The growth of Direct-to-Consumer eCommerce has basically been the story of modern eCommerce in general. So many more brands are engaging with, and directly selling to, their customer base without any retail middleman (let alone a retail location) because of the internet’s reach that it’s been a game-changer to say the least.
A report from Bringg spoke to the effectiveness of D2C:
With revenue growth remaining a challenge, almost half (48 per cent) of manufacturers are racing to build Direct-to-Consumer (DTC) channels, with almost all of them (87 per cent) seeing these channels as relevant to their products and consumers.
Leading brands that once upon a time relied solely on partners to distribute their products are now embracing Direct-to-Consumer sales, which can be a powerful distribution channel with the added benefit of full control over the supply chain, and therefore also in full control of the overall brand experience.
Without having to partner with retailers, brands can keep basically all of their gross margin on sales, leading to higher profits even while keeping the costs low to their increasingly loyal customers.
The benefits of the D2C model
Deloitte (via Shopify) created a handy chart that outlined many of the benefits of D2C models:
In short, businesses can get more reach with less overhead by marketing and selling directly to consumers. It’s also fitting that this data came out of Shopify which has grown leaps and bounds right alongside the D2C industry as this e-commerce platform actively powers many of the online stores of D2C businesses. Much of Shopify’s now $19 billion valuation comes from it powering this tidal wave of direct-to-consumer businesses.
Also, in this current age of savvy consumers, D2C confers more trust between the brand and the buyer. Because there is no middleman, and therefore no additional markup in price, customers generally feel a closer connection to the brand as well as the knowledge that their hard-earned dollars are going directly to the people behind that brand, and not to some other company that has nothing to do with the product or service. Since trust is in such short supply these days, this means a lot for retaining and remarketing to a customer base.
D2C and affiliate/referral marketing
Furthermore, many of these benefits dovetail beautifully with affiliate marketing, which is why we’ll be at GrowCommerce. After all, loyalty programs and brand representatives are some of the most effective D2C marketing campaigns that exist in the space, as well as some of the most cost-effective as well.
In fact, a recent report out of Yotpo on the state of D2C showed this graphic:
It’s heartening to see that a third of D2C brands are already utilizing referral programs in their overall marketing plan, and to see that most are seeing great ROI from it. But that also shows that there is still room for growth for referral and loyalty programs among these businesses, which is why we’ll be evangelizing the huge upside to this marketing model at GrowCommerce.
The future of D2C
Again, the growth of e-commerce is also the story of the growth of D2C, and e-commerce shows no sign of slowing in the coming years, according to a Shopify report:
With eCommerce responsible for half of all retail growth, and increasingly more companies turning to D2C, the future looks bright for this sector overall. And check out this quote from Diffusion’s research (via Retail Dive):
A third of U.S. consumers plan to do at least 40% of their shopping from D2C companies in the next five years, and 81% say they’ll make at least one purchase from a D2C brand within the next five years, Diffusion found in its “2018 Direct-to-Consumer Purchase Intent Index.
More consumers are discovering the convenience and reasonable price-point of D2C online shopping, which will translate to higher sales. It seems both business and customers are all aboard this gravy train for the foreseeable future.