D2C ECommerce 101: Everything You Need To Know
D2C or Direct-to-Consumer eCommerce takes place when manufacturers from any industry directly sell their products without the intervention of any distributor or retailer. This is also becoming popular for brands looking to instantly enter the market at a lower entry cost. With eCommerce and online shopping growth, more enterprises have started working on opportunities to evade the intermediaries and sell their products/services to the target customers. In D2C eCommerce, manufacturers can directly sell their products to customers using digital channels like social media platforms and websites. D2C gives the manufacturers complete control of the product's manufacturing, marketing, and distribution.
Since the beginning of the ongoing pandemic, there has been substantial growth in the D2C eCommerce market. The pandemic has caused a notable shift in the digital transformation habits of present-day buyers. With various stores bringing a close to their shops, customers are now increasingly inclined to buy them online through different channels. According to online data, D2C eCommerce is a preferred purchase choice by 40-45% of Gen-Z today.
How D2C eCommerce Benefits Brands and Customers
Brands today have benefited a lot from the D2C eCommerce model, which is listed below in the table-
Traditional Retail Business Model
D2C eCommerce Model
Lower profit margins as a lot of mediators and intermediaries are involved
High-profit margins as manufacturers directly sell their products to target customers using different marketing channels
Customer Interaction Levels
Indirect relationship with the customer owing to various intermediary entities involved
A direct relationship between the manufacturers and customers
Restricted branding control as the manufacturers market and package their products
Complete control for managing the product marketing and branding
Lower prices to start with
Accessibility to User Data
Difficulty in collecting user data as a distributed network is involved
Easy access to the customer data for personalized offerings
The D2C eCommerce business model is seen as disruptive compared to traditional retails as the former offers numerous advantages to the manufacturers. Some of these key benefits comprise of-
- Better Control Over Messaging & Customer Engagement
- Direct Access to Customer & Customer Data
- Increased Higher Margins
- Strong Brand Loyalty
- More Room for Innovation
From the customer perspective, they get various benefits such as better prices, free delivery, free returns, etc., which are illustrated below
Stat Source: https://www.statista.com/statistics/1274958/motivating-factors-for-purchasing-d2c-sites-worldwide/
Challenges Associated with D2C eCommerce Brands
D2C brands no doubt brought a shift in the eCommerce market globally.; however, going down the line, most of these brands have started facing challenges like stagnated growth, acquiring new customers, and intensified competition, to name a few.
- Increased Competition from Local Vendors: It is evident that D2C brands face intense competition from the local markets in their niche category. To stay competitive, more brands have now opted for online eCommerce sites. Hence, it has become necessary for D2C brands to provide the accurate set of products that the customers are looking for. Thus for D2C brands, their core focus should be around establishing themselves as differentiators, developing the brand, and providing enhanced customer experiences. Once the customer enters the marketing funnel, the D2C brands must constantly provide the former with promotions and offers that keep them connected with the brand.
- Leveraging the Omnichannel Shopping Experience: Providing the target customers with an omnichannel shopping experience has been a major challenge for most D2C eCommerce providers. These brands often fail to match shoppers' expectations and are looking to push orders from different platforms like websites, social media channels, and physical stores. To elevate the customers' omnichannel experience, D2C eCommerce brands need to use detailed customer insights and analytics.
- Providing Personalized Experiences: D2C brands must also align the increased customer demands and accurately offer them what they are looking for at the right time. The D2C brand needs to intensify its marketing efforts to personalize the customer experience. Customers are looking for brands to cater to their business needs as soon as they land on the D2C eCommerce site, showing relevant products based on their macro-level details like location, demographics, buying behaviors, etc.
This comes when the investors and other stakeholders demand founders explore new business growth avenues & show the roadmap toward becoming sustainable and profitable.
Marketing: The Chemical X for D2C eCommerce Brands
It is no wonder that most D2C eCommerce brands have the strength of major corporations to leverage television advertising campaigns to attract more customers to their websites. This is why some D2C brands have now started to place their products on digital marketplaces to gain more exposure. Unlike other eCommerce models, D2C eCommerce has a trump card in the name of Marketing to attract customers. The following are some marketing techniques that can lead to increased customer absorption by D2C eCommerce brands-
- Social Media Marketing: Social media platforms have emerged as one of the prominent areas where a maximum of D2C marketing occurs. With social media platforms, there is one thing in common for leading brands: the marketing mastery of products these brands have been able to do. D2C eCommerce brands are utilizing social media platforms to attract customers in several ways, such as displaying ads, regularly uploading relevant content, and providing discount coupons and sales offers & promotions.
- Content Marketing: Since the D2C eCommerce brands interact directly with their customers, using Content Marketing effectively is the key to D2C brands' success in speaking about their USPs and core offerings.
- Email Marketing: At the backdrop of the pandemic and with many customers still operating remotely, there has been a notable resurgence in the field of email marketing. With email marketing, the marketing communication will reach the customers' mailboxes. A report states that an email intended for the target customers reaches 79% of them, which can eventually get loomed to even 90%. With these stats in place, it is evident that for D2C eCommerce brands, email continues to be the critical element of D2C marketing.
- Omnichannel Marketing: For D2C brands to become successful, they need to leverage omnichannel marketing correctly. D2C brands must deploy different marketing channels to create a consistent customer experience. There is a fast change of hands for applications and devices; hence it has become necessary for D2C brands to 'meet' their customers whenever needed and across any device.
- Search Engine Optimization (SEO): Now, without any middlemen for promoting the brands, the D2C manufacturers must optimize the search engines like Google and Bing using SEO techniques. However, generating digital traffic and visibility is difficult, and it takes establishing a virtual presence amongst the target customers. Successful D2C brands talk like their customers with the right keywords in places like product descriptions and web pages.
The D2C eCommerce market got picked up during the initial stages of the pandemic when everyone was forced to make purchases online. However, with time it has become a successful eCommerce strategy that allows manufacturers to control creating, marketing completely, and selling their products to the target customers directly using various online marketing channels, unlike the traditional retail market system. D2C eCommerce eliminates all forms of intermediaries, thus giving more control and easy access to business leaders about their customers' and customers' data. D2C eCommerce also helps establish long-lasting customer relations and loyalty since the D2C brands will regularly provide recommendations to the target customers based on their buying behavior and preferences.
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