The traditional business model used to sell goods and services to consumers has been a tried-and-true method. But that hasn’t stopped businesses and brands from innovating and developing new models over the years, especially since the creation of the internet. Direct-to-consumer (D2C) companies are one type of innovation that has brought many benefits to shoppers and business owners alike. In this guide, we discuss what D2C is, explain how it differs from other business models, and provide you with a list of steps to develop your own direct-to-consumer brand.
Image via iStock by hirun
D2C stands for direct-to-consumer. In this model, a business avoids dealing with middlemen and retailers to maintain complete control of its sales and production, from manufacturing to shipping. There are several ways that direct-to-consumer brands can distribute their products without traditional shipping and handling. Before opening any physical store locations, most direct-to-consumer brands first start their business online by developing a presence through social media and content marketing. This can help them increase their brand awareness and create an online following to increase their chances of success in the future with physical store locations.
Here are some examples of D2C businesses and how they might operate:
Direct-to-consumer companies often use e-commerce stores as their primary source of marketing to sell their goods to customers online. No matter to what industry the shop or store belongs to, the business often starts by developing an online presence.
Ryleigh discovers that people often have trouble remembering to grocery shop until the shelves are almost empty. So they develop a product that people can buy to scan different shelves and send notifications whenever certain pantry items run low. Ryleigh calls the product and brand: Shelve Scanner. They can manufacture the Shelve Scanner themself, so they create an e-commerce website and social media account to establish an online presence and sell the product. Because Ryleigh’s business handles the manufacturing and shipping of the product, their brand becomes a direct-to-consumer e-commerce store.
Some social media platforms, like Facebook and Instagram, allow people to sell goods and services through their accounts or pages. Though brands can run their business strictly through social media, most often, they use it with their e-commerce store and website.
Ryleigh had outstanding success opening the e-commerce store, Shelve Scanner, and has developed a strong following on social media. They add functions to social media pages that allow them to sell the products through the platforms. This offers multiple areas for people to buy from Ryleigh’s direct-to-consumer business and increases sales.
Pop-up shops are retail locations that companies establish for a short period. Most often, businesses that already have a powerful brand following create these shops to generate some additional income or test markets to see if a retail location would be profitable.
After Ryleigh discovers the e-commerce business, Shelve Scanner, is fairly successful, they open a pop-up shop in their area to see how lucrative the market is. They add the product to the shop and even adds some common groceries that people might buy. After running the pop-up shop for a few months, Ryleigh realizes that adding groceries to the business reduced profits significantly.
Local stores, also known as brick-and-mortar shops, are long-term retail businesses. Just like pop-up shops, direct-to-consumer brands rarely create these stores until they’ve had enough time to establish an online presence with an e-commerce store. The locations of local stores can vary, but most often D2C businesses create them in areas where they know retail markets are successful, such as big cities.
After testing the pop-up shop, Ryleigh opens a permanent location for their Shelve Scanner business. They set up a long-term retail store in the same area as the temporary shop, this time removing the addition of common grocery items. Though their e-commerce store is still the biggest source of income, Ryleigh hopes to have enough success with their local store to open more in the future.
B2C stands for business-to-consumer and it refers to any type of company that sells its products and services to consumers instead of other businesses. Though some companies use the term interchangeably with D2C, B2C is more of a general definition and direct-to-consumer brands are a specific type of B2C company. There are other forms of business-to-consumer companies that don’t exactly follow the direct-to-consumer model. Instead of selling their goods directly to customers, these B2C brands gain and sell their products in a more traditional way.
That means the business—most often a retailer—buys its products from manufacturers or wholesalers to develop its inventory and then resells those products to consumers. These businesses are the middlemen that manufacturers need to use in order to sell products. If a customer purchases an item from a traditional B2C company, and it’s out of stock, instead of creating more of the product, the company has to first purchase it from a manufacturer and wait to restock its inventory.
B2B stands for business-to-business and is a type of company that sells its products or services to improve the functions of other businesses and help them succeed. Unlike direct-to-consumer businesses, a B2B company doesn’t offer its products and services for consumer purchase. These products and services often assist in certain areas of a business’s production, marketing, or sales.
For example, CopyPress is a type of B2B agency that assists other businesses with their content marketing needs. This includes content creation, promotion and content syndication, and interactive content production. With our team of experts, we help other agencies and businesses develop strategies that increase traffic and generate conversions. While D2C brands may also create marketing strategies to reach buyers, these won’t be B2B marketing strategies as ours are.
Read more: What is B2B Marketing?
Everything comes with two sides, including D2C brands. Here are some of the benefits and drawbacks of direct-to-consumer marketing:
Here are some of the advantages of direct-to-consumer brands:
Here are some of the drawbacks of direct-to-consumer brands:
There’s a growing fascination with why millennials (the generation born between 1981 and 1996) are so obsessed with direct-to-consumer business models. Currently, a lot of direct-to-consumer brands operate through an e-commerce store. That’s helpful because millennials make over 54% of their purchases online and 81.3% of millennials shop online at least once a month. In fact, overall, D2C brands saw about a 16% increase in the number of buyers between 2017 and 2020.
Now, there’s nothing to say that the increase was mainly from that group, but 91% of millennials prefer shopping online compared to purchasing products in stores and 44% say their main reason for that is fast shipping and more product options. Direct-to-consumer brands often have some of the fastest shipping available for their products because they don’t need to go through a retailer or middleman. Right off the manufacturing floor, D2C businesses can package their products and ship them right away, saving consumers time and money.
