Direct-to-Consumer Brands or DTC or D2C – the term is almost synonymous with the coveted Gold Rush, except it is nothing like that.
Yes, DTC brands are much more profitable as compared to traditional retailers, selling offline or online. But, that does not necessarily imply that merely switching to this model will grow you like crazy. There are a lot many factors that must be aligned together for building and scaling a successful Direct-to-Consumer brand from scratch.
You’ve probably landed on this blog because either you market for an e-commerce business or looking to create the ‘next big what’ of the D2C world.
Here is how consumer brands can get DTC e-commerce right the very first time!
What is D2C anyway?
Let us gain clarity into the fundamentals first by analyzing what Direct-to-Consumer retail model actually is.
DTC or D2C, or Direct-to-Customer, is an E-commerce retail strategy that allows manufacturers and CPG brands to sell directly to the consumer. The DTC model bypasses the conventional negotiating method with a retailer or reseller to get your product on the market. D2C brands sell directly to consumers through branded e-tail stores or larger technology-enabled sales portals.
This model offers low entry barriers, and established sellers of packaged consumer goods and manufacturers can get started right away! Going D2C has many advantages, with competitive pricing being a major benefactor for consumers. Other advantages include having a self-made first-party customer database that allows direct contact with consumers to understand them better and freely experimenting with new product releases and testing them with a segment of your consumer-based to gain their feedback.
Why shift to the D2C model now?
Frankly? Because there has never been a better time to do so!
Today’s consumers expect to go directly to the product/service source when looking to fulfill their needs or buy from a specific brand. For instance, Astound Commerce found that 59 percent of the customers prefer to do research directly on the manufacturer’s website, and 55 percent preferred to buy the same way.
“Think of the D2C model as an empowerment of the customer and the business, where both derive much better value from each other”
D2C vs. Traditional Retail
Everything has its pros and cons. D2C and traditional retail have them too!
However, the D2C model’s benefits outweigh the traditional retail model by many leaps – thanks to technology 🙂
The direct-to-consumer business model disrupts the traditional selling model entirely, with manufacturers eliminating the retail middleman and directly reaching out to the end-consumer.
Direct-to-consumer companies inherently do not require third-party seller roles in their business models.
However, going D2C also implies that the manufacturer takes responsibility for all the retail activities within the business and the manufacturing, marketing, shipping, and fulfillment responsibilities.
Core Pillars of DTC Success
Now comes the challenging part.
Plans and strategies for a new Direct-to-Consumer brand might look promising on the papers. But they’ll only truly be fruitful if you get the below aspects right!
Let us see what kind of muscle it takes to grow a nascent D2C brand from scratch to successful heights.
Product Market Fit
There is an age-old business adage – if it is not required, it won’t sell. If you are an established traditional retail brand, say one selling trekking shoes, you don’t have to worry much about the product-market fit (because your demand is already proven).
However, if you are a new e-commerce brand with a cool new product, you need solid market testing, an ideal user persona, and proven product demand to scale and capitalize on the target market.
Deploy landing pages, run ads on a small scale, conduct surveys, interview your target audience – be certain about the real demand for your product. If you proceed to build an e-commerce brand without proof of demand, you’ll be wasting a lot of resources, time, and money to build nothing!
E.g., glow-in-the-dark smartphone covers seem cool, but actual market tests might reveal that people won’t buy them for several reasons like sleep interference, highlighting phones in the night on the streets, and so on.
Marketing & Outreach Pillars
Since you are the manufacturer, packager, seller, and shipper, you are also the ‘Marketer’ for your D2C brand.
Digital marketing tools have made it easier than ever to reach your target audience anywhere in the world. A company making ‘Air Cooled hats’ in India and selling it in Delaware, USA, like a cakewalk.
To get this right, keep the following pointers in mind;
- Formulate an online & social media strategy
- Engage with your customers on channels that work for you (not all the channels!)
- Setup PPC campaigns on search engines (Like Google) and Social Platforms (Like Facebook).
- Keep your ACOS (Advertising Cost of Sales) as low as possible – this varies with the niche and other factors.
- Try to maximize your ROAS (Return On Ad Spend) on every paid campaign.
- You can also employ long-term organic search traffic growth strategies like SEO
All these activities should reveal the User Acquisition Costs, and how much paid marketing budget you need to sustain the incoming revenue.
User Experience is Everything!
Merely creating a website or an app and expecting the users to buy from you never works!
You must give your customers an engaging and memorable purchase experience – right from when they first discover you to their last purchase for you.
All this depends upon carefully optimized user journeys, omnichannel communication, and unified touchpoints. There are several optimizations that your company will have to pay attention to – from content fixes and smart customer segmentation to hassle-free checkout experience and nudging customers for a faster, personalized shopping experience.
Leverage E-commerce Marketing Automation
Even if you have a large team for support, each of them will have to wear multiple hats, juggling tasks and extinguishing fires now and then. This will at least be the case in the beginning.
However, if you leverage AI-based Marketing Automation, you can not only ease setting up sales funnels and different marketing channels but also be able to scale faster than any other possible pathway.
Marketing Automation tools like Wigzo allow DTC brands to target, acquire, convert and retain customers via different channels. You have to create suitable automation workflows in the drag-and-drop interface and switch on your ads. And voila! Your company will be ready to conquer new fronts.
You can read about e-commerce marketing automation examples and learn how technology helps thousands of e-tailers skyrocket their sales.
Metrics to Lookout for
Of course, you’ll need to monitor your D2C enterprise’s performance now and then. There are some selected metrics you should focus on. These are the top 5 crucial e-commerce metrics every marketer should track. When you acquire a respectable number of subscribers/customers, these retention marketing metrics will help you retain the best of them for sustained revenue growth.
Keep all these numbers within the desired range, and you’ll be on the growth path!
As a consumer brand, reaching out to your customers with a bulletproof DTC model can be a highly exhilarating business experience. Execute it right and leverage marketing automation to the fullest. You’ll grow like crazy!
Happy selling 🙂