What is D2C (Direct-to-Consumer) Marketing in Retail?

Published by Martha Pierson at December 9, 2021

Coming up with a great business idea is only the first step in becoming a successful brand. Knowing how to convey your product to your target audience is what makes your brand grow and establish itself. Some businesses rely on intermediaries to market and sell their products. Other companies utilize direct-to-consumer (D2C) marketing to control these processes themselves. But what is direct-to-consumer marketing, and why do some businesses utilize it?

Many successful companies utilize D2C marketing strategies to increase revenue and customer satisfaction. We will discuss how to get started with this marketing strategy and some advantages of implementing it in your business.

What is Direct-to-Consumer Marketing?

Young adult signing delivery confirmation.

Companies that use direct-to-consumer marketing rely on their own channels to produce and distribute their products. This ultimately cuts out the middleman. For instance, retail companies usually opt to sell their products in their brick and mortar stores rather than through large wholesalers.

D2C marketing has been around since the mail-order catalogs in the 15th century. Customers would directly order goods from a particular seller using mail-order catalogs, and the goods would be delivered to the consumer directly from the seller. Today’s D2C marketing strategies utilize the same main concept. However, many companies now operate through the internet and social media platforms to conduct D2C marketing campaigns.

To ensure a successful D2C marketing campaign, it is important to create a unique brand and product that stands out among the competitors. D2C marketing involves capitalizing on brand positioning and relationship-building to offer an end-to-end customer experience.

What Businesses Should Implement D2C Marketing?

Consumer buying shoes online.

It’s relatively easier to implement D2C marketing by establishing your presence online. The internet provides a platform for companies to direct customers to their website and make a purchase there. However, this doesn’t mean that D2C marketing cannot also work in physical stores. Offering a physical storefront and the convenience of an online store can expand your consumer base, in turn increasing revenue.

The D2C model can work in almost any industry. Whatever you sell, you have the chance to offer try-before-you-buy deals, which can facilitate your customers’ trust. In addition, retail stores can use their physical presence to help customers get to know their products better.

These are the most common industries that work in the D2C market:

  • Fashion
  • Cosmetics
  • Alcohol
  • Stationery
  • Household goods
  • Confectionery
  • Pharmaceuticals
  • Optical stores
  • Equipment

What Are the Benefits of D2C Marketing?

Professional analyzing data on computer.

Although D2C marketing strategies may be difficult to implement initially, the long-term advantages and benefits can be a great incentive to consider.

  • Higher Control Over Profits

No middleman means no one to share your profits with. When you control the entire selling process, you’re the one overseeing your gains. You can decide which costs to cut to maximize your revenue.

  • Access to More Customer Data

Collecting data from your customers is crucial for your growth. This involves anything from the customer’s information and preferences to their feedback about your product. Direct-to-consumer marketing can provide you with a great opportunity to communicate directly with customers and collect all necessary information, which you usually would not get when there’s a middleman involved.

  • Higher Personalization

Based on your collected customer data, you can better personalize and cater your product range to your customers. When you sell through a retailer, you usually try to satisfy the general public. When selling directly, you can try to personalize the items as much as possible and make the customers feel unique and appreciated.

  • More Opportunities for Innovation

Since you can control your product deliveries, you can also test out new products with more freedom. Don’t be afraid to toy with new ideas with a small portion of your target audience and see how they react.

  • More Room for Building Customer Relationships

One of the biggest pluses of direct-to-consumer marketing is the ability to interact with customers firsthand. You can use this to build strong relationships, enhance the customers’ trust, and increase your brand loyalty.

What Are the Challenges of D2C Marketing?

Individual counting inventory.

Regardless of the appeal of D2C marketing, the strategy can include some disadvantages.

  • Relatively Lower Conversion Control

One of the most common ways to attract customers to D2C brands is using free trials. Customers can take advantage of free trials and cancel before it ends. They will use your product or service once or twice but never end up paying for it.

  • Higher Responsibility

There’s much more than just creating and manufacturing a product. Companies need to know how to attract customers, control logistics, troubleshoot, and deliver top-notch customer service. Having more responsibility and operational factors can become overwhelming for many companies.

  • Occasional Supply Chain Issues

When you make and distribute your products, you can sometimes run into inventory issues. Having enough products in stock can be a more common problem with business supply chains.

D2C Vs. Traditional Retailer Business Model

Unlike traditional business-to-consumer marketing models, D2C marketing producers sell to consumers without any intermediaries. In the retailer business model, manufacturers usually rely on a retailer or wholesaler to distribute their products. Examples of such wholesalers include Walmart, Best Buy, and Target.

In traditional retailer models, wholesalers typically purchase from many manufacturers and display their products together. Since consumers have choices, producers cannot control whether their products could be chosen over their competitors. However, in direct-to-consumer marketing, producers are responsible for turning shoppers into buying customers by providing an end-to-end brand experience.