Here is a list of steps to help you develop your own direct-to-consumer brand:
Before you develop your direct-to-consumer brand, it’s important to have a sound idea for the product you want to sell. A great place to start is to think about a problem or challenge that needs solving. For example, let’s say you notice that dog owners want to train their pets to go on walks without stopping so often. You could create a belt for dog owners to hold treats and toys to assist them with their training. You could also create a harness or leash that protects dogs if they stop suddenly during the walk.
These products might help solve the dog owner’s challenge of training their dog while on walks, and either of them could be a good place to develop your D2C brand. But having a good idea that solves a consumer problem is only part of the development process. It’s also important that you’re passionate about the idea. Passion for your brand and product can help motivate you to develop your product and business every step of the way. It’s also likely that your customers may notice your passion, which can help increase their loyalty to your brand.
Once you have a product idea, it’s important to create a business plan to help you envision how your company may function. A business plan is a document that companies create that establishes their goals and describes how they’re going to achieve them. Some of the key topics that companies cover in a business plan include:
The first step to developing your business plan is to conduct market research. Market research allows you to see what interest there might be in your product idea and the potential competition you might face. If your product idea is fairly original, that’s exciting, but it also means that you might need to spend more on marketing to build awareness for your product.
If your product idea faces some competition, it’s important to understand how those businesses’ products differ from your own. Look at their product descriptions and how they market their brand. See if there are any features of your product you can highlight to stand apart from them. It’s also helpful to determine if there are any gaps in their marketing efforts you might exploit. For example, if you notice none of your competitors are writing a blog, that might be something for you to try.
If you already have the means to manufacture your own product, you can start by developing a prototype. A prototype is a form of your final product that’s made with cheaper materials so you can easily create and test its design. After you’ve created a prototype, it’s important to run tests and get feedback on its production. You can even send these prototypes to potential customers to see if there are any features or changes they would want before purchasing them. If you can not manufacture the products yourself, you can research and find a manufacturer.
Manufacturers are companies that create products and goods from raw materials. There are many types of manufacturers that can help you in distinct steps of the production process. For example, some might help you develop a prototype first and work out any issues with the product before going into full production. A simple place to start is to look at other products the manufacturer has made. If any are like your idea, they might already have the tools and equipment necessary to make your brand’s product.
Developing your brand logo, colors, and style can help you create a brand identity that’s immediately recognizable to consumers. It’s also helpful to develop a tone and style for your written copy. This lets people know what to expect when they visit your domain. For example, Mint Mobile, a popular D2C company, adds humor to its content. This helps people recognize the brand while humanizing it and making it feel more relatable to consumers. It’s helpful to keep your written content consistent because it can help build loyalty and relationships with your customers more easily.
CopyPress has a team of experts ready and willing to help you develop a brand identity. When we work on a new content marketing campaign, we start by developing a style guide. This guide helps our writers and editors follow your brand’s written style and tone so your content stays consistent and recognizable to your customers. Schedule a strategy call with us and learn how we can help with brand development, marketing, and content promotion.
Because direct-to-consumer brands often perform most of their operations on the internet, it’s important for them to have a strong online presence and excellent marketing campaigns. Here are some of the most popular marketing strategies that people use for D2C brands:
Content marketing uses different written or visual content to boost your brand awareness. This content helps inform your customers about specific topics in your industry and can also provide them with helpful tutorials on how to complete different tasks. For example, if you created a product that helps dog owners train their pets on walks, you might write articles on subjects like, “tips for training new dogs” or “how to loose-leash walk your dog.” Some of the most common forms of content marketing include:
Social media content helps customers interact with your brand more easily. It also helps you stay active in your community, which can improve your brand’s following and loyalty. Creating a successful social media marketing campaign often involves creating consistent posts that deliver quality information to your followers. Create posts that highlight current company promotions, inform people about your products, and mention important industry topics. You can also pair social media marketing with content marketing and create posts that direct people to your new blogs, infographics, and videos.
Influencers are people that have a large social media following and a strong online presence. Most often, people follow influencers because they post about their exciting lives and the products or services that they use. This makes them helpful to businesses that want to market their own products and services. You can hire influencers to post about your brand, which can attract a larger online following and increase your sales.
Use software and online tools to find influencers that best fit your brand and products. You can also use these tools to reach out to them, gauge their interest in your brand, and determine the cost of marketing through their social media accounts.
Platforms such as Facebook, Instagram, and Google allow brands to purchase targeted ads they can use to attract consumers. These platforms often collect data from their users to determine the people who would be most responsive to your advertisements. This helps you reach your target audience more efficiently and increases your overall brand awareness. It’s helpful to use your paid advertisements sparingly so your brand doesn’t appear spammy. Too many direct advertisements on people’s search results or social media accounts might deter them from interacting with your brand further or making a purchase.
Search engine optimization (SEO) is the process of improving your website and content, so it’s easier for people to find on search engines. This can include strategies like:
You can perform SEO on many platforms, which makes it a dominant strategy to pair with other marketing efforts. For example, you can perform SEO strategies on your website and content to improve its ranking on the search engine results page (SERP). You can also perform different SEO strategies on your YouTube channel so your video content is easy to find on YouTube’s native search results.
D2C brands offer a lot of benefits to both customers and the businesses themselves. By establishing an online presence first and focusing on their digital marketing efforts, direct-to-consumer businesses can develop powerful brand loyalty and find immense success.
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