The D2C business model is the very definition of eliminating the middleman. While a B2C business model relies on third-party platforms to sell products and interact with customers, direct to consumer puts all the power in your hands.

Based off that description, direct to consumer businesses sound like they'd have a lot of strengths and weaknesses right off the bat, right? With the traditional retail model facing an increasing desire for personalized customer experiences and unique products, direct to consumer business models stand at the crossroads.

For some businesses, the D2C model can generate higher profit margins and provide more control over interacting with customers. Other businesses, however, may find direct to consumer business models too time-consuming to establish compared to traditional channels.

How do you know whether the direct-to-consumer model is well-suited to your business? We'll break down the benefits of these types of digital channels, why more brands sell through D2C these days, and how you can get started.

Key Takeaways

• Direct to consumer (known as D2C or DTC) is a business model where customers purchase directly from a business instead of through a third-party storefront or platform. This model is growing in popularity due to giving business owners more control over marketing, brand identity, and more.

• While B2C has some similarities to D2C, such as selling to customers, it doesn't have the same level of personalization or control. B2C businesses still need to use external platforms and storefronts instead of selling directly to end consumers.

• Shifting to the direct-to-consumer approach is smoother with the help of an experienced marketing partner. Rightpoint works with brands across multiple industries to help them gain more control over their business model and successfully stand out in the D2C space.

What Is D2C And Why Is It Growing in Popularity?

In a world overflowing with growing businesses and fresh start-ups, individuality continues to be the key detail in separating one brand from another. Selling directly to a customer without third-party platforms gives brands a higher level of control on how they run things.

Several popular D2C brands today include Dollar Shave Club, Casper, and Glossier. These brands all sell different products ranging from mattresses to razor subscriptions, yet they share a similar philosophy: offering customers a wholly unique experience compared to most major brands and commercial retail stores.

You can find this flexible, innovative approach across most D2C brands and start-ups. According to a Statista study, some of the biggest growth opportunities for D2C brands lies in digital advertising, testing, and shipping opportunities. Businesses these days are enjoying the ability to customize and polish their internal processes without having to adhere to the strict rules and guidelines of business of B2C storefronts.

Let's take a look at a few more reasons why the direct-to-consumer model is starting to outpace traditional retail and business to consumer models.

Customers Want More Personalized Interactions with Brands

According to a Harvard Business Review survey, a staggering 80% of customers actively expect personalized experiences with brands. While B2C models offer a more predictable experience thanks to popular third-party platforms, the trade-off involves fewer one-on-one interactions.

Less personalization could potentially mean less brand loyalty and fewer opportunities to keep customers coming back for years.

The D2C model allows business owners to customize everything from their customer response times to their online presence. Instead of going through a standardized approach of a third-party platform, they can create a completely unique experience that instantly differentiates them from other brands.

More Businesses Want A Bigger Cut Of The Profits

The B2C business model fundamentally requires a 'middleman' for the business. They take a cut of profits and, in return, provide businesses with features such as quickly setting up a storefront or handling the bulk of the marketing.

However, some business owners don't find the trade-off worth their while. Sometimes the cut B2C platforms and storefronts takes is too high to generate a steady profit. As such, the D2C model is appealing to business owners who want greater control and more financial benefits.

Businesses Get A Higher Level Of Control Over Brand Identity

Without a memorable brand identity (and wonderful customer service), it'll be difficult to generate brand loyalty. The B2C sales model struggles in this area since it fundamentally shares space with a brand's identity, potentially diluting the full impact of a business.

Direct sales through independent channels bring customers directly to a brand's doorstep without potentially conflicting or incompatible marketing getting in the way. Everything from brand voice to visual design is back in the hands of business owners.

D2C Is An Agile Business Model In A Fast-Paced Market

The D2C model's simplicity gives it an edge in a world where technology and markets move at the speed of light. With fewer working parts and intermediaries to go through, a D2C business model can quickly scale or adapt on-the-fly.

For example, imagine a small business on Etsy deciding they want to offer a new product on their storefront. Since Etsy has limitations on what they can or can't sell, they'll have to go through the process of getting their new product approved before sale. If this process is denied, they'll have to consider setting up a different storefront to complete the sale.

A D2C business model won't have the same limitations. As long as it still complies with state and federal regulations, it can more quickly meet the needs of its target audience.

Julia North, founder of the luxury wig brand Wigonia, greatly enjoys the flexibility the D2C model gives her business compared to B2C.

"The biggest difference I've discovered is that D2C gives us complete control over the customer experience. When we sold exclusively through salons, we couldn't control how our wigs were presented or fitted. Now, we can ensure every client gets our signature white-glove service, from virtual consultations to personalized styling guides."

"One lesser-known detail that significantly impacts success is inventory management. In B2C, we had to predict what salons would order, leading to either stockouts or excess inventory. With D2C, we can react to customer demand in real-time and adjust our production accordingly. This has reduced our waste by 40%."

