A growing number of customer-facing enterprises are choosing a Direct to Consumer (D2C) strategy, which eliminates the intermediaries. Manufacturers may now control the whole supply chain, from production through distribution, marketing, and delivery. According to a recent poll, 84 percent of consumer products businesses have witnessed a rise in direct-to-consumer sales in the last 36 months, and 88 percent predict this trend to continue by 2020. It’s reasonable to predict that 2020 will be the year of direct-to-consumer retail.
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What is D2C (Direct to Consumer)?
Direct Consumer marketing is described as the sale of goods directly between producers and customers, without the need of intermediaries.
In a direct-to-consumer (D2C) approach, retailers/companies make and deliver their items to customers without the need for conventional storefronts or other intermediaries. This enables D2C businesses to offer their goods lower than conventional consumer brands while maintaining complete control over product development, promotion, and distribution.
D2C businesses may experiment with different supply methods, such as delivering directly to customers, forming partnerships with existing retailers or marketplaces, or creating physical storefronts. They are self-sufficient in terms of distribution and do not depend on other marketplaces or large merchants.
What was the motivation for the creation of D2C?
There was a need to eliminate the additional layer between brands and customers in a world where profit drives company tactics. Manufacturers, too, are always seeking new methods to connect with customers directly.
According to a study, more than 30% of the US public recognizes that they will need to redirect more than 35% of their purchasing power to direct-to-consumer (D2C) shops in the following decade. This graph depicts how customers’ purchasing patterns are shifting toward a more customized experience.
More than 55 percent of customers choose to create their wardrobe from conventional brick and mortar businesses for D2C physical retailers. If that isn’t enough to persuade you, consider the buying pattern, which shows that one out of every four consumers shop for cosmetics and beauty items at a typical retailer store. Not to mention, when it comes to buying furniture, roughly 30% of customers are willing to spend time at the retailer’s store.
These figures indicate a one-way picture of Direct to Consumer, which is limited to e-commerce and the physical storefronts that a merchant may open. What better example than Apple Inc., which has taken things into its own hands by opening Apple shops that draw large crowds every day and provide customers with a highly customized and rich experience.
A one-of-a-kind experience: ‘Personalization’ is the buzzword of the day. When wholesalers sell via retail distributors, they have very little input in how the product is offered. They rely significantly on the distributor to guarantee that consumers are pleased and satisfied when they leave the shop (or online platform). Companies may imagine how the customer journey should take place and execute the methods necessary to make that vision a reality by selling directly to customers.
What’s better than having a pool of customer data obtained directly from the source? Yes, selling directly to customers allows the manufacturer/retailer to keep a close eye and gather data on customer behavior. Demographics and consumer purchasing habits may help a retailer tailor the user’s/browsing consumer’s experience for a better purchase experience and more conversions.
Quicker launches: Every merchant is aware of the astronomical costs of launching a new brand or product. When a product must pass via wholesalers/marketplaces, retailers’ only alternative is to rely on the middle layer’s power. Manufacturers may mitigate these risks by launching a new state-of-the-art product on a smaller scale using D2C. Manufacturers may design a product and test it on certain demography to get direct feedback from customers. This enables large manufacturing companies to detect what their consumers like and hate to make adjustments that will improve their bottom line.
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Connect directly with customers: When customers purchase directly from manufacturers, they not only become brand ambassadors for the experience, but they also form a bond with the company’s ‘brand.’ Manufacturers can strike the perfect chord with direct customers with a highly focused and persona-driven marketing strategy, something that was absent with middlemen, to assure loyalty and enhanced brand reputation.
The rapid pace at which eCommerce is growing shows that several innovations will be witnessed in the sector in the coming years. As marketers scramble to get a competitive advantage in the market, rapid technological innovations are expected. Business who wish to establish a strong foothold in the digital space must start acting now or it might be too little too late.