The retail industry is evolving. As time goes by, more and more business models are shifting the eCommerce world.
It's essential to know these business models in case you want to start or develop your eCommerce business.
Not only that, but customers are also changing. Nowadays, customers want to connect directly to the brands they're purchasing from. And that's DTC.
It allows you to skip all middlemen and sell directly to your customers.
So... that's why we're talking about DTC or the direct-to-consumer business model today. You'll learn...
- What is DTC or direct-to-consumer?
- What are the advantages of DTC?
- What are the usual challenges of DTC?
- 3 Ways to build a strong DTC brand.
- 3 Examples of DTC brands to inspire you.
If you want to remove the confusion surrounding the DTC business model... you'll have a great understanding after reading this blog!
Let's deep dive. Shall we?
What is DTC or direct-to-consumer?
You've certainly heard the term "DTC brand" before. And from the word itself, direct-to-consumer means a business is selling directly to customers.
Okay, if that sounds confusing... let's break it down.
In traditional retail, the manufacturer will supply the product to the wholesaler. Then to the distributor before going to the retailer. After that, the consumer will purchase the product from the retail stores.
But in a direct-to-consumer setting, the manufacturer or the brand sells the products directly to its consumers.
In short, the DTC model ditches third parties. The brands sell, market, pack, and ship the products.
Now, let's talk about...
The 3 advantages of the direct-to-consumer business model
1. Give a personalized experience
The DTC business model will give your customers a more personalized experience. How?
Since there are no other parties involved in fulfilling the orders and marketing... you have the freedom. You can control and oversee customer data.
This will help you provide your customers with personalized offers and curate your recommendations. As a result, you can...
2. Build genuine relationships with customers
Having control of your business means building genuine relationships with your customers.
You can reach out to them through your marketing and customer service channels, like social media and email.
And once you maintain excellent relationships with your customers, you can encourage customer loyalty moving forward. Having a DTC brand can give you that privilege.
Of course, a DTC business model can also give you...
3. Control over the business
It's your brand... you have control over the entire business. This includes the products, pricing, and marketing.
You have control over the marketing strategies to use, what is the brand messaging of your products, and more. It gives you the freedom to run your business however you want to.
But having a direct-to-consumer brand is not just full of advantages, because there are...
The 3 common challenges of having a DTC brand
1. Marketing costs
You have to market your products both offline and online. And that's not exactly cheap because you need to implement digital marketing strategies that will work for your business.
For example, you need to run Facebook ads, which will cost money. You also need to invest in content marketing, which means you need to purchase editing tools and other software.
Whether it's time or money, there will be costs in marketing your products to gain DTC sales. Another one is...
2. Improving customer experience
Having total control of your business means improving the customer journey is your job. You need to make sure everything is up to par.
Your website has to run smoothly, so they will have no problem placing orders. Your customer service must be available during the day if they have concerns. And more...
It's solely your job to make the customer's online shopping experience seamless. This means you constantly need to look over your channels and operations to ensure everything is running smoothly.
And this also includes...
3. Order fulfillment
A lot of orders means your DTC sales are going strong... but sometimes, it can be a headache. And since you don't have any third-party logistics helping you, it might give you a hard time.
If you're receiving high-volume orders every day... you might find yourself with hundreds of orders you need to fulfill and ship by the end of the week. Failure to do so might affect customer satisfaction.
So, these are the challenges of having a direct-to-consumer eCommerce brand.
You have control over the entire business... but it also gives you all the responsibility you need to fulfill so your customers will be happy.
But of course, despite these challenges... you can still thrive as a DTC brand! Here's...
How to create a robust direct-to-consumer eCommerce brand?
1. Build a strong digital marketing strategy
Having a digital marketing strategy is critical in promoting your direct-to-consumer brand. This will help you reach the right people who can be your paying customers.
These are some areas of digital marketing you can try:
💡 Email marketing
Email marketing should be a part of your strategy. It has many uses for your business and is not just limited to sending newsletters.
You can use this as a customer service tool or send retargeting emails. You can also remind your customers who abandoned their shopping carts.
💡 Social media marketing
Social media marketing will help you reach your target customers on social media. This will increase your brand awareness, especially since there are 4.70 billion people who use social media globally.
With the right strategy, you can connect with your target customers, boost brand awareness, and increase your sales.
💡 Influencer marketing
Influencer marketing is a way to promote your products through influential people online. This will make more target customers aware of your brand.
Why? Because an influencer with thousands of followers will talk about your brand. That's why it's crucial to collaborate with the right influencer for your brand.
You can implement these aspects of digital marketing, but there are more. Because having one will help you scale your DTC brand.
The next strategy you can try is...
2. Strive for brand loyalty
Loyal customers will return to your eCommerce store and support your future endeavors... like collections, new products, and more.
So, this should be one of your strategies: turning your customers into loyal ones.
One thing that could help you is rewarding customers who are repeatedly purchasing from your eCommerce store. You can also create a loyalty program to encourage more customers.
Another is by exceeding customer expectations. Customers wouldn't come back if they didn't like the product quality.
And of course, you can encourage brand loyalty if you...
3. Create a hassle-free customer experience
Your customers will come back if their shopping experience is remarkable. This will also help you in attracting new customers.
So, it's essential to...
- Have an enticing Shopify theme, which keeps the customers interested
- Offer excellent customer service if they have concerns
- Fulfill shipping and delivery on-time
- Have an uncomplicated checkout process
- Include FAQs or reviews in your products if customers need some push before purchasing the products.
- Check the loading speed of your website
By making the customer experience convenient... you can attract both new and loyal customers for your direct-to-consumer eCommerce business!
And to give you some inspiration, here are...
3 Great examples of direct-to-consumer brands
1. Olipop
Olipop is a healthy soda brand. What you can learn from Olipop is their power to solve a problem.
Many people like drinking soda, but it's unhealthy. So, they created a healthy option. This is the best example of solving a problem for your target market.
Customers can shop their products online but can also be found in other retail stores. It means Olipop is not sticking to one business model but expanding their horizons.
2. Glossier
Glossier is another successful direct-to-consumer brand. But what makes Glossier stand out is the fact that 70% of their sales are from referrals.
That's what makes them successful... their strategies focus on building a community. Then the community does the advertising for them!
And needless to say that their products are also top-quality, which is vital in making your DTC business thrive.
3. Bonobos
Bonobos is a direct-to-consumer menswear brand. What makes this company fantastic is how they position its brand online.
They say that however their customers fit, Bonobos will fit them. It's also focused on style. Not only that... Their social media strategy is also full of fun and non-transactional posts.
It's no surprise that they have over a hundred thousand followers on Instagram.
So, take these lessons with you and...
Create a strong direct-to-consumer eCommerce brand!
When consumers change the way they shop, it's time for you to adapt and try something new! You need to rethink your business and marketing strategy to cater to the needs of your target customers.
And through the direct-to-consumer model, you can build long-term relationships with your customers, which is beneficial to your business in the long run.
So, use these tips and examples when you're implementing your direct-to-consumer strategies. And to gain more knowledge, you can check...
Ricky Hayes
