The greatest benefits (and challenges) of running a D2C business

What is D2C eCommerce?

D2C (direct-to-consumer) eCommerce is an online business model in which a business sells their products directly to the consumer, bypassing traditional middlemen such as retailers.

Sales are usually made through an online storefront, and allows brands to establish and nurture a more direct connection with their customers.

In today’s article, we’re going to unpick D2C eCommerce and how it differs from other business models, as well as look at the benefits and challenges of D2C.

D2C vs B2C vs B2B: What’s the difference?

As already discussed, D2C eCommerce is when a customer makes a purchase directly from the eCommerce business, which is then processed and fulfilled in-house.

The B2C (business-to-consumer) business model is similar, as it also involves the customer buying directly from the business. However, a B2C brand will lean on third party companies for aspects of supply chain management, such as order fulfilment.

B2B (business-to-business) is the more traditional route, which involves a brand placing stock in a retailer, such as a supermarket, high street shop, or online storefront, which acts as the intermediary between the brand and the consumer.

What are the benefits of D2C eCommerce?

Entrepreneurs often choose the D2C business model because it requires less risk and investment than traditional routes to market. D2C eCommerce also has several advantages over a traditional retail business model, which we explore below.

Greater brand control

When going down a traditional avenue of stocking your goods in a third-party store, you end up relinquishing a lot of control over how your products are displayed to the consumer. You have little to no say over how and when your products are presented to the customer, and it can be difficult to sync up a retailer’s selling strategy with your D2C marketing strategy.

D2C eCommerce brands can directly control how their goods are presented to the customer, including product pages, high-quality photography, pricing, and more. Moreover, you’re better equipped to contact your customers directly about their purchases when they make direct sales through your digital channels.

Better brand loyalty

On a similar note, a D2C brand will generally have an easier time of generating loyal customers. There’s a distinct disconnect between the customer and your brand when they’re purchasing goods through a middleman, and repeat customers can be difficult when there’s a myriad of other options available next to your product on the shelf.

For example, why would a customer choose your product over a similar item that is on sale on the next shelf over?

Conversely, it’s far easier to track customer purchases when they’re made through your own channels, and as a result, it’s simpler to implement loyalty programmes to reward your most valuable customers.

Access useful customer data

When a customer makes a purchase through a third-party retailer, it’s unlikely that they will ever be more than a stranger to you. Unless a customer decides to contact you post-purchase, there is nothing but a number on a spreadsheet, which is of very little value to you in the long run.

Thanks to the digital nature of eCommerce, it’s easier than ever to capture useful customer data from a variety of sources when selling products D2C. Basic information like names, addresses, and contact details are essential for most purchases, and you have the option to learn more about customers via feedback and surveys. Also, with cookies and other tracking tools, you’re able to learn more about customer behaviour.

Sell anywhere

As D2C brands have full control over their operations, the sky truly is the limit when it comes to offering an omnichannel fulfilment solution. Without exclusivity deals, contracts, and other limitations imposed by traditional retailing, D2C companies are free to sell anywhere in the world, and through any means they see fit.

What are the challenges of D2C eCommerce?

While D2C can be a lucrative and rewarding business model, it doesn’t come without its challenges.

Lots of competition

Competition isn’t exactly unique to the D2C space, but competition in the vast majority of industries is fierce. In most cases, you’ll be up against D2C brands that have been in the game much longer, have many more resources at their disposal, and have large customer bases that will be difficult to take away.

A newer D2C brand will have their work cut out from day one, and needs to be innovative, smart, and have a great value proposition if they want to compete with more established businesses in their field.

Many hats to wear

Again, businesses of all shapes and sizes need to manage a lot of different things, but D2C brands might have the most hats to wear of all.

B2B and B2C brands naturally have more support in supply chain management and logistics planning, whereas D2C companies need to manage every aspect of their supply chain. This includes first mile delivery, order fulfilment, and last mile delivery.

D2C brands will also need to have dedicated customer service teams in place, as any complaints or feedback from customers will be directed to the brand, rather than the retailer.

Order fulfilment

One of the biggest challenges for D2C businesses is order fulfilment. What starts off as a fairly straightforward task quickly becomes unmanageable without the right strategy in place.

Often, D2C brands that experience rapid growth struggle to keep up with demand, driving customers away and destroying the momentum necessary for long-term success.

How to scale up your D2C operations

If you’re a growing D2C brand struggling to keep up with demand, outsourcing your fulfilment operations to a 3PL can free up huge amounts of time while improving your customer experience.

At James and James, we offer fulfilment solutions and inventory management tools designed to help your business grow.

We’ll store, pick, pack, and ship your products anywhere in the world, and our award-winning platform, ControlPort™, will help you to optimise your operational costs.

With fulfilment centres in the UK, EU, and USA, we’re ready to help you grow both domestically and internationally. To learn more, give us a call on +44 (0)1604 968 820 or arrange a call through our online form.

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