Recently, there has been a lot of buzz in the eCommerce industry around the direct-to-consumer (D2C) model. Over the years, we have witnessed many D2C brands emerge and scale. But what is D2C eCommerce and why is it in such rage nowadays?
In this blog, we’ll walk you through what D2C eCommerce is, the challenges and benefits, and how you can launch your own eCommerce D2C brand.
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What is D2C eCommerce?
Direct-to-consumer or D2C is a business model where there are little to no intermediaries such as agents, distributors, wholesalers, and retailers. As the brand, you sell directly to your customers.
This also means you control all aspects of your business — from production to distribution and everything in between. In short, a D2C brand is an independent seller and has more authority over its business.
A D2C eCommerce brand primarily uses online methods to find customers and collect orders. Compared to other eCommerce models, D2C has many benefits running from profit to better reach. Let’s look at the most popular reasons why brands are choosing D2C over other business models.
Advantages of a D2C business model for eCommerce businesses
Let’s look at the most popular reasons why brands are choosing D2C over other business models.
The 3 main advantages of a D2C eCommerce model is mainly:
- There are massive opportunities to innovate
- There is a higher profit margin compared to marketplaces
- You have more control and access over customer data (consented data)
1. Opportunity to innovate
You get complete control over the customer experience and branding as a D2C business. You can personalize products and create a fantastic shopping experience for customers.
In the eCommerce world, this is a huge advantage you’ll get over other brands. Online consumers look for good brands that resonate with their values and appreciate a good shopping experience.
D2C brands also have higher chances of gaining customer loyalty and retaining more customers.
Higher profit margin
Another significant advantage D2C brands have is the chance of getting higher profit margins.
By eliminating “middlemen” in the supply chain process and other aspects of business, brands can cut costs and gain authority over their profit margins. You won’t have to share your profits with other parties.
In other eCommerce business models like marketplaces, you must give a significant percentage of your income to the platform as a commission. This is not the case when you become an independent seller.
Related read: How To Sell Online In India: Website vs Marketplace
Access to customer data
Most D2C brands have direct access to an enormous amount of data about customers. You can use this to run successful marketing campaigns, run re-targeting ads, and retain customers.
As an eCommerce business, you will own your own website with your own domain. Through this, you can track how many leads visit your store, their location, and what they’re interested in. This can be done with the help of tools such as Google Analytics and Hotjar.
By understanding customer behaviour, you can make more informed business decisions and get more results in the long run.
Challenges eCommerce D2C brands face
1. Cost of marketing and branding
Although you get higher profit margins, be prepared to re-invest some of this into your business for marketing. As a D2C brand, you’ll need to market your products in creative ways to gain customers.
You’ll also need to spend money on branding and positioning your business in the market. Logos and other brand assets need to be created, packaging has to be made, and you’ll have to create unique messaging or get a branding agency to do it.
Related read: Barbie’s charm and Oppenheimer’s enigma: How marketing makes a difference
High competition
As a D2C brand, the success of your business depends upon how well you stand out from the competition. In the coming years, you should expect to see an increase in competition across different niches in the eCommerce market. Therefore, standing out as a D2C brand will become tougher.
However, this does not mean it’s too late. There are ways you can overcome competition and stand apart. One crucial step you can take is to build a website for your D2C brand.
According to a report, online sellers claim that having a website for their business helps lower the competition.
Managing business can be quite complex
When you switch to a D2C model, you’ll get the freedom to control all aspects of your business. This also means more operational tasks will be added to your list. Everything from creating a website to packing orders, you’ll have to get involved with the nitty gritty.
With technology like Instamojo, you can make some of these tasks easier. For example, with the Instamojo D2CTech platform, you can create an online store easily even without any technical knowledge. You also get to easily partner with courier companies and get your products shipped to customers.
How to take set up your D2C eCommerce
Here is a snapshot of the steps you need to follow to set up a D2C eCommerce brand:
- Find a supplier or manufacturer
- Create a website for your business
- Focus on the branding and messaging
- Create a marketing strategy
Step 1: Find a supplier or manufacturer
You need to find a reliable source for your products or raw materials. They should be able to send you the products at the right time and whenever required as wholesale. If you have a product idea, get a manufacturer to create it in bulk to sell.
You can search a business depository online to get lists of registered suppliers or simply do a Google search.
Step 2: Create a website for your business
A website is a must-have for D2C brands. Although you have other options like selling on social media, a website will set you apart and take many operating tasks off your hands. You also open up many marketing and partnership opportunities with an eCommerce website.
You have many options when it comes to creating a website for your D2C brand. And no, you don’t need any coding or design knowledge to get started.
With a platform like Instamojo, on a monthly or yearly subscription, you can start creating an online store by choosing a theme of your choice and adding your products. You can launch your eCommerce website in no time!
Here’s an example of an online store created on Instamojo: ArtisticIndie.
Step 3: Branding and messaging
Branding is how you position your business in the market. As a D2C brand, this step is very important because you want your target audience to know about you and how you differ from other brands in your niche.
In fact, 77% of marketers say building a strong brand is key to their company’s growth.
Branding includes establishing values, telling a story, and creating your brand assets like logo, images. Brand building for your business also includes:
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Understanding the pain points that you solve
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Choosing brand colours for your website branding
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Curating an emotional brand story that your audiences resonate with
Step 4: Create a marketing strategy
Now that you have a website, supplied products, and created a branding strategy, it’s time to launch your D2C brand online! For this, you will need a solid marketing strategy.
As an eCommerce brand, here are the major digital marketing channels you can get started with:
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Paid advertising
You can start with social media marketing and work your way up to the other channels. Pick one social media network your audience is more active and start engaging with them.
Related read: How to use social commerce to grow your business
Instamojo: a #D2CTech company to power your business
As you can see, the Direct-to-consumer business model has many aspects. It’s a huge step to transition into D2C and become an independent online seller.
Instamojo is a #D2CTech company which helps businesses launch online successfully. With this platform, you can create an online store, set up your product catalogue, and start selling within minutes.
You also get access to marketing features and customer service tools — managing your business becomes a lot easier!
You can get started on Instamojo for free. Sign up and check out how your D2C brand can grow online.
