If you create something and want to sell it to a broad audience, you might have heard about DTC.
Direct-to-consumer (DTC/D2C) is a model where you don’t rely on the middleman, such as a third-party retailer. Instead, you take the reins and connect with consumers in your own way. You’re in charge of everything:
While it may sound difficult to cover, you speed up the process and don’t play phone tag with suppliers, distributors, and retailers. Do you want to roll out a new product? Share it on social media channels or via emails. Do you need to learn more about potential buyers? Do it right at first hand with the help of surveys on the website, online behavior analytics, and comments on forums.
Such an approach provides numerous benefits. No wonder this market rapidly grows in the post-pandemic era, with 2024 sales estimated to be valued at $161.22 billion.
However, it’s not all roses, as you need to be prepared for some challenges. The good part is that by securing your business against them, you can enjoy what any other commerce model can’t offer:
This article will guide you through DTC eCommerce and provide examples of successful DTC eCommerce brands. Let’s maximize your sales, brand loyalty, and referral marketing effectiveness.
Understanding DTC eCommerce
What Is DTC?
What’s the deal with DTC, and why do everyone from fashion brands to online marketplaces join this movement? At its heart, direct-to-consumer (DTC) is about selling directly to end customers via online platforms or in brick-and-mortar stores. For example, it can be an online store offering sneakers straight on the brand’s eCommerce website.
You, the maker, don’t have to search for suppliers and distributors. You route all the efforts to find new customers, maximize repeat purchases, and ensure higher customer satisfaction.
You’re also responsible for website maintenance, its optimization for search engines, and delivering a seamless online shopping experience. For instance, you may need to opt for advanced eCommerce technologies like Shopify Headless (if you’re a Shopify store owner), artificial intelligence, or augmented reality.
The result? This direct access allows DTC brands to collect valuable customer data, tailoring their marketing strategies and products to meet their audience’s exact needs and desires.
The Evolution of DTC
DTC eCommerce has gracefully blossomed with the advent of digital technology. Yet, its roots are deeply entwined with the very essence of commerce. Let’s skip the part where DTC selling was about door-to-door transactions.
As the Internet appeared, many retail stores have moved their marketing efforts online to spread their messages across various channels. Social media and eCommerce platforms have transformed these interactions into purchases.
Nowadays, you can set up an eCommerce store even without coding. There are many user-friendly solutions with drag-and-drop interfaces that streamline website creation. Plus, you can opt for social commerce and sell on social media. All of these advancements have contributed to the fast expansion of direct-to-consumer (DTC).
DTC Advantages and Challenges
Reasons to Start a DTC Company
The perks of launching a DTC business are multiple, such as:
- . Small and medium-sized companies can deliver their unique value proposition without getting lost on the shelves of larger marketplaces.
- . DTC brands can tell their stories authentically and decide how to promote their mission and values. No pressure from third-party retailers
- . Would your dress look better in another color or fabric? Do your stickers fall off the plastic and would benefit from better adhesive? Learn everything about your products through direct communication and quickly adapt based on the insights. By meeting customer expectations, you can set yourself apart from other consumer brands.
- . Access to customer data enables DTC brands to improve the customer experience with personalized product recommendations and resonating marketing messages.
- . Direct relationships make people feel more attached to the company and encourage them to become part of the community of existing customers. Whether you’re an eco-conscious brand or support diversity in the workplace, shoppers know where their money goes.
- . Thanks to their digital-first nature, DTC brands can reach customers anywhere in the world. You don’t have to set up physical stores or distribution channels to get in front of the audience in varied locations. With a well-optimized online presence, you can grow the market, bypassing traditional retail channels.
Why a DTC Business Model May Not Be Right for You
Notwithstanding the obvious advantages, DTC brands have unique difficulties that call for careful consideration and navigation:
Market saturation
The speedy growth of DTC eCommerce companies means a new business has to differentiate itself from competitors in the overcrowded market. Many consumer brands, if not most of them, offer DTC services, which makes the industry unfriendly for startups.
