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Rethinking Direct-to-Consumer Businesses


October 7, 2021
5 MIN READ
Vinculum
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Vinculum
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With the pandemic now underway, all businesses need to rely on a solid digital presence to keep their operations running smoothly. To disengage from physical stores, brands adopted direct-to-consumer business models.

Direct-to-consumer business models are primarily based on e-commerce, online marketplaces, and promoting company independence.

Digitalization in retail has been on the rise lately, and its pace has only accelerated. The following explains this approach in more detail and why it has proved so successful.

What is Direct-to-Consumer?

Direct-to-consumer is an entrepreneurial model referred to by the acronym D2C or DTC, which eliminates intermediaries. It makes a company independent concerning the commercialization of a product or service.

We refer to digital and physical points of sale when we talk about direct-to-consumer. The evidence from recent practices and norms indicates that the digital model will continue to grow.

So, most sources of information on the web address e-commerce as a crucial step towards D2C.

How does D2C benefit businesses?

D2C models are oriented toward the user and therefore result in greater customer satisfaction. However, we won’t discuss branding. At this point, let’s focus on strictly tangible benefits.

Here are some advantages of going direct to consumer:

  • Cost reduction: You can also eliminate obstacles to maximizing profits when you stop steps between you and the customer. You need to offer the product at a price low enough that wholesalers and retailers will consider reselling it, for instance, if your company deals with wholesalers and retailers. By contrast, direct sales result in lower costs since they don’t involve intermediaries.
  • Segmentation: You can gain countless insights into your customers from data-driven digital strategies. In this way, you can segment your companies according to the criteria that interest them the most. Your products and communications will be more tailored to your segmented base the more segmented you are.
  • Data intelligence: You know that refined data is more valuable than raw data if your Data Analytics area is well structured – which is why you need a sales channel. Using this, you can create sales and marketing performance indicators.

How to implement D2C in practice?

The D2C model requires several factors to work together. Adopting this strategy requires synchronizing the sales channels with a consolidated digital presence and enabling real-time insights into every stage of the purchasing process.

To better understand our customers’ consumption habits, we need to analyze their data.

  1. Have a strong digital presence
    Your presence on the Internet alone isn’t enough. To connect with your customers and generate revenue, you need an integrated strategy that spans your digital touchpoints – that’s how the data economy works.
  2. Understand who your consumer is
    A company that outsources its sales (usually large brands) to wholesale retailers has less contact with its customers. By creating an impersonal relationship, you miss out on learning what your customers want, when they want it, and how. The retailer will have more market data and shopping information about the end-user in traditional resale models than you do.
  3. Pay attention to the shopping journey.
    Shopping has changed with the advent of the digital age and smartphones. Taking an in-depth look at your customers’ digital shopping journeys will help you determine how to lead the best to make a purchase.
  4. Use the data to your advantage.
    To provide more market intelligence, the volume of data is not the only most crucial factor. Companies without well-connected data collection strategies often experience difficulties extracting relevant insights for decision-making.

In the era of digital commerce, D2C is the present and the future.

It is crucial to emphasize that direct-to-consumer isn’t a replacement. In essence, it offers new business opportunities and updates the business ecosystem. It fills a gap in existing business plans.

Physical commerce is not rendered impossible by digitizing operations. The new consumer experience trend is “phygital,” a mix of physical and digital retail. It would be best to consider the cultural factors of the local market in the event of a complete model transition. D2C businesses accustomed to physical contact will need to embrace a digital mindset to maximize their success. The time has never been better to offer your customers direct access to your products.

As brands engage in direct-to-consumer marketing strategies, the term direct-to-consumer becomes less relevant. The “DTC” phenomenon emerged from a specific moment that catapulted an early cohort to stardom. Nevertheless, in the current environment, that model seems unsustainable. For the business to succeed today, we must understand the basics that remain the same and the lasting ways that DTC has contributed to industry transformation.

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