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What Is Direct-to-Consumer Marketing Retail?

by Mike Abelson   December 8, 2021
Direct-to-Consumer marketing puts the manufacturing and selling power in the company's hands. Consider the advantages and disadvantages of D2C marketing before implementing this end-to-end strategy.
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More companies are turning to direct-to-consumer (D2C) marketing strategies to improve brand image, customer relationships, and revenue generation. This method cuts out the retailer and distributor, putting end-to-end manufacturing and selling power in the company’s hands.

D2C marketing allows brands to:

  • Eliminate intermediaries
  • Develop better relationships with their consumers
  • Retain brand image
  • Increase innovation

However, with any new marketing strategy comes potential difficulties and risks. Nevertheless, if done correctly, D2C marketing may offer growth opportunities for brands.

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Direct-to-consumer (D2C) marketing allows companies to cut out the middlemen in their manufacturing and selling processes. D2C marketing grants companies end-to-end control of their production and distribution channels.

This provides D2C companies the opportunity to minimize commission costs and increase revenue. This process also helps to maintain control over the production, marketing, and distribution of products.

Unlike regular retail competitors, D2C marketing brands have plenty of room to experiment with distribution models, such as:

  • Directly shipping to consumers
  • Shipping to physical retailers
  • Opening pop-up shops

Typically, these types of merchants do not rely on traditional retail stores for exposure. As a result, they are better able to compete with prominent brands that also ship directly.

Which Businesses Should Implement D2C Marketing?

There are plenty of businesses that can profit from direct-to-consumer marketing strategies. Some of these companies offer:

  • Household goods
  • Organic groceries
  • Clothing
  • Beauty
  • Pharmaceuticals

What Are the Benefits of D2C Marketing?

Overhead view of professional marketing meeting.Direct-to-Consumer marketing is an innovative e-commerce strategy where manufacturers avoid the middleman, allowing them more control over their brands. This business model offers several competitive advantages over the traditional retail strategy, including:

Improved Control Over Brand Image

Unlike traditional retailer marketing, D2C marketing affords the company more control over its brand positioning and image. Traditional marketing strategies yield control of product presentation to retailers. With D2C marketing, businesses can retain control over their online and in-store product presentations and advertising. This allows them to maintain a unique brand image rather than relying on a third-party retailer to promote the product at their discretion.

More Room to Innovate

Retailers typically follow a set standard for the products they choose to offer. As a result, many companies confirm their brand and products to retailer standards. Through D2C marketing, companies can freely innovate and experiment with new products by retaining control of brand image and presentation. For example, companies may run trials of new products to test their success and demand in the market. Ultimately, D2C marketing doesn’t bind brands to what has been proven to sell. Companies are free to create unique products because they retain production and distribution control themselves.

Earn Higher Margins

Direct-to-consumer marketing can allow companies to cut out retailers and earn higher profits. Rather than earning revenue from retailer markups, D2C companies can sell products comparable to retailer pricing. As a result, this can positively impact their bottom line and total revenue.

Direct Communication to Customers

Consumer taking survey on laptop.Direct contact with customers is what it’s all about. With the implementation of direct-to-consumer marketing, the company interacts with the customer at each stage of the production and distribution process. As a result, brands can directly collect customer feedback and data through advertisements, email marketing campaigns, and surveys. Ultimately, this allows D2C companies to build stronger customer relationships and loyalty.

Additionally, learning consumer buying behaviors helps companies improve existing products and even create new product lines to cater to specific needs.

Powerful Brand Loyalty

Direct-to-consumer marketing can provide the opportunity for companies to develop customer relationships and brand loyalty. After-sales feedback is a useful strategy to deliver consumer comments to businesses directly. This can be a great tool to address concerns or implement new changes. Additionally, incorporating feedback can demonstrate a company’s dedication to customer satisfaction.

Increased Market Opportunities

When using D2C strategies, companies are not limited by geography. They can begin marketing to a global target audience. For example, utilizing online social media platforms is a great way to expand the consumer base and the brand’s reach.

Using a direct-to-consumer strategy is advantageous from a financial and operational viewpoint. However, it is always a good idea to create forward-looking plans to ensure that the model continues to be consistent in producing what the consumers demand. Additionally, companies should regularly review the implemented strategies to ensure they cater to consumers’ diverse needs.

What Are the Challenges of D2C Marketing?

Young adult choosing between products.Before implementing a D2C marketing strategy, companies need to consider whether the advantages outweigh the risks.

Increased Competition

One of the most significant challenges that D2C companies will face is increasing competition in the digital arena. More and more companies have moved their operations online as the trend grows to be more successful. In addition to small business competition, major retailers such as Amazon dominate the eCommerce space. Companies considering D2C marketing will need to consider the difficulties of increased competition and determine whether they can dedicate the time and resources to creating a standout online brand.