When working with retail partners, you can count on their established audience. With DTC, you’re on your own, having to spend more time getting into the shopper’s mind.
Hurdles with supply chain management
Shipping is one of the essential parts of a positive customer experience. Even the best quality of products can’t overshadow the inability to get them promptly and at a reasonable price. That’s why many consumers choose traditional stores over DTC ones. As a direct-to-consumer brand, you have several delivery options:
The need to excel in customer service
In this business model, building customer relationships also falls on your shoulders. You need to acquire new customers, nurture existing ones, and proactively enhance the customer experience at every touchpoint. Speedy issue resolution is key. It contributes to customer loyalty, leading to higher customer lifetime value.
Balancing costs
As a DTC, you may have a larger budget, but you’ll have to spend more, too. Starting your own DTC brand requires a significant investment due to the costs associated with staff, fulfillment centers, website(s), and marketing.
Working with retail partners eliminates some of these costs, particularly fulfillment. However, you’ll have to consider these expenses if you handle the entire process yourself. From social media to paid advertising, the key is to sustain profitability without shelling out thousands of dollars or compromising on competitive pricing.
Navigating retail relationships
Suppose you’ve been operating on a solely wholesale model for some time, promoting goods through retailers. Now, you shift from this framework to hybrid or strict DTC options. In such a case, maintaining positive relationships with retail partners can be one of the significant dilemmas.
These merchants may begin to fear that your direct-to-consumer business will reduce their sales. Why? Because you’re competing for the same customer base. As a preventive measure, they may remove your product from their shelves or require you to give them a guaranteed threshold they can reach by selling your product.
DTC vs. Other Ecommerce Models
There are numerous ways to connect with the target market apart from DTC eCommerce. Let’s compare it with other well-known eCommerce models, such as:
- (B2B, bulk sales, and building long-term business relationships);
- (B2C, catering to a mass audience with a narrow or diverse product range);
- (similar to B2C but providing a wider choice of brands and product assortment).
In this table, you’ll find a comparative analysis along with some insights into how these models shape price, product range, and customer experience.
| Aspect | DTC | B2B | B2C | Marketplace |
| Pricing | It’s often competitive due to the absence of a middleman. Sellers can offer direct discounts and promotions. | This approach typically involves volume discounts. Pricing can be negotiable based on relationships. | Pricing is competitive but includes retail markup. | It’s mostly competitive and ranges widely due to multiple sellers. |
| Product range | It’s focused and curated. Brands sell a narrower selection in which they specialize. | It’s broad, catering to business needs across different sectors. | It’s broad and diverse, targeting unique customer preferences. | It’s comprehensive, including products from a multitude of sellers. |
| Customer experience | It’s highly personalized. Direct interaction ensures a tailored customer journey. | It’s tailored to business representatives with an emphasis on efficiency and reliability. | It’s standardized but with efforts to personalize where possible. | It varies due to multiple sellers and depends on individual merchant’s efforts. |
| Customer loyalty | There may be more loyal customers due to personalized experience and direct brand relationships. | It’s built on long-term business relationships and contracts. | It can be high but very competitive. | It depends on marketplace policies and individual seller performance. |
| Sales channel | A company sells primarily online through its own platforms, social media, and email marketing. | There are direct sales teams and online portals for bulk orders. | Brands sell via online stores or physical retail. | People shop online on large platforms hosting multiple sellers. |
| Supply chain management | A DTC brand has direct control over production, logistics, and distribution. | It’s often complex with bulk orders and customized solutions. | It’s standardized with a focus on efficiency. | It’s managed by sellers, with the marketplace providing the venue to place goods. |
As you can see, online shoppers can benefit from DTC sales as there are no retailer or distributor markups. DTC brands can set lower prices or forward the saved money to enhance product development and customer service. The result is higher-quality goods and services.