What Are The Challenges And Barriers Of The D2C Model?

With so many advantages over traditional models, you might be wondering why a brand wouldn't immediately go for D2C. As it stands, the D2C model still has a few financial and structural limitations that could pose challenging.

Establishing A Brand Identity Can Be A Challenge

While many businesses enjoy the amount of control the D2C model allows for crafting a unique brand identity, this level of detail can be exhaustive. The trade-off of more control means you have to do everything, from creating a logo to crafting a consistent brand voice across all marketing materials.

New business owners or small teams can quickly become overwhelmed by all these details, making it difficult for them to complete other tasks, like building an organic search strategy or managing customer orders.

Earning Customers’ Trust Will Be Slower Than With B2C Models

When you use a B2C storefront, you get to share some of the goodwill the third-party platform has already gathered. Their reputation partially becomes your reputation, allowing brands to earn the trust of target customers a little more easily.

For example, Amazon is known for their swift delivery and regular discounts. New customers who hear about your business may be more likely to purchase from you if they know you're verified by Amazon's marketplace.

With a D2C business model, you have to start from the ground up. Since you don't have any retailers or distributors with decades of experience in your corner, you have to painstakingly earn every bit of trust. While all businesses have to start somewhere, the beginning stages of a D2C brand can be intimidating.

Business Operations Are Slower With Less Third-Party Help

The majority of business tasks will be in your hands. While retailers and distributors take some of the customer service, fulfillment, and shipping work off your plate, the D2C model will require constant oversight in all areas from its business owners.

As such, a D2C model may take more time to start building higher profit margins due to the slower beginning stages.

The D2C Model May Be More Expensive For Shoppers

Customer expectations have only gotten more strict with the growth of convenient and accessible online service. As a result, many customers will bring B2C expectations to your D2C model.

Online delivery models are one just one of many areas you'll have to consider when making the switch. According to Statista, the D2C model may struggle due to higher delivery costs compared to B2C models. One-fourth of shoppers stated they were unlikely to spend more than five dollars for delivery, while another one-fourth expected free delivery.

The Marketing Tools Needed For D2C

If you're considering the direct-to-consumer model, you'll need compelling, consistent marketing strategies that cut through the noise. Since you won't have a B2C model to help you study and fine-tune the customer journey, you'll need a mixture of marketing tools and first-hand expertise to bridge the gap.

Content Marketing

Content marketing remains one of the most powerful ways of helping customers get to know your brand better. Everything from your social media accounts to your email newsletter will help customers feel more confident in purchasing from you.

There are several content marketing tools you can immediately start using to craft content, such as:

• Email marketing software such as HubSpot or MailChimp

• Visual development tools such as Adobe Photoshop, Adobe Illustrator, or Canva

• Writing tools such as Grammarly and Airstory

• Content planning software such as Planable and Buzzsumo

At Rightpoint, we offer content and creative services to take some of the work off the plate of hardworking business owners. We'll help you craft content that's entertaining, helpful, and gets across the exact message you want to share with your target audience.

Customer Research

Do you want to eventually expand into physical stores or remain a strictly ecommerce business? No matter your future goals, you need consistent customer research to make sure you're always resonating with what people need.

We helped one of our hospitality clients, Outrigger Hospitality Group, gather up valuable customer research and analytics to help them improve their site's performance. The brand was struggling with centralizing their customer data across several touchpoints, lacking the tools needed to analyze the efficacy of their content or website functionality.

Without deeper insights into their customer activity, they lacked information that could help them generate more online sales or create a smoother customer experience.

After we refreshed their branding design and gave them alternatives to their current analytics platform, they relaunched their site and experienced a complete transformation. They not only experienced a significant increase in engagement and revenue, their launch day booking sales nearly matched their Cyber Monday sales.

Sales And Services

The D2C sales model may be more individualized and personalized than a B2C business model, but it still relies on a classic marketing foundation. You need to prioritize a positive and seamless sales process if you want customers coming back for more.

Our sales and service experience hones in on any weak spots in your sales strategy to ensure you're getting the online sales needed to grow. We'll help you collect data, study the buyer's journey, and give you that edge in the increasingly popular world of D2C.

Build Your D2C Brand With An Experienced Marketing Partner

Making the plunge can be daunting, especially if you're a first-time business owner or have more experience in B2C. With Rightpoint by your side, you'll have both the marketing tools and deep experience needed to help your D2C launch be as successful as possible.

We'll help you do everything from research your target audience to generating content that helps them believe in what your business has to offer. We know how difficult it can be to run a business solo or with a small team, so we're prepared to take on some of the work so you can get back to what you do best.

When you're ready to get started in the rapidly expanding world of D2C, we'll be here to help. Contact us today with your questions and concerns so you can finally start seeing your business goals come to life.