Personalization

D2C companies also need to cater to customers expecting unique content and a personalized experience. Customer feedback should be influential to the products that companies are offering. To stay in demand, D2C companies need to consider creating items personalized to these needs.

Product Differentiation

With more competition and online consumers, the need for differentiation is higher than ever. When brands have similar packaging and target markets, it’s even more important to create a unique selling point.

Advertising and Growth

It has become more expensive to run ads on Facebook and Instagram due to the large increase of users on these platforms. Forbes pointed out that Facebook ad costs increased 90% between 2018 and 2019.

Advertising costs vary per industry and depend on the company’s size. As a result, it can be challenging to keep up with competitors that maintain larger advertising budgets.

Customer Habits Are Evolving

Customers are no longer at their desktops browsing the web for hours until they find what they are looking for. Instead, they are shopping from mobile apps. While it may have been strange to shop directly from Instagram just a few years ago, now the trend is more common.

Companies need to keep up with these changes and ensure that they are present on any platform or medium that their targeted audience prefers to shop through.

D2C vs. Traditional Retailer Business Model

Here’s how the D2C business model and traditional retail model differ.

Direct-to-Consumer Business Model

Traditional Retail Business Model

Length of the Supply Chain

The supply chain is shorter, with no intermediaries like wholesalers and retailers. It reduces the time for the product to reach the customer.

Middlemen increase the channels the product must pass through before reaching the consumer.

Influence On Relationship with Consumers

Customer feedback and suggestions are directly provided to the company. This can increase customer relationships, satisfaction, and brand loyalty.

Brands in the traditional retail model find it difficult to directly interact with customers, making their customer relations weak.

Control Over Branding

The D2C model allows brands to take control of their branding as they are selling to customers directly.

Retailers promote and sell a brand’s products in stores. Retailer branding guidelines define the marketing control of brands.

Utilizing Digital Space

D2C brands depend on digital platforms to promote their products and create sales.

Brands that conform to a traditional retail model may or may not see the need for an online presence.

Most of their sales occur through store traffic.

Collecting Customer Data

D2C brands can quickly and efficiently analyze the data collected through direct sales. This helps to quickly address customer needs and concerns.

Traditional business models find it difficult to collect relevant data from customers firsthand. This can eventually influence the brand’s knowledge of customer needs and wants.

Personalization

D2C brands can personalize their products to cater to various types of customers.

Brands in traditional retail models tend to produce their products to satisfy a mass market. They cannot direct their products towards personalization.

Identifying Unmet Customer Needs

D2C brands receive direct feedback from customers. They can ask customers about their level of satisfaction or unmet needs.

Brands in traditional retail models find it harder to identify and act upon their customer’s unmet needs.

Profit

D2C brands do not need to rely on markups to make a profit. Additionally, they are not required to dole out commissions to retailers or distributors. This helps increase revenue.

Brands using the traditional retail business model acquire more costs due to commission.

New Products

D2C brands have more room to experiment and implement product innovation. With comprehensive data from their consumers on preferences, they can create new products to meet their needs.

Businesses in the traditional business model find it difficult to create new products and receive adequate feedback. Additionally, their lack of connection with the customer gives them little to no information of what the consumer is expecting from the brand.

How To Get Started with a Winning D2C Marketing Strategy?

Consumer signing up for subscription plan on laptop.Those new to D2C marketing should start by checking off the following:

  1. Focus the product and marketing on your customer’s needs and preferences
  2. Consider a subscription-based model
  3. Implement a content-first approach
  4. Allow easy, no-fee returns
  5. Incentivize your customers to help spread the word
  6. Invite popular social media figures to endorse your products and brand
  7. Get customers involved with content creation
  8. Execute a dynamic SEO campaign
  9. Understand the end-to-end customer experience
  10. Sign up on Facebook, Instagram, and YouTube

Successful Example of D2C: Glossier

Glossier is a leading beauty brand thanks to the use of D2C marketing. The brand relies on user-generated content to advertise its products, ultimately building long-term customer relationships. For example, the brand showcases consumer reviews, pictures, and videos on social media.
Moreover, Glossier only sells through its official website. Their simple web design is user-friendly and offers an easy three-step checkout process.
Glossier’s advertisements all lead to its website. The brand also offers generous free shipping and discount incentives. Through the D2C model, Glossier has seen massive growth and brand loyalty.

Conclusion

Having a robust direct-to-consumer marketing strategy can set your brand apart when it comes to attracting and maintaining loyal clients. From direct communication with customers to better improvement of products, D2C has a lot of perks. But it is not without its challenges—such as increased competition. Therefore, developing and implementing a well-strategized D2C marketing campaign is the key to success.

Mike Abelson   Editorial Director
Mike is the Editorial Director at Lendza. He enjoys helping entrepreneurs and startups succeed through smart, innovative strategies. He’s partnered with CEOs and executives to grow businesses from the ground up. Before his work at Lendza, Mike was a stock market analyst. When he’s not traveling for work, he enjoys reading adventure and science fiction novels.