However, direct-to-consumer brands can’t offer as diverse products as B2C actors and marketplaces. On the bright side, such an approach lets them specialize and innovate.
At last, B2C and marketplaces can’t compare with the depth of personalization the DTC model supports. No matter how hard they try, DTC brands win over them. Direct communication with the manufacturer on social media, email, and dedicated customer service teams paves the way for unique journeys for each buyer, enhancing customer retention.
Praiseworthy Examples of Prosperous DTC Brands
Now, let’s explore some thriving DTC brand examples from different industries. From fashion and beauty to health and beverages, these businesses create an unforgettable experience for their online customers. Some of them, like Allbirds and Warby Parker, also have physical stores to make the shopping process more tangible.
Warby Parker
Screenshot taken on the official Warby Parker website
This eyewear provider has exceeded customer expectations and made stylish glasses affordable for consumers from various walks of life. Apart from its pricing strategy, its online store offers a convenient virtual try-on and a home try-on program. This move eliminates one of the biggest hurdles in buying glasses online: uncertainty. Thus, shoppers don’t have to visit the brick-and-mortar store to see how the product fits their style.
Allbirds
Screenshot taken on the official Allbirds website
This company can teach you a lesson on how to grow from a startup with the first shoe made out of bamboo into an eCommerce company with $240M in value. They specialize in crafting sustainable footwear made from natural materials.
However, as the Vice President responsible for the Allbirds’ marketing strategy states, the staff goes beyond the goods. From organizing the headquarters to commutes, the team strives to be as carbon-neutral as possible. To strengthen its success, Allbirds leverages a Shopify platform that lets it efficiently scale DTC operations.
Bombas
Screenshot taken on the official Bombas website
Amidst the ups and downs of the DTC industry, Bombas is among the DTC eCommerce companies that weathered the storm of unpredictability and economic downturns. The store is primarily recognized for its socks. It started its online-only operations in 2013 and has steadily expanded ever since.
It now generates over $300 million annually. And although DTC eCommerce is still one of its main revenue streams, it has grown to include retail stores like Dick’s Sporting Goods and Nordstrom.
Co-founders David Heath and Randy Goldberg believe that Bombas has stood the test of time because they decided to concentrate on its core capabilities and avoid rapid expansion. Good job for Bombas!
Glossier
Screenshot taken on the official Glossier website
The cosmetics brand Glossier began its journey by providing makeup and skincare goods. The company is renowned for its tasteful branding (pastel hues and simple packaging) and the amount of effort it directs to cultivate customer relationships.
One of the reasons behind its triumph is the word-of-mouth marketing it generates through influencers and social media. For example, the company incorporates celebrity interviews about favorite makeup products in its content marketing strategy to drive online sales. It goes so far as to allow the audience to contribute to product development.
Now, it has physical storefronts. However, it continues to operate under a direct-to-consumer business model.
Olipop
Screenshot taken on the official Olipop website
Olipop is a socially aware brand that prides itself on assisting customers in making healthier choices. What do you think of the goods provided by legacy brands like Pepsi and Coke? While you probably won’t agree that soda can be good for your body, Olipop has emerged to challenge this belief.
The direct-to-consumer company has also chosen a daring marketing strategy that most DTC brands would stay away from. It ditched paid advertising to capitalize on organic content creation and collaboration with influencers. Thanks to this move, the brand can drive DTC sales in a more natural and authentic way.
Building a DTC Brand: Strategies for Growth
Are you prepared to launch your own direct-to-consumer online store? Let’s go over the steps involved in selling products and services online using this method. If you currently have a DTC eCommerce business, these tips are still useful. By following them, you can boost sales and improve store metrics.
Starting Your DTC Business
The first stage is determining the product or niche to which you want to dedicate your time. For example, you can make goods and sell them on Etsy. Alternatively, consider contacting a manufacturer to find a specific product you fervently believe in. Or perhaps you’ve seen a gap you’re eager to bridge.
