The global economic context as well as growing digital innovations have given birth for several years now to an increasingly used electronic commerce model: the D2C model or also called Direct-to-Consumer. This practice of removing any intermediary in the process of selling a product continues to attract new brands.
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What is D2C?
D2C or also referred to as Direct-to-consumer is an online distribution model whereby a brand sells its products directly to the consumer. The manufacturer therefore manages all stages of his business himself, from sourcing to shipping, marketing and sales. No distributor enters the loop which therefore means that there is no margin for the brand.
In 2021, in the United States, the increase in sales of D2C was expected to amount to $ 21.25 billion. Indeed, the number of brands developing this commercial concept is constantly increasing. The D2C combines a number of advantages for launching a digital brand, but also a few disadvantages.
What are the advantages and disadvantages of D2C?
Advantages of D2C
First of all, the undeniable advantage of D2C is characterized by the brand image control. In the absence of retailers, the seller can therefore manage and control his image and history as he pleases. He masters the brand’s communication with buyers and can thus improve the commercial relationship by developing a proactive approach to customer service. The manufacturer can play alone on the brand image that he wishes to convey. Its own identity is respected.
The study of customer data also allows the brand toaccess a lot of live information. This access to information offers a detailed look at what consumers’ needs and expectations are. Thus the D2C company optimizes the offers offered to consumers. This allows him to have a fresh look, based on all the information collected from customers and therefore to adjust the products offered for sale. Direct marketing to consumers offers the company real added value by being able to closely analyze the behavior of buyers.
The concept of D2C allows the brand to retain customers while benefiting from a strong commitment from them. The seller having the freedom to manage his business as he wishes, without an intermediary, can thus set up any communication strategy he wishes. It can in the same way create an audience committed to the brand. The company can develop its communication strategy by creating personalized content on social networks by proposing special offers for example. By communicating directly with consumers, the company gives itself the right to earn their trust and encourage them to join its brand.
The D2C model is also characterized by the advantage of presenting a better profitability than a traditional business model. The company sells its products without sharing the margin with other external companies. It therefore maintains control over all stages from manufacturing to distribution, saving money. Knowledge and analysis of the collected customer data also allows more precise targeting of the marketing actions to be implemented. Therefore, again, the company is saving on the marketing budget.
The increasingly significant advantage for buyers today is the diversity of channels. The D2C method allows consumers to buy products directly online from the manufacturer, anytime, and most importantly, from anywhere. Several possibilities are offered to them to make the purchase. It is a real growth lever for e-merchants. The needs of consumers can be met quickly and at any time by increasing the number of digital communication channels. The company benefits from greater flexibility in pricing, promotions and marketing.
Disadvantages of D2C
In order to remain competitive in the face of competition, the company opting for the D2C method must ensure a perfect order tracking. Indeed, faced with the large international groups of online commerce, the company must ensure logistics in an expert way. In a world where everything always goes too fast, consumers’ expectations are constantly changing and consumers expect fast delivery times. It is even a key element in the purchasing decision of consumers. The D2C model must meet this requirement, which implies for the company to rethink the entire control system in place in order to be as efficient as possible.
The effectiveness of the D2C model is also characterized by the implementation of a flawless marketing and sales strategy. The competition is important in e-commerce and just having an online store is not enough. The company must invest in digital marketing actions. She must devote significant time and resources to install a system to acquire customers. The seller can therefore call on a digital strategy agency or surround himself with an internal team of experts specializing in digital marketing. Whatever strategy is put in place, it must be complete and reliable in order to promote the company’s products.
A company wishing to launch its activity with the D2C process must be aware that depending on the business niche in which it sets up, it risks facing very tough competition. Large companies are already in place or will enter the market in the coming months. The brand must therefore remain competitive by continuously analyzing the competition. For a small structure, this represents a major challenge. It must imperatively keep informed of all the actions of its direct competitors and have an excellent knowledge of the market and its evolution.
Finally, the D2C model nevertheless generates additional costs, at the level of commercial operations for example. The company does not go through any intermediary, it must therefore bear the expenses related to advertising campaigns, product promotions and other costs, which represents a significant cost.
Examples of companies doing D2C
The French Brief
Launched in 2011 by Guillaume Gibault, the Le Slip Français brand has established itself as one of the best business model. Most of its sales are made on the internet. The initial idea was more than simple: briefs made in France. The brand has been able to play on an excellent marketing strategy and especially by creating craze on social networks. By creating a loyal community, by offering targeted digital content, the Le Slip Français brand has positioned itself as one of the biggest brands of men’s underwear. Its strong positioning on the web and without any intermediary, the brand quickly gained market share.
The Sézane brand represents THE digital fashion label! The company created by its founder Morgane Sézalory in 2013 is the very first online French fashion brand. The company was able to stand out quickly thanks to its customer approach. This brand born on the internet without any intermediary has invested very clearly in the quality of its products by always offering them at a fair price. Sézane has bet on an eco-responsible commitment by not making any overproduction, by offering neither sales nor destruction. She has put in place an ultra-powerful marketing strategy using social networks to exchange every day with her community. Today, the brand has more than 1.3 million subscribers.
Here again, a fine example of a D2C model is presented with the Envie de Fraise brand. It is the first digital fashion brand offering maternity clothes. Its founder Anne-Laure Constanza created this online business in 2006. The brand was nested from the start on a targeted offer with sustainable maternity clothes at a fair price. Its founder had only one objective, which was to develop her brand exclusively on the internet, without intermediaries and to bet everything on a quality product. It has capitalized exclusively on digital by removing all market constraints. Envie de Fraise works in close collaboration with a team of experts specializing in digital marketing. They have implemented an effective marketing policy for natural referencing and social networks.
The D2C therefore represents a new model of electronic commerce in constant growth. Despite certain challenges for the company to take into account, this concept offers endless opportunities. By working more specifically on the digital marketing strategy, the brand can thus create a unique link with customers, optimize its development on the web and have total control over its brand.
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