What are the Primary D2C Model Types?
Direct-to-consumers business model is quite trending to fetch the eyes of the massive crowd for online shopping. Such models come with the idea of eliminating the mediators or intermediaries in a crystal-clear way to sell the brand products and enhance the sales funnel significantly.
Traditionally, the manufacturer sells the brand products with the help of distributors, retailers, agencies, and wholesalers. But in the current scenario, companies that follow the D2C business models directly reach out to the vast crowd. The buyers or customers can directly communicate with the manufacturer per their wishes or desires to vividly satisfy the customer’s needs. Amid the pandemic, this shift in the purchasing pattern of the customer is because of the following reasons:
- Consumers and the respective brand products are on the verge of adopting digital shopping ideas significantly. Direct-to-consumer access platforms like online stores, factory outlets, retail stores, and applications to sell the brand products appropriately.
- These days internet penetration is growing dynamically to access the D2C platform quickly.
- The E-commerce platform is enhanced in terms of logistics operations and management of warehouses and inventories.
- The D2C model uses different payment methods, and the brand products are delivered in real-time.
The above factors made India stand fourth most prominent in the D2C market, following the US, China, and Japan.
Advantages of a D2C Business model
- The cost-effective supply chain
The D2C business model eliminates the intermediaries from the chain to reduce the operation costs and sell the product at an affordable rate. Brand products minimize the commissions the retailers, distributors, or wholesalers take. Such a process helps manage the revenue and achieve the goal of cost-effective supply management.
- Logistics management
With the help of the D2C model, the companies prefer to have a smooth delivery of the brand products effectively. The orders are placed online, and last-mile delivery of the services is done vividly. Even companies can choose their logistics or third-party logistics prominently.
- Buyer-seller relationships
The customers or buyer gets the opportunities to interact directly with the brand to get the customized brand products. And the companies try to gather all the customer information vibrantly to nurture the sales channel appropriately. Such a process helps the buyer and seller establish a solid bond to run the workflow efficiently.
With the use of analytics, brands can process accordingly:
- They try to target specific customers via coupons or other offerings.
- Sellers try to know customers’ behaviour, choices, requirements, patterns, and preferences.
- Even customized services are also available to run the sales channel.
- They try to improve the customer’s choices in a significant way.
D2C businesses model and its challenges
- Operation management
Full access to the operations needs a lot of strategies and planning to serve the purpose. The decision-making in such a process is tough to execute, but the procedure goes on without delay. D2C manages all the operations in a blink and with a click. For the smooth work of the operations, companies are looking for automatic system and error-free systems to run the process vividly.
- D2C expansion constraints
These days online shopping has set limitations. Beyond one point, the site will not perform the operations. For example, WOW is initially for online options, and once the limit is reached, it has shifted to offline mode. And the same with other brand products like Mama Earth. The brand finds it difficult to expand without distributors or wholesalers.
- Marketing of the brand products
The D2C brands look for marketing through different channels. Such channel includes social media platforms, e-commerce, and digital marketing to hike sales in the marketplaces. The challenging part is the cost of such marketing is expensive.
D2C types and their models
- Direct selling
In Direct selling, the company comes out with the idea to offer products to a large crowd through independent sales. There are two ways of direct selling:
- Door-to-Door selling: in such a process, the sales representative sells the products at the customer’s adobe. Door-to-Door selling is the traditional form of selling stuff to the customer without any hurdles.
- Multi-level or network marketing: In such a process, the brand products are sold by hiring other sellers and reward commissions are given. For example, Tupperware and Amway come under such an umbrella to generate profits.
- Pure-Play Digital
In such a model, the companies choose their digital channels to sell the product and its advertisement.
With the help of mobile applications, websites, and social media channels, marketing of the brand products is done in a simple and sophisticated way.
Most brands are giving complete control or access to such a business model to hike the sales in the market. In such a model, only small D2C players can only survive despite the big companies.
- Omnichannel D2C model
The Omnichannel D2C business model helps establish retail outlets and investments in CRM, POS systems, and ERP. The omnichannel model prefers to satisfy the customer more over the brand publicity. Such a model helps customer experience via retail stores, websites, social media, and other relatable platforms.
- Marketplace only
In such business models, intermediaries are available to run the process smoothly. E-commerce is a platform that adopts such strategies to attract giant customers to improve the sales funnel clearly. In such a model, the manufacturer must register as a seller and run the business in simple terms. The local brands choose such a model to start the business and expand it with time.
- Hybrid Model
It is mentioned that almost 90% of the D2C business model are hybrid. Hybrid means they sell their brand products on both platforms, the marketplaces, and the channels. To run the business smoothly, brand products like Mama Earth, Licious, and sugar cosmetics access the hybrid products to advance the sector magnificently.
These days D2C marketplace turns out to be pleasing to the customer in terms of fulfilling their needs and desires. It is said that by the end of 2021, India will be home to around 600+ D2C brands, and by 2025, the market will grow to $100 Bn.
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