What is a Direct to Consumer (DTC) eCommerce brand?

Not only does the direct to consumer model eliminate intermediaries, it also excludes all kinds of middle-men, as well as brick-and-mortar storefronts from the system. In this business model, businesses deal and interact directly with their consumers digitally to sell their product or service.

6 Minute Read

The business world has witnessed major shifts in policies and practices over the last few years. Technological advancements have accelerated business opportunities online and allow businesses to operate in new and exciting ways. One such innovative business model is the  Direct to Consumer model, also known as DTC or D2C. The direct to consumer definition is quite straightforward. As the name suggests, it involves selling merchandise and products directly to end consumers. It is a business model that bypasses all intermediaries, retailers, and wholesalers, and connects businesses directly to its’ consumers for the sale of products or services. It removes all traditional distributors in the supply chain and works as a one-to-one contact between the selling company and the consumer.

Direct to consumer model

The direct to consumer model is a shift from the traditional vertical organization structure where the company sells its products to wholesalers who then circulate them to distributors who then sell it to retailers, and eventually, consumers buy the product. By breaking the traditional supply chain, the direct to consumer model eliminates all these vertical supply chain agents and directly connects sellers to the consumer. 

Not only does the direct to consumer model eliminate intermediaries, it also excludes all kinds of middle-men, as well as brick-and-mortar storefronts from the system. In this business model, businesses deal and interact directly with their consumers digitally to sell their product or service. Many people get confused about the differences between direct to consumer (D2C) and business to consumer (B2C) models. Let's clear this confusion with an example to elaborate on the concept in depth. If you buy a Dell laptop from a Dell seller then it will be known as the D2C model whereas if you buy a Dell laptop from Walmart or any other store (intermediary) then this will be known as the B2C model.

Benefits of direct to consumer eCommerce

There are many benefits to the direct to consumer eCommerce model, which is why many big companies are now shifting to this mode of selling. Some of the major benefits include:

  • Cost-effective - This business approach is cost-effective in two ways. Firstly, it excludes the brick and mortar system, which requires a lot of running costs as compared to digital or eCommerce stores. Secondly, by directly connecting to the consumer and excluding the commission of intermediaries, the seller can earn much more profit.

  • Less costly products offering - Due to the digital presence of DTC stores, the sellers save the cost of the traditional brick and mortar models including electricity, fixed costs related to the property, and other such operational expenses. By saving these costs, the seller can offer the product at a lower price as compared to the traditional sellers who are bound to raise the price to cover these traditional operational expenses.

  • One-on-one connection - DTC model allows the seller to directly connect with the consumer to understand their needs, preferences and gather real-time feedback. This interaction gives valuable information to sellers about the consumers’ purchasing habits, preferences, and pain points,  which helps them to offer better products and services to consumers in the future.

  • Ensure a great consumer experience - By being directly in touch with consumers, sellers can ensure to offer great customer service and shopping experiences to their consumers. By relying on middle-men, sellers cannot entirely control the consumer experience. They are beholden to the quality upheld by the middle man. A bad experience with a wholesaler or distributor can negatively impact the seller who can't control the consumer experience. The DTC model offers more control to sellers, so that they can treat customers well and ensure customer  satisfaction.

  • Much easier to start a business - DTC offers a much easier and more affordable option to start a business as compared to the B2C business model. In the B2C business model, the seller has to go through an extensive and laborious process of meeting and satisfying all stakeholders in the supply chain, from wholesaler to retailer, in order to reach their consumers. This not only consumes energy, but also demands a lot of capital that they have to spend in the process and terms of product commission. Sellers can get relief from all this trouble by opting for the DTC model that allows them to start a new business without having to worry about renting an outlet and going through the entire supply chain network. By going the direct to the consumer route, companies only need to have their offerings ready, and do thorough online marketing to reach consumers and drive them to their online storefront.
  • Reliable and timely service - By excluding the middleman direct consumer companies can deal with their consumers directly by ensuring a reliable and timely service. In the B2C model, if the retailer with whom consumers are interacting doesn’t have a supply of products, then it can cause friction in the sales cycle and untimely offering of the product to the consumer. In the DTC model, the seller can ensure to offer the available products and share realistic information about the future availability of products that are not in stock to ensure the customer receives the product on the promised time. This is quite important to make sure that consumers trust the brand and its services by having a pleasant and cooperative experience. 

  • Enhance consumer reach - Having a digital presence in an era when eCommerce is booming has become a necessity for any brand that wants to remain competitive. Direct to consumer eCommerce businesses have unlimited reach to consumers from all across the world on a 24/7 basis. This unlimited reach helps them to expand their business and enhance their consumer base. 

A crucial aspect of DTC

The Direct to consumer model comes with great advantages and every seller, big or small, should be executing on this business model in 2022. The most crucial aspect of the DTC model is to ensure the timely and safe delivery of the customers’ precious products. Consumers have come to value fast delivery with a reasonable delivery cost. To remain competitive, DTC companies must offer transparent delivery services where consumers can track their order, have the option of fast delivery at a reasonable/ affordable cost in order to ensure a pleasant shopping experience for consumers.

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