e-Commerce is becoming more and more powerful, also, D2C is increasingly important in the retail sector.

But what exactly is a D2C strategy?
How does it differ from other business solutions?

D2C vs B2C

D2C (Direct-to-Consumer) is an e-commerce model designed to sell products directly to final consumers. In other words, such companies use their own sales channels, such as social media, websites or mobile apps, to reach customers. This model is especially common in fashion, electronics, furniture, automotive and luxury goods.

An example of moving to the D2C model is Łazur - read more about this case study.

B2C (Business-to-Consumer) includes companies selling products through a third party website, such as retailers and wholesalers. In contrast to the D2C model, the manufacturer does not use its own platform to sell and distribute its products. B2C is currently much larger than D2C e-commerce, but its development is no longer as rapid. In 2020, the global B2C market was worth $3.67 trillion. One of the largest organisations operating in the B2C model is Amazon.

What benefits does D2C have over B2C?

Although research shows that more than half of consumers prefer to buy directly from the manufacturer, they continue to use B2C comparison services to research products online. However, the main advantage of D2C over B2C is the possibility of creating a unique customer experience. Customers return to stores where they have received an exceptional added value within the purchase path, which they do not receive when shopping on B2C platforms.

More advantages of the D2C model are:

• unique customer data,
• strengthening the relationship with the customer,
• faster adaptation of the products to customers’ needs,
• price and margin control – offering the same prices and promotions in all sales channels,
• freedom in cross and up-selling,
• sales are subject to product availability,
• no intermediaries = higher revenue.

Here are the main differences between the D2C and B2C models.

Who is D2C for?

Direct selling is undoubtedly a good option for companies that are just starting. This is a great way to offer competitive prices and get to know your customers better. Moreover, an attractive idea can help you stand out and attract a wider audience.

Well-established companies can also use the D2C model. This is especially the case when they introduce personalised or innovative products. If this is the case, changing the strategy and approach to customer service will be necessary.

First of all, your own website - if you do not already have one - because it is an essential element that allows you to present your product range. The next step is to build relationships and trust with the customers. There will also be a need for marketing and promotion and the planning of all the logistics involved.
 

How to build a D2C brand - 11 steps to help your business succeed

The market has to continuously adapt to rising consumer expectations. To ensure the best possible experience for their customers, more and more companies are adopting a D2C strategy. So, how to make a D2C company work?

Step 1. Create a brand identity

Setting up an online store is not complicated. However, the key to success is to have the right idea and to develop a narrative that effectively reaches the right customer - the one who wants to buy.

What are the questions you need to answer?

• Who is your potential customer?
• Do you have something unique to communicate to the public?
• What makes your brand unforgettable?
• What benefits do you offer to your customers?
• How do you encourage them to buy from you?

Step 2. Identify your customers’ needs

Brand image is one thing. But customers do not just buy the product - they buy the benefits and experiences that come with it. One of the essential stages in developing the sales strategy in the D2C model is identifying consumer needs.

So, what do you need to consider?

• What makes customers want to buy your product?
• How will your product make their lives easier?
• What information do your customers need to know at each stage of the sales process?
• How will you communicate the benefits of your offer and the solutions to the problems it solves?

Step 3. Be where your customers are

Knowing your customers’ needs means knowing where to find them. Intermediary sales do not provide access to customer data. It is not possible to observe their reaction to specific products. There is a lack of basic information that could help improve their experience. D2C enables retailers to stay in touch with potential customers and to collect and process vast amounts of data on their behaviour.

What do you get when integrating with customers?

• Transparent communication - you immediately know what you do well and what you could change or improve.
• Customer trust - D2C allows you to maintain good customer relations and build brand loyalty.
• Consumer insights - Not only can we learn how to improve the consumer experience, but we can also track their every move on the website. This has an impact on creating a purchase path.

Step 4. Estimate your budget

Budgeting is a crucial step in starting a D2C business. But it is also a challenge. Estimating your finances will help you decide how much you need to spend on the most important elements of your market entry and what you can leave until later.

What do you need to consider when planning a budget?

• Do you know the costs of setting up an online shop?
• What budget do you need to get started?
• What are the future fixed costs?
• How will you finance the launch?
• Have you considered costs such as hosting, domain, expenses related to the creation of rules and regulations, the presentation of the offer, and the design of promotional material?
• What is your budget for promoting your store?
• How long will it take to prepare the site content, introduce products, etc.?

