D2C or direct-to-consumer is one of the major e-commerce trends in 2022 to look for. The direct-to-consumer business model has already had a major impact on the e-commerce landscape in the USA and is also becoming increasingly important in the UK and other major European e-commerce markets. So, prepare to jump onto the bandwagon of this disruptive trend or level your current strategy up.
In this blog you will learn the following:
D2C is a type of online retail sales strategy where a business will market, sell and ship a product directly to the customer. This means that there is no middleman to promote or distribute the products.
Since there is no middleman involved, the products can be sold and shipped directly to the customer either at lower prices or with a higher profit margin. In addition, a D2C seller retains total control over the operations of the business.
In contrast to brick-and-mortar sales, direct-to-consumer companies target their potential customers with direct advertising, as well as social media and content marketing. This strategy has huge potential to get their target group’s attention on an individual level and in the most cost-efficient way possible.
Advertising measures such as Google Ads and marketing activities on social platforms like Instagram, TikTok, LinkedIn, Facebook, or YouTube can increase sales through impulse purchases and direct sales. Another way to maximize profits for D2C companies is through social media partnerships.
In addition, customers can often be won through other types of content marketing. For example, a successful blog or an SEO-optimized website is often worth its weight in gold to win new customers and turn existing buyers into loyal shoppers.
Here is a chart that shows which channels D2C brands use most often to acquire new customers. The data comes from a study by Yotpo.
All these strategies have in common that the e-commerce brand is in direct contact with its target customers/audience. In addition to often lower costs, this brings further advantages. Customers with whom companies communicate directly:
In addition, and this is often the most important factor, these customers provide valuable feedback. Knowing what customers like and, usually more importantly, what they don’t like, is worth more than a sale in many cases. In this way, D2C e-commerce companies save resources in market research and always keep an eye on their customers’ preferences and wishes- That way they can stay ahead of new trends.
Another important factor of D2C marketing is creativity. One of our favorite examples of this is a Youtube video from 2012 published by the back then small direct-to-customer company, MillionDollarShaveClub.
This video, which has more than 27 million views to date, and similar efforts, have helped the company to challenge industry giants such as Gillette, and gain enormous publicity. The simple business model then enabled customers to be won quickly and easily. Subsequently, the products could be sold without a middleman, and thus at a low price. This ultimately resulted in Unilever buying the company for $1 billion in 2016.
One question that occurs quite often is, what is the difference between D2C (direct-to-consumer) and B2C (business-to-consumer)? The first thing to note is that all D2C activities are categorized as B2C at the same time, while not all B2C companies automatically have a D2C strategy.
Sounds complicated, but it’s not. After all, any company that sells products to end customers, with or without a middleman, is a B2C company. If this is done directly and without intermediaries, the company is also considered a D2C company by definition.
All D2C is B2C but not all B2C is D2C.
By the way, marketplaces and e-commerce platforms are also considered intermediaries (middlemen). For example, if an online retailer sells its product via Amazon, this is not considered a D2C business. Amazon and Co. on the other hand justify the accruing duties by the increased visibility and the increased traffic.
By the way, if sales are made in large quantities to other companies, this is called B2B (business-to-business) trade.
In the U.S., where the popularity of D2C brands has figuratively exploded in recent years, it has quickly become apparent that self-operated warehouses and in-house order fulfillment are holding back the growth of direct-to-consumer companies. Similar developments in direct-to-consumer fulfillment and logistics can be expected and already are seen in the UK and Europe.
The simplest solution for fast-growing online retailers is working with so-called 3PL partners. By outsourcing and automating order fulfillment, bottlenecks can be prevented. At the same time, specialized and optimized processes reduce or eliminate errors and guarantee efficient operations.
Moreover, having optimized fulfillment will also render cost-effective shipping and a top-notch customer experience that can go toe-to-toe with industry giants like Amazon and Co. However, D2C brands can retain their individuality when working with fulfillment service providers like byrd. For example, individually branded packaging can be used as a differentiator from competitors.
In addition to the benefits mentioned above, such as fast and cost-effective delivery and branded packaging, byrd’s strong European fulfillment network is one factor that has been simplifying the business lives of many D2C brands. Numerous locations in Europe’s largest e-commerce markets allow for decentralized warehousing that facilitates cross-border fulfillment and shipping and enables geographic proximity to your end customers.
byrd’s all-in-one fulfillment tool integrates your shop seamlessly with all leading e-commerce systems such as Shopify, WooCommerce, Amazon, Plentymarkets, Shopware, and similar in just a few minutes and guarantees a smooth and well-organized live data transfer. Furthermore, you also benefit from shipping flexibility due to years of close cooperation with our international shipping service partner network. This is, as has been shown especially in times of crisis, of crucial importance for B2C as well as D2C companies.
In addition to the DollarShaveClub company mentioned above, there are hundreds of other online companies that have celebrated incredible success with a D2C business model and are still putting up impressive numbers.
Another company that is considered a prime example in this regard is Casper Mattresses. By selling mattresses in a direct-to-consumer way, $100 million in revenue was generated in just 2 years. How is this possible?
Casper quickly realized that there is a big, even too big, selection of mattresses available that are not all that different from each other. Every one of us has had this experience – if there is too much choice, a decision is postponed or a purchase is generally not made. In marketing psychology, this is known as the “choice overload” effect.
So what did Casper do? Exactly, they offered only one mattress. So instead of creating the optimal mattresses for back sleepers, side sleepers, and so on, they simply worked on one single mattress, “the best mattress.”
The sales figures speak for themselves. So do, by the way, the more than 20,000 reviews on Google with an average of 4.4 stars (after 3 minutes of scrolling, we still couldn’t find a review that was less than the maximum of 5 stars).
One of the many success stories from the D2C sector in Europe has been written by Sober Berlin. With the help of their Shopify online store, the founders Philipp and Simon were able to successfully sell their skincare products to men. Together with Prof. Dr. Michael Schirner, they developed a skincare product that was specially adapted to male skin. Incidentally, they received awards such as the IF Design Award and the Plus X Award for their products.
Together with byrd as their fulfillment partner, the two founders and their team were able to grow successfully. Outsourcing their order fulfillment, allowed them to work on and not in their business. Their success speaks for itself.
We would notice an omission above all in the time that byrd currently saves us since we don’t have to worry at all about packing and delivering parcels to the post office. This is of very big value for us.
- Simon Schier, Co-Founder Sober Berlin
D2C is an unstoppable trend in online commerce that will shape the e-commerce landscape even more in the future. As such, this business model has already enabled numerous companies to grow into unicorns (companies worth more than $1 billion), and, granted, D2C commerce brings many benefits to e-commerce companies. Some of these are increased customer proximity, greater control over business processes, and a reduction in costs.
However, order fulfillment and the associated logistics set-up become all the more important. 3PL and fulfillment partners like byrd have proven to be attractive solutions for many e-commerce companies. They simplify business processes, enable efficient workflows, and offer end-customers a good customer experience through fast delivery. So, if you’re in D2C business, working with a fulfillment company could be just the right thing to do.