That’s where you need to conduct market research. Who’s your target audience? What do they value? Where do they hang out online?
Then, decide on the way you’re going to get your product. Will you produce it in-house or collaborate with a manufacturer? Which business are you going to partner with for packaging? Answer these questions and get some basic prototypes made and tested.
Develop a clear, compelling brand identity that speaks to your target demographic, including:
- brand voice;
- aesthetics;
- values;
- unique selling proposition.
If you have a website or app, evaluate its design to determine whether it’s clean, user-friendly, and reflects your brand identity. Then, optimize the website for search engines to help potential customers find you.
Marketing Strategies for DTC Brands: From Social Media Platforms to Customer Feedback
So, you’ve settled on the product line. How do you get the word out about your offerings? Leverage digital marketing methods, such as:
- targeted ads;
- influencer marketing;
- social media;
- referrals;
- word-of-mouth marketing, and so on.
Explore all the possible ways to utilize each channel. For example, many social media networks provide social commerce opportunities, i.e., you can sell products right there without setting up a website or app. These are Facebook, Pinterest, Instagram, TikTok, and Snapchat.
Plus, think about going omnichannel to reach clients wherever they are, be it by blog, email, social media, or another touchpoint. That’s where software solutions like Pacvue Commerce may help, namely:
- boost the return on advertising expenditure (ROAS);
- save marketing teams time;
- automate mundane tasks;
- introduce changes at scale;
- research keywords;
- make bulk edits for keyword bids.
YouTubers, TikTokers, Instagrammers, and other social media celebrities can give you more credibility and increase the audience reach. It’s a fast and efficient strategy to get your messaging in front of millions of potential buyers. Choose well-known figures in your DTC eCommerce product sector. Make sure their values correspond to your brand’s.
Honest customer opinions shared via reviews and comments can increase social currency. Incorporating them onto product pages, even unfavorable ones, promotes product transparency and showcases firsthand user experiences. Adding negative reviews may seem counterproductive. But, when addressed, they can create realistic expectations for consumers.
Logistics and Supply Chain Optimization
Give customers the freedom to choose how they want to pay for and receive goods. Provide a range of shipping options, including standard and expedited, and try to ensure free shipping.
If it cuts into your profit margins, implement a free shipping threshold. It encourages shoppers to buy more to get their products delivered free of charge. Accept various payment methods like credit cards, ACH transfers, and foreign currencies.
Overcoming DTC Challenges when Scaling
To eliminate the challenges mentioned above and build a resilient DTC eCommerce brand, apply these recommendations:
- Invest in scalable solutions early on to support the changing needs of a growing business.
- Make sure your supply chain, production, and customer service are ready for expansion. Keep an eye on inventory levels to avoid stockouts or overstock situations.
- Growing DTC brands can lose the close connection they once had with their buyers, so you need to factor maintaining relationships into your plan. Continue to utilize social media, email marketing, and direct engagement to keep the conversation going.
Direct-to-Consumer Selling: Conclusion
Let’s be honest: There are dangers associated with direct-to-consumer business models. That explains why some brands sell to wholesalers and retailers. You can also find examples when selling direct-to-consumer goods didn’t yield the desired results, driving the company towards insolvency.
At the same time, if a business succeeds, its ceiling will be higher than it would have been if it worked exclusively with retail partners. DTC eCommerce unquestionably has benefits. You aren’t giving big-box stores a hefty share of your sales. You aren’t giving up profit margins as you would when working with wholesalers.
DTC eCommerce can be an advantageous additional channel. And you don’t have to sacrifice collaborating with retailers and wholesalers. Well-known companies like Nike have shown how to enter the DTC space without jeopardizing retail relationships. Lots of DTC brands are DTC-first—not DTC-only. Embrace the DTC eCommerce model by crafting digitally native sectors for your brand, taking control of the customer experience, and ensuring repeat visits to your eCommerce store.
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