It has been rightly said that, “Customer is the King.” All businesses have that knack of being dedicated towards understanding the requirements of the consumers. When it comes down to having an organic sale in a peculiar format in the market, the strategy that has proven to be the most effective of all is DTC, which is Direct to Consumer.
DTC or D2C is an efficient method of dealing the perks of your service directly to your target audience while bypassing the mediators like wholesalers and retailers, hence deducting the unnecessary hassle of dealing with different people while cutting down costs associated with having intermediaries between manufacturers and the consumer.
Despite the fact that it might not be a traditional format of conducting sales like in the past,
but this strategy has benefited businesses in generating effective and guaranteed sales while maximizing the overall profit. It has also brought changes in advertising and marketing the product or business to a particular set of people. This has an impact of looking after each and every customer with utmost care and delivering the best quality of goods to the required consumer.
DTC eradicates all the corruption as well as the taxes applicable while dealing with indirect form of sales. If the brand is dealing with consumers by themselves then they can efficiently learn about the pros and cons of their businesses. Apart from these benefits there is a seamless flow of purchase and sale, hence keeping the business model intact from having any troubles.
Top three reasons why brands prefer Direct To Consumers method:
1. Impact on the Flow of Income:
When businesses decide to become partially independent by taking the matters of sales in their hands through using this strategy, they simply deduct the costs of wholesalers and retailers and enjoy the ultimate profit. E-commerce companies usually build, market, sell and ship their products themselves without middlemen. BMO’s analysis determined that DTC gross margins average 2,350 basis points above wholesale, but the costs to run DTC operations leads to lesser earnings before interest and taxes margins than wholesale. Here is a pictorial representation on how DTC works.
Reference : https://bit.ly/33ouDKg
2. Smooth Flow of Delivery and Direct Reach:
When brands eradicate the middlemen, they then themselves have to directly approach their target audience through effective streams of story-telling or selling experiences, hence marketing their particular brand in a creative, quirky yet convincing manner for them to generate guaranteed sales for their products. The consumers thus have to deal directly with the businesses for any query regarding their purchase, thus the company learns to achieve improvements in terms of feedbacks given by the buyers. When the brand contacts the customer directly, they are bound to develop a database of the interested buyers, which eventually ensures that when something else is put up in the market by the brand, they’d already have a list of their target audience set, even before planning the entire flow of events. Apart from that, the businesses will be able to look forward to the quality of items that they serve to their customers. No doubt there are many drawbacks in taking care of the needs of each and every customer, but it is always better to know something than nothing.
Reference : https://bit.ly/33IIRoV
3. Multiple Channels for Sales:
When brands make sure that there is no person in the middle, the brands tend to approach the customers through feasible terms of messaging. Social media has played a significant role in making that happen. Online shopping is very much preferred and prevalent in the era of the global pandemic and also making people’s lives easier by getting goods at the tip of your fingers. All the consumers have to do is sit back, relax and wait for their order to reach their doorsteps. According to Harvard Business Review, 73% of all customers use multiple channels during their purchase journey, and according to UC Today, 90% of customers want an experience that has seamless service between communication while shopping online.
Reference : https://bit.ly/3tvrYco
Despite the fact that DTC is very prevalent in today’s era, yet not all businesses necessarily require this model of sales. A survey was conducted which proved that DTC was the most efficient strategy of sales for E-Commerce brands, apart from those, it is effective depending upon the nature of Businesses. Companies like Glossier, Dollar Shave Club and All birds are great examples of DTC models. DTC can be considered as the future of the E-Commerce market.