What Is D2C Ecommerce, And Why Should You Care?


October 17, 2021
5 MIN READ
Vinculum
Written by:
Vinculum
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E-commerce has evolved drastically in recent years, and we are now witnessing the slow demise of the multi-channel store model. Diminished margins and a decrease in the number of customers willing to come into actual retail establishments to make purchases are two major causes behind this. It led to the meteoric rise of the Direct to Consumer or Direct to Consumer e-commerce industry. Today, more and more businesses are looking towards D2C e-commerce to take control of the customer experience, reach out to more prospective consumers, and improve revenue.

What is D2C e-commerce?

D2C e-commerce is the retail strategy of selling products through various online channels and online marketplaces, such as Etsy, Amazon, eBay, and others. The basic idea is that the consumer will purchase products online, have them shipped to them or picked up from a location near them, and then delivered them to the consumer through a trucking company or local couriers.

Selling directly to customers eliminates including many intermediaries while also giving brands complete control over their marketing and customer service. It’s a chance to capture a proactive, personal approach to customer service and build a strong customer relationship. D2C e-commerce businesses have the flexibility to conduct their business as they see fit, without worrying about their image being tainted by a third-party vendor. It’s an incredible opportunity for store owners to develop a communication strategy to keep their customers engaged. For example, creating personalized, high-quality content to share across your channels and more is an excellent way to earn your customers’ trust and keep them coming back for more.

Why should you care?

The direct-to-consumer e-commerce sales channel for the CPG industry is enormous and growing. The continuous development of e-commerce was the most major retail trend fuelled by COVID-19. Even as vaccine delivery offers optimism for a return to normalcy, this increase is likely to continue. The reality is that the current customer’s profile is shifting in ways that certain wholesalers can substantially profit from if they go to D2C. Consumers demand convenience and place a high value on trust. That is to say; people prefer to buy directly from brands that they believe reflect their beliefs.

According to Euromonitor International, digital shopping will account for half of the worldwide retail sector’s absolute value increase between 2020 and 2025. As more products are sold online, this translates to a US$1.4 trillion increase in total value.

Therefore there is no better time than the present to consider entering the direct-to-consumer business for your brand.

The Pros of D2C Ecommerce

The advantages of e-commerce (online sales) are widely known. It can assist you in reaching a more significant number of clients in your target areas, both locally and abroad. It also comes with a set of tools to help you turn interested in your product or service into actual sales.

Retailers seldom stock a brand’s entire product catalog, preferring to allocate shelf space to items most likely to produce repeat purchases. Manufacturers may provide as extensive a product selection as they wish by creating and operating their online shop, enhanced by their material, such as comprehensive product descriptions, photographs, and videos, which merchants may not utilize.

D2C provides manufacturers with an additional route to reach customers, allowing them to counteract the effects of price competition. They collect information about their clients’ purchase behavior and may modify product assortments and promotions appropriately.

The Cons of D2C Ecommerce

There are, however, a few downsides to D2C eCommerce for manufacturers and CPG brands. The first is the relatively low margin opportunity: the actual sale price of the product, less the cost of sales and shipping. As a result, the manufacturers lose substantial revenue opportunities due to the D2C model’s significantly lower margins. The second is lack of brand presence, i.e., if the manufacturer wants to be present in the market, they must build their brand from scratch. As the company’s reach is limited to the manufacturer and the site, there is no opportunity to engage with customers or customers to engage with the brand. And, because there is no “face” or product to convey a brand’s image or sales pitch, customers could be skeptical about the manufacturer’s products.

Conclusion

D2C continues to gain popularity among retailers, but companies of all sizes have benefited from its success. Though it seems like a better bargain, before adopting a direct-to-consumer e-commerce strategy online, brands must first ensure a thorough understanding of their current sales channels. Also, they must check that the D2C channels created by them are part of a larger multichannel plan. D2C e-commerce indeed enables firms to manage their supply chains and consumer connections better. Understanding the obstacles and benefits of direct-to-consumer e-commerce may allow brands to target their consumers better and raise brand recognition.

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