Direct-to-Consumer: What You Need to Know
As eCommerce reshapes how we buy products, consumer expectations continue to shift, seeking meaningful connections and highly personalized shopping experiences from brands. Providing unique interactions enables businesses to stand out from the competition and go the direct-to-consumer (DTC) route, leading to established consumer relationships that foster loyalty and trust.
The ushering of the DTC route means eliminating the wholesale intermediary and empowering brands to make their own decisions. By having total control over your inventory, packaging, and shipping, you create a customized distribution process that only your customers can experience.
But how does direct-to-consumer work? This article will discuss everything you need to know about DTC to help you transition to online retail.
What is direct-to-consumer?
Direct-to-consumer is an online retail model that sells products directly to customers. No wholesalers, no retailers, and no third-party fulfillment services. By skipping the middlemen, DTC brands can develop stronger customer relationships and cater to their needs/preferences.
Traditional retail models often rely on three key entities to deliver products to customers; manufacturers, wholesalers, and retailers. Wholesalers purchase bulk orders from manufacturers and sell them to retailers to reach the end user. This process encompasses the brick-and-mortar shopping experience that customers are familiar with, like going to grocery stores and buying products in person.
Why do businesses sell direct-to-consumer?
There are plenty of reasons why businesses choose to go the direct-to-consumer route. Having end-to-end control of the selling process allows for greater flexibility in marketing, communication, and brand development. Here’s why businesses prefer DTC over other eCommerce strategies:
1. Boost brand engagement
One of the main benefits of selling direct-to-consumer is increased brand engagement. Businesses can interact with their customers more consistently and maintain close relationships that build consumer loyalty. Unlike retailers where they present the product to the end user, DTC businesses can influence the sale and make a lasting impression on their customers.
By increasing brand engagement, you can maximize the potential of your marketing efforts by having full control over your brand’s messaging.
2. Gather insights from customers
Making data-driven decisions is key to providing a positive customer experience. When you sell direct-to-consumer, you can acquire information from customers that can help fuel your marketing strategies. You learn more about their buying habits, spending power, and social media presence to leverage your product’s positioning in the marketplace.
For example, you can create a post-sale survey that gathers feedback from consumers. You get a pulse on how customers feel about your brand, and you can use that information to further improve your products/services.
3. Meet consumer expectations
There’s a reason why brands are shifting towards a direct-to-consumer approach, and that’s because customers prefer buying direct instead of from retailers. According to Statista, around 64% of customers buy directly from brands due to cheaper prices and better access to product information.
The numbers make sense because consumers want to purchase from a brand that understands their pain points and how they can proactively solve them. By selling DTC to customers, you put your best foot forward and let them experience each aspect of your brand’s excellence.
4. Offer better deals to customers
It’s no secret that customers look for deals when shopping online. Whether free delivery or discounted prices, every buyer wants the most value out of their purchase. By selling direct-to-consumer, you can maintain better control over your product’s pricing and offer better deals to customers.
Brands can also achieve higher profit margins by cutting out intermediaries and selling them for the same price (if not lower) than retailers, thus impacting their bottom line. It’s a win-win for both the brand and the consumers as they continue to develop stronger relationships with each transaction completed.
5. Open up cross-selling opportunities
Brands that take the direct-to-consumer approach can benefit from increased cross-selling opportunities as customers learn more about their business. You can leverage the data gathered from surveys, reviews, and feedback to offer bundle sales, recommend relevant products and suggest services that fit their needs/interests.
The key to successful cross-selling is to build customer journeys that help identify when a customer is ready for cross-selling pitches. The last thing you want is to sell a different product or service to a user who hasn’t had enough time to form a favorable opinion of your business.
Wait until customer satisfaction kicks in, and then hit them with a pitch of relevant products/services.
Best practices for direct-to-consumer selling
If you plan on selling direct-to-consumer, you need to know a couple of things. Follow these best practices to ensure your business generates as many sales as possible:
1. Emphasize customer support
A quality support team is the backbone of a direct-to-consumer business, as customers value brands that listen to their feedback and deliver on their value proposition. Good aftersales support means going the extra mile to ensure the customer’s satisfaction, whether through product warranties or timely replies.
Chatbots have become a key component in every brand’s customer support team, as they enable businesses to maintain 24/7 communication for customers. Look for a reliable chatbot solution with the features you need to deliver superior customer service.
2. Deliver on the unique selling proposition
Everyone wants to start selling products online, but the question is, what makes you different from the competition? Customers love buying from innovative brands with fresh ideas and creative execution. The more you can differentiate your products/services, the more customers you’ll be able to attract.
To deliver on the unique selling proposition (USP), you want to strike the perfect balance between your brand’s biggest strengths and your customers’ biggest wants. For example, Domino’s Pizza delivers on the USP by highlighting its 30-minute free pizza delivery policy. They rely on their speedy logistics to guarantee customer satisfaction, something that you don’t see with other pizza brands.
Make your business stand out from the crowd, and reinforce the idea of direct-to-consumer even further.
3. Listen to your customers
Reviewing customer feedback opens up a window of opportunity for cultivating long-term consumer relationships. By listening to what your customer says, you demonstrate the ability to adapt and overcome challenges that come with selling products to your audience. Direct-to-consumer is all about the consumer experience, and one way to elevate that is to address pain points that your customers face regularly.
Over time, your brand will be able to gather positive reviews that will shape its credibility and reputation. If you plan on selling direct-to-consumer, make sure to cater to their needs and take action based on the insights gathered from your customers.
Direct-to-consumer is taking over as the preferred retail model due to its higher profit margins and wider control over brand messaging. Hopefully, this article gives you in-depth information about DTC and how you can implement it to secure more sales and position your business ahead of the pack.
Need help with sorting out financial records from your business? Our team of expert bookkeepers is ready to assist you! Feel free to fill out the form, and we’ll get back to you shortly.