Are you DTC? An in-depth look at e-commerce’s biggest paradigm shift: Direct-to-Consumer

28th October 2019

6 Min Read

“If you’re trying to disrupt the status quo and beat bigger competitors, you’re not going to do it by playing their game.” Dharmesh Shah, OnStartups.com.

For the longest time, the e-commerce industry has been monopolised by giants such as Amazon and Alibaba. That, however, is no longer the case; thanks to the Direct-to-Consumer (DTC) e-commerce business model.

Cutting out the middleman

The good

As the name suggests, DTC cuts out third-party retailers and connects manufacturers directly with their consumers. The absence of an intermediary that comes with a DTC sales model yields several benefits. For one, manufacturers are able to regain control of the customer journey – something that was previously out of their hands.

This, in and of itself, is a game changer. By taking back the reins, DTC brands are not only able to have a say in how their customers interact with and perceive their brand, but also to build a lasting relationship with them.

With the help of data gathered from interactions over multiple touchpoints, DTC companies can get a better understanding of their customers’ shopping behaviours and preferences throughout the entire customer journey. This consequently results in a more personalised experience for each customer, which seems to be the industry standard these days.

Another major advantage is that instead of just winging it, DTC brands can base their supply on actual customer demand patterns through data insights and scale accordingly. No more excessive stocking up of inventory on the off chance that someone may or may not make a purchase.

Speaking of which, it is worth noting that despite big data’s amazing ability to personalise the customer experience, DTC companies must first be able to make sense of it in order for it to be actionable. After all, what good is a map if you don’t know how to read it?

Going DTC also lowers manufacturers’ operating costs, which equates to higher profit margins and more competitive pricing. By taking supply chain partners out of the equation, DTC brands can streamline the sales and delivery process. This subsequently results in more affordable products for the end user. Win-win.

The bad and the ugly

It’s not all unicorns and rainbows, though. Full autonomy does come with its caveats, the largest of which is the possibility of your DTC strategy backfiring on you. Due to the nature of the e-commerce industry, every customer you convert is taking a leap of faith when they make a purchase from you.

Without having any physical interaction with your products through a brick-and-mortar store, your customers can never be absolutely sure that what you’re selling is legit until they it arrives on their doorstep.

To make matters worse, this seemingly impossible task just got a whole lot harder now that you’ve decided to sell directly to your consumers. You’ll have to convince your customers that what you have to offer is indeed worth buying.

What reason do they have to patronise your DTC website over a reputable online retail store filled with countless big-name brands to choose from? That’s an important question you’ll have to ask yourself before making the jump.

If done right, your move to DTC could be just what your e-commerce business needs to level the playing field. On the flip side, there are a million things that could go wrong if you’re unprepared. But if you’re ready to take the leap, let’s talk about how you can go DTC without shooting yourself in the foot.

Nothing happens by accident

The first thing you have to come to terms with is that nothing ever happens by accident. As cliche as it sounds, if you fail to plan, you plan to fail. The DTC industry is no exception. The good news is, you won’t have to come up with something from scratch. Take a page out of these DTC brands’ books and see how you can apply these strategies to your own business.

Casper: Eliminate analysis paralysis by offering one product, the best one

The founders of Casper realised how ridiculous it was for consumers to have to deal with a myriad of options when it comes to mattress shopping. They decided to offer one (just one) type of mattress, made it affordable and delivered it right to their customers’ doorstep.

Glossier: Start a blog before launching your product

Emily Weiss started a blog called Into the Gloss, which provided a real look at the beauty industry and provided practical tips for the everyday woman, as an intern at Vogue. The blog quickly turned into a big hit, with over 1.5 million views since its launch. This gave Weiss the platform she needed to find out what women really wanted out of cosmetics and create products to meet those needs with Glossier.

Dollar Shave Club: Hit your target market from all angles

You’ve probably seen the viral video “Our Blades are F***ing Great”, but have you ever wondered if it made its claim to fame through pure luck? It didn’t. In order to pull off something with that much reach, Dollar Shave Club integrated multiple channels that worked together to pull off probably one of the best examples of great content marketing.

Cast your net far and wide

It’s natural for your website traffic to take a hit once you’ve broken free from your retailer. If you haven’t already, now is the time to focus your marketing efforts on reaching out to as many potential customers as possible.

Double down on your market reach by adopting an omni-channel marketing strategy, which goes beyond just creating accounts on every social media platform you can think of and calling it a day. Not to be mistaken for multi-channel marketing, an omni-channel strategy uses multiple channels to provide a seamless, integrated customer experience.

Multi-channel, on the other hand, is simply the usage of multiple channels without any thought for improving the customer experience. Avoid this boo-boo by taking into account the platforms and devices your customers are on and think of how you can tie it all into one smooth-sailing journey for them. If you manage to do that, you’re golden.

In order for an omni-channel approach to succeed, however, you’re going to need to grab your customers’ attention. And although it’s easier said than done, it is possible to stand out in a sea of advertisers. How? You’ll need quality ad creatives. Lots of them.

Bumping up the volume of your ad creatives may sound tedious, but it opens up many doors for your DTC advertising. It’s simply a numbers game. The more creatives you produce, the more options you have to play around with. This doesn’t just apply to creative testing, though. More ad creatives also allows you to come up with different visual directions that you can use to target a higher number of target demographics. This, in turn, significantly increases your reach.

Still not convinced about advertising? Get this. According to a recent study, DTC ad spend has shot up by 7-20% annually over the last five years and continues to grow across multiple product categories.

The future of e-commerce?

Is DTC the future of e-commerce? It’s still too early to tell, but there are definitely signs that point to it. For starters, DTC consumers are mostly made up of younger demographics who spend most of their time tapping on a 6-inch brick. These consumers appreciate value and convenience over anything else, and tend to do their shopping on multiple channels rather than on a single platform.

The greatest challenge for e-commerce brands looking to go DTC is figuring out why consumers would choose them over other DTC competitors or online retailers and to come up with a DTC strategy that provides the best omni-channel shopping experience possible. No pressure.