In a traditional sales model, the supply chain includes manufacturer/producer → wholesaler → distributor → retailers → before it is finally available for the consumer to buy. But, what if you cut out the middlemen? Direct to consumer (D2C) eCommerce aims to do just that. A D2C business model starts and ends with the manufacturer.
And, while D2C has been a hot trend, don't expect it to go away anytime soon. With the power of the internet and technology, selling directly to the customer offers some serious upsides. Let's dive into why so many brands are moving to a D2C model.
There was a time in history where “direct-to-consumer” was how just about all selling was done. The same farmers or crafters that made the goods were also the ones to sell them. But, the rise of the industrial revolution led to an increase in products. The manufacturers had plenty of goods and didn’t want to take the time to sell them individually. This opened an opportunity for retailers to buy bulk goods at wholesale prices and then sell them to the consumer individually for a price increase.
But, this extended supply chain means the creator (or manufacturer) loses quite a bit of control once the products leave their hands. Marketing efforts and sales strategies are often left entirely to the retailer. The separation can also create a divide that makes it harder for manufacturers to pivot based on consumer needs.
There are several good reasons D2C has become a growing trend. The benefit of a direct-to-consumer eCommerce model include:
Companies that are considering D2C eCommerce might choose to sell on their own website or a platform that supports eCommerce stores (like Shopify or Amazon). This blog will look at the pros and cons of the top eCommerce options for D2C sales.
If these benefits weren’t enough, the pandemic has had a huge influence on brands. Not only were supply chains disrupted like never before, but people also swarmed to online shopping in droves. Sluggish mail, lost packages, and closed borders meant companies were far better if they could sell directly to the customer and skip the steps between. The digital migration of brands only increased with the news of COVID-19.
According to Statista, retail eCommerce increased from 3.35 trillion to 4.28 trillion in 2020 and is expected to increase to nearly 5.5 trillion by 2022. In 2019, Statista reported D2C eCommerce reached 14.28 billion and was expected to reach 17.75 billion in 2020.
Some of the biggest D2C brands include Nike, Warby Parker, and Dollar Shave Club. Peleton made $1.8 billion in 2020—a 100% increase year over year. HelloFresh doubled their revenue from 2019, reporting around $4.5 billion in revenue for their worldwide food subscription service in 2020. Nike has openly admitted that they are landing better sales through their own channels than by selling to retailers or in marketplaces like Amazon.
In 2019, Invesp reported that more than half of all consumers will opt to visit a brand website over a retailer because they typically offer more comprehensive information and guides.
When you cut out the middleman, like a marketplace or retailer, there are certain challenges that will arise. Shifting into D2C eCommerce with your own site means taking on the customer-facing side of your brand. You will have control over:
These are all added challenges that will take time, effort, and insight to do well. Another challenge will be competing with other retailers and brands. When you aren’t resting under the umbrella of a larger brand, like Amazon, you will have to create your own reputation and bring in your own leads.
On the flip side, once you bring in those leads, you won’t have to compete with other brands like you would under that umbrella.
Additionally, you will have to have a solid understanding of growing and marketing to an audience on social media. Platforms like Facebook, TikTok, and Instagram have made it increasingly hard for brands to get visibility without paying for ads. You can use their targeted advertising to help pinpoint customers that have already visited your site (remarketing) or who fit your buyer persona.
While you can gain a lot of freedom selling directly to your consumers, many brands struggle with the amount of work it takes to create a marketing strategy, handle customer support, package products and manage shipping. But, to face these challenges, many brands will outsource parts of their new workload, like marketing, customer support, and content creation. This still gives them full control over the process but reduces the amount of work, tools, and experience they need to have for successful growth.
Is it better to create your own eCommerce site from scratch, use a platform (like Shopify), sell through social media, or sell on a marketplace (like Amazon)?
The best way to approach growing a successful store is going to largely depend on your brand. But, there are some pros and cons to a few of the different options. Here are some of the most popular choices for a direct-to-consumer eCommerce site.
One popular option is using a platform that is already in place. When it comes to Amazon, you will have the benefit of a trusted marketplace. However, this isn’t exactly a true D2C platform. Amazon sells and ships third-party items through its own warehouse. They also allow third-party sellers to sell through the platform and then ship out the products themselves.
Using the Amazon site, you will be far more limited in what you can do with your branding. When you market your products, you will have competing products also show up at the bottom of the page. So, you will never be able to cultivate the same kind of loyal audience you would have with visitors on your own site.
Amazon also makes it impossible to connect with users via email or social media unless you are able to get them to take a second action after receiving the product and sign up for your marketing. This is a hoop most businesses (and customers) do not want to jump through.
Shopify can get pricey because there are a lot of add-ons and additional apps you will likely want to use. But, we’ve found, eComm stores do have more options with Shopify than Amazon or most of the other eCommerce platforms, and we even recommend our own clients use Shopify.
Shopify is a popular choice because it is pretty easy to use, supplies your hosting, includes store security, offers multi-channel integration, supports abandoned cart recovery, and won’t charge transaction fees (as long as you use the Shopify payment gateway). It allows users to pay with a variety of payments, including PayPal, Apple Pay, and more. It provides flexible design options and gives you built-in marketing tools.
Shopify also has more than 1,200 apps that help with tasks, like accounting, inventory, shipping other common eCommerce marketing needs. (We’ve curated 20+ of the best Shopify apps in another blog post so you don’t have to sift through a thousand of them, though.)
There are some odd things that can be difficult with Shopify. For example, your customers can only use one discount per order unless you change the script. You may also find it a huge hassle to export blog posts and you will have to pay for additional plugins to use certain SEO features. It can be a huge pain if you decide to change your theme since you will have to reformat your content.
WordPress is essentially the step between Shopify and creating your own website from scratch in terms of power and flexibility. You will have more control over your options, but you will also need more technical knowledge. The expenses can add up pretty quickly since you will need a domain, hosting, security, and a solid eCommerce site theme.
WordPress isn’t exactly designed for eCommerce, but you can use a plugin, like WooCommerce or BigCommerce to make your website ready for sales. The platform for WordPress is pretty big and the dashboard can be overwhelming. You may struggle to customize your site’s appearance without the help of a developer. It’s easy to have an error or compatibility issue on this platform and then struggle to get things back to working order.
The upside to your own site is the full control you will have over the design. The right website will improve your sales funnel and user experience (UX).
However, building and maintaining your own eCommerce site can be extremely difficult and expensive. You will have to pay for the design, hosting, eCommerce capability, security, and more. You will need to change the elements of your site as often as the market changes.
You cannot build a website without a very in-depth knowledge of coding and tech. Because of this, most brands will use a developer who has experience building eCommerce sites. Virtual shops require inventory pages and a smooth design that’s intuitive for the consumer to use. While the design will be completely up to you, there is a serious potential for amateur design flaws to drive away the customer.
Are you ready to start selling directly to your audience? Check out this post on 11 Essential Digital Marketing Lessons for D2C eCommerce Businesses.
Taking the next step means looking at all the options and choosing what works best for your brand. In most cases, companies have a huge advantage when they get the right experts on their side. This is something EmberTribe has done a LOT. You can talk to the team to find support and choose the option that works best for you.
It doesn’t matter if you are just getting started or planning the next step in your brand journey.
As a growth-focused agency, EmberTribe won’t just focus on one marketing channel or eCommerce platform. Find the right fit for YOU and grow accordingly. Using rapid testing and analytics, EmberTribe is focused on seeing the patterns before you notice a difference. This is not a one-size-fits-all approach.
If you want to see serious growth, it’s time to talk to the team.