D2C e-commerce

Definition of D2C e-commerce

D2C e-commerce is when manufacturers/producers sell their products online directly to end-consumers.

What is the difference between D2C e-commerce and a traditional retailer business model?

D2C e-commerce is when the manufacturer/producer sells its products/produce directly to consumers from their web store. A more traditional retailer business model goes from the manufacturer/producers > to a wholesaler > to a distributor > to retailers > and then finally to a consumer.

The D2C e-commerce model quite literally “cuts out” the middleman. Research has also shown that 55% of consumers prefer to shop directly with the brand manufacturer over retailers.

The traditional retailer business model deals with bulk purchases, so for a manufacturer to start selling direct-to-consumer they’d have to start selling individual items. This essentially is why most manufacturers have not yet switched to a D2C strategy, as their entire business revolves around selling products in bulk.

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What are the benefits of D2C e-commerce?

An omnichannel experience

A huge benefit of having a D2C e-commerce strategy is that manufacturers get full control of all their activities, from packaging to marketing. Meaning they can also create an omnichannel experience for their end consumers. Click here to read more about omnichannel strategies.

More control over brand reputation

In a traditional retailer business model, a manufacturer has little control when their products are being sold by retailers. A D2C e-commerce strategy gives a manufacturer back the control over its marketing efforts and sales strategies, and it puts the company directly in contact with the end-consumer. D2C gives a manufacturer total control of its customers’ experience from the research phase to purchase.

Truly understanding your customers

Manufacturers who have a traditional retailer business model rarely interact with the consumers who have purchased their products. So, they don’t have many opportunities to get to know their end-consumers, other than by conducting target market research to try to gain a better understanding of their likes and dislikes.

Learn more about the benefits of D2C e-commerce.

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What are the challenges of D2C e-commerce?

Competing with retailers

With a D2C e-commerce strategy, the biggest challenge for manufacturers is having to compete with retailers. Retailers already have experience in selling to consumers and a good understanding of their clients and the retail market.

Order fulfillment

Newly formed D2C companies often struggle with order fulfillment. Not only does a manufacturer have to ship their products, but they also need to compete with Amazon and many other online retailers with next-day shipping.

Marketing, sales and customer service

D2C e-commerce also means that manufacturers need to start looking after their marketing strategies and sales strategies. This often requires hiring a new team.

What does the future of D2C e-commerce look like?

D2C is the future. Especially if there is a continual disruption happening across supply chains. More manufacturers will turn to D2C e-commerce to sell to end-consumers directly.

Learn more about D2C in the blog: Direct-to-consumer business model in e-commerce, or download the D2C sales guide.

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