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Direct-to-Consumer Trends

Direct-to-Consumer Model

What is D2C e-commerce? Direct-to-consumer, or DTC, has been in the spotlight in the retail and e-commerce industry over the past year. Direct-to-consumer products are sold directly to consumers, bypassing intermediaries such as wholesalers or retailers Consider the Molson Coors Beverage Company as an example. As the pandemic disrupted its traditional distribution channels, the company pivoted to a direct-to-consumer model through its online store and consequently increased sales by 188% month over month. Some top direct-to-consumer brands include Allbirds, Warby Parker, Gymshark, as well as Nike, Adidas, and Under Armour.

Difference Between DTC and Traditional Retail Strategies

Traditionally, retailers send their products to a wholesaler or distributor, who then delivers them to the final consumer. Some of the disadvantages of such traditional retail strategies include being more vulnerable to supply chain risks, and also not being in control of the end-to-end customer experience. . That is why more retailers are shifting away from traditional retail to selling directly to the consumer, also known as direct-to-consumer. Unlike traditional retailers, selling direct-to-customer allows brands to establish a direct connection with customers, which helps build brand loyalty. Furthermore, a manufacturer will have little to no control over how traditional retailers market and distribute their products. On the other hand, a direct-to-consumer e-commerce business model provides manufacturers control over their sales and marketing efforts and gives them direct access to end-consumers.

Direct-to-Consumer Benefits

There are many benefits to the direct-to-consumer model. First, it gives businesses control over distribution networks. With their efforts and resources focused on one primary distribution channel, businesses can focus on effective scaling while avoiding a lot of overhead. Second, selling direct-to-consumer gives manufacturers visibility of the entire customer journey. This allows brands to understand customer feedback on the product and work on improvements quickly. Manufacturers may also benefit from increased margins by cutting out the middlemen, since there is no wholesaler, retailer, or marketplace involved in the process. Nevertheless, retailers should still look into establishing a multi-channel retail or an omnichannel strategy in the long-term, to diversify risks and capture a larger share of the consumer market.

Direct-to-Consumer Marketing

To be successful in DTC e-commerce, businesses must establish an effective direct-to-consumer marketing strategy to stand out from the competitive DTC landscape. For example, having a robust social media strategy helps to increase brand recognition for DTC brands. Your social media page can become a space for you to share product information and build a DTC community while engaging with your followers. Gymshark’s direct-to-customer marketing strategy, for example, has contributed to its tremendous growth. It has created a community around its gym clothing by collaborating with influencers and organizing live events on Facebook.