What is D2C e-commerce

What is D2C e-commerce?

Direct-to-consumer e-commerce, commonly known as D2C e-commerce, is a term for an e-commerce strategy where traditional B2B businesses start selling directly to end-consumers via an e-commerce site. Like for example, farmers selling directly to a customer who will consume their produce.

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-commercemodel 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.

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.

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 pandemics continue to break out around the globe. More manufacturers will turn to D2C e-commerce to sell to end-consumers directly. Learn more about manufacturers/producers who are turning to D2C e-commerce in times of need, or learn how a Sana Commerce solution for D2C e-commerce makes transitioning to a brand-new business model simple.

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