Step 5. Focus on customer lifetime value (CLTV)

A well-estimated budget for launching a business in the D2C model and responding to real consumer needs is one thing - but every company should also understand the value of its customers over time (CLTV). Long-term customer value is an indicator that tells you how much money you can make from the average consumer.

The value can lead the customer to make more purchases and foster positive relationships. If a company can increase its profits and retain its customers, it will up-sell more and, as a result, increase its revenues and ROI in the long term.

What can you do to build customer value over time?

• Monitor your customers' actions, needs, and problems
• Segment customers into profit groups
• Assign each a specific budget to reach the "ideal customer."

Step 6. Build up your community and take care of the relationships

It is necessary to collect as much contact data as possible - phone numbers and email addresses - to fully assess the quality of customer relationships in terms of effectiveness in building the D2C brand.

Both forms - email for quick and targeted online information and telephone for direct contact with customers at any time - are appropriate depending on the situation and relationship with a particular consumer. The key to success is to integrate your mailing and telephone lists to have a consistent marketing strategy for each communication channel. However, the list of people to contact needs to keep growing.

To take care of the customer relationship, it is worth investing in a CRM (Customer Relationship Management) - a system that organises customer data, while archiving and storing data about the whole company, creating a 'business memory card.' With such a tool, sellers have a wide range of options for communicating with customers, and creating new product offers based on stored data becomes simple and intuitive.

Step 7. Choose a strategy

The overall success of the brand depends on choosing the right business strategy. An understanding of the objectives and values, as well as defining the assets and budget, will allow for a rational assessment of the business opportunities. Moreover, it is necessary to have the appropriate technological skills to migrate to the D2C model.

Examples of D2C strategies available on the market:

• Your own online store - for selling products and creating a personal experience with the use of valuable content. This is the right strategy to build brand loyalty and ensure the business's flexibility.
   
• Touch point commerce – for selling products through other non-commercial forms of contact, e.g. social media and games. A helpful strategy for building consumer experience and researching consumer preferences and habits.
   
• Personalized D2C – for creating customised offers using e-commerce tools. Through a personalised form of contact with a particular customer, the seller is able to gather insightful data about their needs. This strategy highly influences customer loyalty.
   
• Subscriptions - recurring deliveries of products tailored to individual customer requirements. Besides brand loyalty, this strategy ensures a regularly refreshed offer.

Step 8. Define logistics processes

The clarity in logistics processes affects how the brand is perceived in the later stages of the purchasing process. This will help to avoid disappointment and improve the delivery of orders directly to the customer.

Delivery is often one of the most important elements in online store evaluation, so getting the logistics right from the start is important.

Step 9. Create a marketing strategy

A website is not enough to be successful in the D2C model. A properly constructed marketing plan tailored to your customers and your business's needs will allow you to achieve the best results. The good strategy will cover product launch rules, social media schedules, and SEO activities.

What steps should you take to create a good marketing plan?

• Identify and evaluate your brand
• Create buyer persona
• Set business goals
• Develop a marketing strategy
• Estimate your budget
• Test, develop, and monitor effects

Step 10. Integrate customer service

This is often overlooked but is key to the business's success. Customer service helps build a strong D2C brand - it has direct contact with consumers and knows their preferences and the source of their biggest problems or dissatisfactions. Consumer opinions provide invaluable information that can be analysed to help develop both the product offer and the business as a whole. As a result, the company's ability to respond quickly to customer needs is a key competitive advantage.

Step 11. Train your employees

Developing the right brand strategy is undoubtedly an essential component of success. However, it is impossible to achieve measurable results without training your people. They are responsible for completing the company's goals and objectives, so they need to have a broad knowledge base.

If the message is not in tune with the target audience or is prepared by 'advertising robots,' the company will not achieve good results. Working with employees to create a solid marketing strategy will help build a strong brand that customers want to return to.
 

Conclusion

D2C is not a fad but a direction in which e-business is moving. Online retailers must adapt not only to changes in the industry, but also to dynamically changing consumer needs. The D2C strategy lets you choose your sales and distribution channels, strengthening customer relationships and building loyalty. If your business is consumer-centric, the D2C model will best serve your needs.