Since buyers interact with manufacturers without any third parties, the customer journey is typically not disrupted. Customers can walk into the main product store and decide whether to buy or not based solely on the producer’s engagement strategies. Similarly, they may browse the manufacturer’s website, select the products, and purchase directly through the online platform.

How to Get Started with a Winning D2C Marketing Strategy?

Employee helping customer check out.

If you’re seriously considering implementing the D2C strategy, there are a couple of things you should keep in mind. First, decide whether you want to go full D2C or hybrid. A hybrid D2C marketing strategy includes selling a portion of your products through your channels and some through a wholesaler.

If you opt for a full D2C model, you have to create seamless distribution channels for your products. Holding enough inventory for your demand is crucial to keep the operations going smoothly. Make sure to solve any issues with suppliers as soon as possible to avoid complications or delays.

The final and essential step is to try to win the trust of your customers. Remember that they will mostly base their decision-making on your marketing efforts. Offer them a chance to try your product and let them fully experience it before purchasing. You can also offer alternative payment methods, such as customer financing, to maximize revenue. Develop loyalty and referral programs to incentivize customers to purchase from you again. Special offers and lenient return policies can also facilitate higher customer engagement and enhance conversion.

D2C Marketing Tips (What to Consider)

Once you’ve kickstarted your D2C strategy, here are some additional tips to implement along the way:

  • Collect and Make Use of Data

Treat your advertising campaigns as data sources. Successful D2C companies are usually data-driven. You can combine purchase history and feedback to identify popular products in different demographics and develop tailored marketing campaigns for each niche.

  • Take an Omnichannel Perspective

Guiding people to your website on the internet is pretty straightforward. But if you want them to also visit your brick-and-mortar stores, utilize other methods to generate traffic. It can be through TV and radio ads or billboards showing your store’s address.

  • Focus on Customer Experience

Take a narrow and personal approach when targeting your audience. Engage with them during product testing and empower them to participate in your brand’s creation and prosperity. Prioritize transparent communication to deliver the best customer experience.

Successful Examples of D2C

Skincare products.

Here are some examples of brands utilizing D2C marketing successfully.

Dollar Shave Club

This small business quickly became a multi-million dollar brand thanks to D2C marketing. Dollar Shave Club sends you personalized shaving kits through a subscription service. Competing against large companies like Gilette and Schick, Dollar Shave Club stood out thanks to a 2012 video that went viral on the internet.

The company took a creative approach to appeal directly to the customers. They emphasized the simplicity and convenience of shaving by delivering tools to their customers’ doors. Dollar Shave Club grew because it created a strong brand identity and stuck to it over the years. They stayed true to their marketing strategy that consistently humanized their brand and image.

Glossier

Selling through retailers is very common in the makeup industry. However, Glossier takes on another approach and sells directly to consumers instead.

Glossier relies heavily on user-generated content, which is one of the key reasons for its growth. Instead of advertising their products through influencers, the company sends products to their most loyal customers. They also maintain strong relationships with their customers by encouraging them to share their experiences with Glossier through social media.

The makeup brand only sells through its official website. All of their advertisements eventually lead to their website, where all sales are generated. This way, Glossier maintains complete control of its marketing and profit margins.

Away

Away is another example of a unique marketing approach that helped them become successful. Away sells suitcases and travel bags through their easy-to-use website. However, positioning as a travel company, the company enriches user experience through sharing creative content and media for its travelers. For example, they share and promote travel content their consumers have created using the products.

The company prioritizes open communication with its clients by making a travel bag a fun and fashionable purchase. The company also offers 100 days of free product use and a lifetime guarantee for its suitcases.

The Future of D2C

Company meeting discussing marketing strategies.

D2C has started to reshape the entire eCommerce industry. We see many brick-and-mortar stores moving their sales channels online and still maintaining control over their deliveries.

While distributing goods through an intermediary cuts the job in half, it also prevents companies from creating an end-to-end customer experience. In the future, we will most likely see companies embracing D2C for its enhanced data collection and brand personalization. As a result, with the growth of D2C strategies, many companies will likely also offer more alternative financing options. For example, POS finance providers can offer consumers buy now, pay later options, and retailers can benefit from invoice financing. These options can afford consumers more flexibility in how they pay for goods and services, ultimately increasing customer satisfaction and experience.

Bottom Line

If you adopt a D2C business model, get ready for more work and possibly more profits. From establishing your distribution channels to coming up with unique marketing campaigns, you gain one of the most crucial advantages of running a business — control.

Direct-to-consumer marketing cuts out the middleman and allows companies to directly produce and distribute their products through online or physical channels. This can increase revenue for the company and allow for enhanced data collection. However, D2C strategies also come with added responsibilities, which may become overwhelming.


Martha Pierson

Martha Pierson

Editor-in-ChiefMartha is Editor-in-Chief at Finturf.com. Her career began in 2003 when she started as an investment banking analyst. Martha continued her career path as a financial advisor for investments. She has a passion for writing and is mainly focused on covering financial and business management topics.

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