What is direct-to-consumer retail?
Direct-to-consumer retail is a strategy whereby businesses sell their products directly to the end-user without wholesalers, third-party retailers, and other middlemen. As consumers continue to embrace the convenience of online shopping, there is an increased need for businesses to achieve direct-to-consumer growth.
Why D2C is a trend that will change everything
The D2C (direct-to-consumer) market has been growing rapidly, with double-digit rates for several years. It is projected to maintain a further 19.2% growth in 2022. These data is pre-COVID-19, so the willingness to launch into direct-to-consumer will probably grow even more in the face of the uncertainty and loss of control of the supply chain that we have experienced in recent months. Some businesses have long been taking over the market on the other side of the pond — and in the process breaking down the bricks of their competitors in physical retail.
These movements have not gone unnoticed by other long-established brands, which have been selling through traditional channels for few years now. Recently, other brands have opened new channels of communication with their customers, where for the first time they have activated direct relationships with them.
Why are brands cutting out the middleman?
Most products are not sold directly from brands to consumers. Products in the supply chain often pass through dozens of hands: the manufacturing factories, shipping vehicles and pallets, distributor and retail warehouses, shop floors, and delivery fleets.
Packages can travel thousands of miles and go through multiple hands in the chains of custody. This not only affects profit margins, but also has an impact on the brand’s ability to connect and communicate with their customer. Direct to consumer provides an important marketing strategy: branded messages and a branded fulfillment experience. No matter what touchpoint customers have with the product, the messaging can remain consistent across all channels and optimized to encourage additional sales.
The future of D2C
Cutting out the middleman is as much a measure to improve efficiency as it is a strategic move which enables new and legacy brands to get closer to customers. They can build a direct communication channel, gather invaluable feedback, and collect customer data which is otherwise left in the hands of partners who can leverage this knowledge to their advantage.
This shift doesn’t happen overnight – and by no means does it undermine the necessity of using retailers, distributors, and other partners to reach all potential customers. However, it does provide new opportunities, more customer data and the ability for companies to gain unprecedented visibility and control over their relationship with customers.
Advances in ecommerce and delivery logistics software are giving companies the opportunity to explore new distribution channels, gain a better understanding of their customers and ultimately create better brand experiences that are seamlessly personalized.