The Growth of Direct to Consumer (D2c) Marketplace and Why It’s Growing

January 10, 2022

By:  John Tomblin, Senior Solutions Architect
PhoenixBizz, a division of Sofvue, LLC
Printed with permission of Sofvue, LLC and the author

Direct to Consumer (D2c) is a business model allowing manufacturers to manufacture, market, sell, and deliver their products directly to customers, eliminating intermediaries (distributors, retailers, etc.).

With the rise of eCommerce, the D2c model has seen significant growth over the past five years, especially given the pandemic which started in 2019. And the trend is not showing any signs of slowing down.

According to Statista, D2c eCommerce sales in the US reached $129.31 billion in 2021. The number is forecasted to increase to $151.2 billion by the end of 2022, a 14.6% increase in just a single year!

So, the question becomes, why is the D2c market growing so fast, what are the benefits with operating a D2c model, whether you should also leverage D2c, and how you can get the most out of D2c?

Let’s get started!

Benefits of the Direct to Consumer (D2c) Business Model

When utilizing the direct-to-consumer model, you control the customers’ shopping experience. You can use available data to offer every individual a unique, personalized, and memorable experience, and when done right, D2c results in stronger brand recognition and increased customer loyalty.

Other benefits of the D2c model for your business includes.
 

  • Better yields: When you sell directly to customers, the entire profit model changes, especially for high in-demand products. Some examples of companies in this vertical include Warbly Parker, Dollar Shave Club and Casper.  Warby Parker is being watched very carefully by Wallstreet since it has launched its own multi-million-dollar advertising campaign direct to the consuming public. If the bet pays off, they will have proven the model, increased their yield or ROI, lowered logistic time and reduced their distribution overhead.
     
  • Stronger customer relationship: When you sell directly to consumers, you can deliver a better experience at every step: from the moment a consumer visits your website to the moment of product delivery. Apart from a value proposition based solely on the product’s quality or price, brands can begin to build an emotional connection with customers and build loyalty.
     
  • Facilitates new product lines: With complete control over customer data, including their consuming behavior, it facilities the ability to create new product lines. You can even obtain immediate feedback to optimize your product offerings.

Why 2022 is the launch year for Direct to Consumer?

As previously mentioned, the D2c eCommerce model is expanding -- a lot.  Because of improved software offerings, better code libraries, brand awareness and significantly improved logistic delivery models now mainstream, it’s easier than ever to reach consumers.  Here’s why:
 

  • Increased acceptance of web applications selling D2c
  • Increased trust by consumers toward eCommerce
  • Shifting consumer behavior
  • Rising household income
  • Less time to “shop” in physical stores
  • The pandemic and its effect on buyer behavior

Here are some statistics that highlight the growth of D2c:
 

  • 88% of consumers prefer to buy directly from brands rather than multi-brand retailers.
  • 82% of customers expect to be able to transact with a brand on its website.
  • Consumers are 57% more likely to start their online shopping journey on a brand’s website than on a retailer’s. 

These numbers show that you can attract more customers and boost profit margins by acting now (i.e., creating a D2c strategy). Also, you can build a stronger, more loyal customer base, which will help you overall.

How to Get Started with D2c

In the past few years, consumer expectations have risen sharply. Brands that meet and exceed their expectations will be the brands that capture and expand in their market segment.  The only way to do that is by leveraging the “eCommerce personalization” or “personalization” experience, which in simple terms is providing a dynamic and unique shopping experience for each visitor.

66% of customers expect brands to understand their individual needs. 63% of shoppers won’t buy from companies that provide a poor eCommerce personalization experience.  

And it’s not just what customers feel. Businesses that use advanced eCommerce personalization techniques see returns of up to $20 per $1 spent.

To get the most out of D2c, you will need to focus on three tactics:
 

  • Technology
  • Customer experience (CX)
  • Sales and Marketing
  • Let’s dig deeper into each of these.

Technology

To go all in with D2c, you will need a set of technology solutions that enable your brand to reach customers and sell your products directly.
 

  • Website: This is the first place your customers will look when considering a purchase with your brand. Therefore, you need to ensure your website is constantly updated with the latest information. The site needs to be easy to navigate, and it must offer a seamless shopping experience.
     
  • Mobile application (app): Depending on the size of your business and customer base, you might consider creating a mobile app that allows shoppers to buy from you at any time, and not just trying to offer a responsive platform experience -- that never works.

Apart from these customer-facing technologies, you will also need:
 

  • AI and ML: Artificial intelligence and machine learning enable you to personalize the customer’s shopping experience and recommend products based on their browsing behavior and purchase history.
     
  • Chatbots: Whether you love them or hate them… chatbots answer customers’ questions around the clock and help you capture their contact details. Chatbots can answer frequent questions about your refund policy, terms & conditions, estimated delivery time, etc., and since chatbots supply solutions to users’ questions instantly, it helps improve the consumers overall experience.
     
  • Augmented and Virtual Reality: AR and VR enable customers to try-before-you-buy concept. This helps reduce the return rate and increase sales.

Tip: Hire a mobile app development company in Phoenix to take care of the technological aspect of D2c.

Customer Experience

Being customer-centric is vital for success. By ensuring a great customer experience, you can entice shoppers into revisiting your website and drive repeat purchases. Here are some ways to offer the best possible customer experience.
 

  • Use AI to recommend products
  • Reward customers for buying from you directly with loyalty programs
  • Provide an omnichannel experience (sales and customer support) through digital solutions
  • Offer multiple payment options (including mobile wallets)
  • Offer fast and, when possible, free shipping
     

Sales and Marketing

D2c must include a strategy that facilitates leveraging all the sales and marketing possibilities to maximize conversions. Here are some marketing strategies you can use to help achieve this goal.
 

  • Search engine optimization (SEO)
  • Paid ads across multiple platforms and social media
  • Social media marketing
  • Email marketing
  • Programmatic retargeting

For sales, you can offer:
 

  • Flash sale promotions
  • Subscription models
  • Extra benefits for direct consumers (added discounts, gifts, etc.)
  • The Future of D2c

The future of D2c is bright. Brands can increase their profit margins while customers receive the “eCommerce personalization” they demand. Statistics bear this out and current data shows that the D2c marketplace will increase rapidly in the coming years.

If you have not yet started D2c, now is the time to consider it. If you are in Phoenix, or anywhere in the Arizona or Southern California area, you need a technology company who can build your company through each step of the process, and for that, PhoenixBizz is where you begin. Ready to get started? Give us a call at 623-845-2747.

Article References:

STATISTA: https://www.statista.com/statistics/1109833/usa-d2c-ecommerce-sales/
Ecommerce Platforms: https://ecommerce-platforms.com/ecommerce-selling-advice/88-of-consumers-prefer-to-buy-directly-from-the-brand
STARTUPBONSAI: https://startupbonsai.com/personalization-statistics/
LIVECLICKER: https://www.liveclicker.com/resources/report/the-value-of-personalization-optimization-for-retailers/

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