverse logistics. Also, customer expectations spike up to same-day and next-day deliveries that can be difficult to accommodate alongside the warehouse and order management processes.
For faster movement of goods, D2C brands can consolidate their supply chain cycles by automating micro-fulfillment centers from where they can coordinate orders and meet last-mile delivery goals. For ultimate success in order fulfillment, they can shift to robots and drones to manage internal processes and improve customer experience.
4) Inventory management
Direct-to-customer companies face significant bottlenecks while managing their inventories due to the lack of understanding and insights across various inventory levels. This can become concerning since buyers now expect an unparalleled omnichannel delivery experience.
Managing your inventory well can guarantee more sales after tending to all the inbound tasks more effectively. To get that done, D2C brands depend on WMS (Warehouse management system) and OMS (Order management systems). Half the work is over when your inventory management is in check.
Way forward
Despite recent prominence in the e-commerce ecosystem, D2C has gained sufficient support from its varied customer base. It will soon become as widely recognized as the other business models. Besides that, it is ideal for companies that practice the DIY (Do it yourself) strategy to stick to a close-knit workforce between themselves and their audiences.
So, if you are looking to start as a D2C brand, there are things to consider and think about. Read the information above to clear clutters and take the first step in your D2C journey.
