Intermediaries, go-betweens, brokers, and middlemen:
Avert your eyes.
You’re not going to like what you’re about to read.
Direct to consumer sales, or D2C sales, in the U.S. rose from $6.85 billion in 2017 to $17.75 billion in 2020.
More than half of shoppers, according to Astound Commerce Insight, prefer to shop with manufacturers than retailers.
More than half of online shoppers want to cut the middleman out.
That’s why so many B2B businesses are integrating D2C into their sales strategy. A merchandiser that sells directly to consumers is a company with a huge competitive advantage.
Here’s what you need to know about it.
What Is D2C? Direct to Consumer Definition
Direct to consumer sales, also known as direct to consumer ecommerce (or D2C/DTC ecommerce), is a sales strategy where a business sells directly to customers. It's the
That’s opposed to what B2B businesses usually do: sell to vendors, retailers, and resellers.
But when a wholesaler, manufacturer, or producer transacts with individual end consumers through an ecommerce website, that’s the meaning of D2C.
Because when anyone speaks of the direct to consumer meaning, it’s assumed that the context is of a B2B business expanding its sales strategy.
Direct to Consumer Business Model
How the D2C Business Model Differs
The direct to consumer business model cuts out the intermediaries. And depending on where you are in the supply chain, those middlemen might be different.
Here there is a manufacturer or producer that sells to a wholesaler. Who sells to a distributor. Who sells to a retailer, who sells to a consumer, etc.
But the direct to consumer business model skips a few steps. In it, finished goods inventory goes directly from the manufacturer or producer to the end consumer. Or directly from the wholesale to the end consumer. Or directly from the distributor to the end consumer.
The theme? It does directly to the end consumer.
D2C Business Model Types
There are five primary types of D2C business models: direct sellers, advertisers, online go-betweens, community-driven, and fee-based.
This is what most online shoppers have exposure to. These are retail websites powered by ecommerce platforms. They may be powered by internal platforms or third-party platforms like Shopify.
The experience for end-consumers:
The same as regular online shopping. But at the other end is a manufacturer or producer, not a reseller. Imagine a farm that sells eggs directly to customers who will consume them. They're in the DTC food market now.
Some manufacturers, producers, or suppliers may opt to advertise their products directly to end-users. Blogs or media outlets create content that’s typically free, though they surface ads for the D2C business.
These Internet intermediaries act as bridges between buyers and sellers. They’re not quite the vendors or distributors they’re replacing, they’re more like matchmakers.
Sites like Priceline or eBay that act as forums for buyers to find sellers and vice versa.
BlueCart Digital Storefront is a great example of this in the hospitality space. With an industry-leading digital catalog that takes care of online visual merchandising, customers can browse high-quality images of your products anytime they want.
Marketplaces are also risk-free D2C solutions that naturally scale with the businesses they serve.
Facebook Marketplace is the best example of a community-driven D2C sales tool. B2B business can target potential buyers based on their interests and community membership versus purchasing behavior or content consumption. This applies to any interest-based forum as well.
Some D2C sites charge a subscription fee for access to their products. Costco is a great example of this. They allow manufacturers to sell directly to consumers (both in-store and online), but with a subscription fee that subsidizes it.
Benefits of Direct to Consumer Sales
Directo to consumer sales can be embraced by any pre-retail part of the supply chain in many ways. In the traditional retail model, the pre-retail parts of the supply chain all deal with bulk purchases and bulk shipping. In fact, manufacturers, wholesalers, and distributors are all built around operating in bulk.
That’s why it can be difficult for many B2B businesses to pivot to a D2C strategy on their own.
But if they can, there are a lot of benefits.
This is what a B2B company can expect if they integrate D2C ecommerce:
- Control over brand engagement and reputation. Manufacturers and producers don’t have much control over how and when their products are sold by retailers. A retailer may have salespeople with little knowledge of the product. The display may not be branded properly. There are numerous ways first impressions and engagement with end users can harm your brand. But if you’re in total control of that, you can deliver a stellar customer experience directly from who knows your product best: you.
- Consistent omnichannel marketing. Omniwhat?? Channel. Check it out: omnichannel marketing means marketing through numerous channels. When your business controls everything from manufacturing to sales, you control every customer touchpoint. That means that whatever channel you choose to market in—SEO, physical packaging, social media, print media, etc.—your marketing will be consistent. Ask any brand marketing professional what the most important part of branding is and they’ll say consistency.
- Deep user research. When you interact directly with your end users, you don’t get to know them. But when you’re digitally transacting with them, you can gather data. User behavior data like browsing habits, bounce rates, and cart abandonment. Or market research data by communicating directly with customers about their likes, dislikes, and expectations. That type of stuff is invaluable when it comes to delivering industry-leading customer experiences and, thereby, growing your business.
- Alignment with modern consumer expectations. 59% of online shoppers do research at the manufacturer’s website before purchase. And around that number prefer to make the purchase at the manufacturer’s website. Consumers aren’t satisfied with hearsay about their purchases; they want information straight from the source. By going D2C, you deliver on those expectations.
One benefit the D2C sales model offers is the ability to experiment with D2C distribution. Companies in total control of their supply chains, marketing, and customer experience need not rely on retail outlets as in times past.
D2C distribution options include:
- Direct sales online through an ecommerce website or digital marketplace. This is the most common and cost effective D2C distribution strategy. And the one that most firmly leverages the benefits and agility of direct to consumer sales.
- Partnerships with physical retailers. Traditional third-party retail need not be totally shunned. In August 2020, for example, Casper announced retail partnerships with Sam's Club, Ashley HomeStore, Denver Mattress, and Mathis Brothers.
- Pop-up shops like Neighborhood Goods, which feature an ever-changing assortment of brands (both D2C and not) in a trendy, community-based department store.
The ability to experiment and hone in on what works is a big part of what makes selling direct to customers so appealing.
Business to Consumer Examples
Here are some examples of successful D2C operations out in the wild.
Subscription-based businesses are classic and reliable examples of D2C sales in action. B2B businesses use kitting and construct mail order boxes to send directly to customers. A monthly coffee delivery service is a good example of this. So is a business like BarkBox. They manufacture dog toys, treats, and accessories, and send boxes of it straight to consumers every month. For a subscription fee.
No more going to Petco.
You go straight to the manufacturer’s website and they ship directly to you. BespokePost, Dollar Shave Club, and Blue Apron are other examples of D2C subscription model success stories.
On the other end of the spectrum are third-party marketplaces. Etsy is a good example. They act as an intermediary between craft producers and buyers. They don’t charge a subscription fee, but they take a small commission of items sold.
Third party marketplaces are convenient because they supply the entirety of the ecommerce functionality needed to connect directly with consumers.
And the good ones have best-in-class digital catalogs that are designed for web and mobile and optimized for discovery.
B2B businesses plug right into the marketplace and start selling.
D2C: Try It
Any B2B business can immediately take advantage of D2C revenue with a third party marketplace. All the overhead and tech is taken care of. All a B2B business has to do is list their product and they’re off to the races.
BlueCart Digital Storefront is one of the most effective ways for B2B hospitality businesses to connect with individual consumers. You don’t have to invest in launching and maintaining an entire ecommerce platform. It’s a sharable, all-in-once solution that BlueCart does for you.
All you have to do is list your goods and the frictionless selling begins.