Most people have a misconception that b2c,i.e, business to consumer and d2c meaning direct to consumer are one and the same. However, the difference between the two business models is that in d2c eCommerce the brand owners sell their product directly to customers without any middlemen whereas the b2c model enables the selling of other brand products as well. To get a detailed understanding of what is d2c read through this article.
D2C refers to Direct-to-Consumer. It’s a business model where a producer or manufacturer can avoid the middlemen to build, market, sell, and ship its products directly to the customer. By forgoing the traditional retail distribution models and middlemen like third-party retailers, go-betweens, intermediaries, and brokers, D2C companies can offer their products at lower prices compared to brands that use traditional retail business models.
Studies have found over 50% of online shoppers want to cut the middleman out and prefer to shop with manufacturers instead of retailers. These are among the key reasons why several B2B businesses are incorporating D2C into their sales strategy. When a company sells directly to its target consumers, it’ll enjoy a massive competitive advantage in the market.
As per a survey conducted by DEG Digital in 2019, the main challenge facing brands in eCommerce was D2C meaning direct to consumer growth, even ahead of Amazon’s influence.
Reasons that gave D2C momentum in the recent years
1. The COVID-19 pandemic
The coronavirus pandemic has acted as a catalyst for some of the biggest global brands, making them open online stores to deliver products directly to their consumers’ homes. The Indian market was no different as leading brands like ITC, Duroflex, Puma launched their D2C offerings during the 2020 lockdown to help their customers access their preferred consumer-packaged goods.
Lockdowns and subsequent outdoor movement restrictions also encouraged people to experiment with and increasingly buy D2C offerings, especially in the fields of healthy food alternatives and personal care items.
Dedicated to delivering 100% toxin-free products in the market, personal care brand Mamaearth turned the Covid-19 crisis into an opportunity by adopting direct to consumer routes with the help of logistics partners that helped increase their sales and ultimately, revenue.
2. Significant growth in Ayurveda-based brands
COVID-19 has triggered a spurt in the growth of Ayurveda wellness brands, especially in the categories of health and nutrition, and skin care, among others. For instance, Khadi Essentials – a D2C beauty and wellness brand, which was launched in 2019, closed at over 15 crores in gross merchandise value within a year of its inception. It’s interesting to note here that India’s Ayurveda market is anticipated to touch the INR 710.87 billion mark by 2024. This will surely fuel the growth of Ayurveda-based D2C brands further.
Started in 2017 at a very small scale by the brother duo-Vishal Kaushik and Paarag Kaushik, Upakarma Ayurveda has become one of the leading Ayurvedic brands during the pandemic with over 100% year-on-year rise in its revenue by putting faith in direct to consumer strategy.
3. Need for personalized and newer brands
Boredom spawned due to being cooped at home because of the pandemic and trying to find relevant products online also gave a fillip to several new-age brands like Licious, Country Delight, Lenskart, Dr. Vaidya’s, and BoAt, and among others. Thanks to being brand-starved, the new-age consumers in India are also looking for variety, which has given these brands an additional boost. For instance, leading D2C brands in food spaces like Licious and Country Delight have witnessed more than 100% growth in scale with respect to pre-COVID levels.
COVID-19 also encouraged many people like home bakers, DIY enthusiasts, etc. to start their home-based D2C businesses. By using technological advancements and channels like Facebook, Instagram, Shopify, etc. to reach their customers and sell their offerings, these people have added some much-needed variety to the market mix.
A one-size-fits-all strategy does not work for d2c eCommerce. Winning in modern retail requires a consumer experience personalization strategy to offer a differentiated experience. Knowing the fact that about 85% of the customers are influenced by personalized homepage recommendations, Sephora, a direct to consumer brand in the cosmetics segment has placed a new arrivals widget on its home page.
4. Dropshipping has helped D2C models growth
Thanks to their ability to reach the end customers quickly, drop shippers have helped D2C brands leverage their services to fulfil products on their behalf. Such services can even come in handy when a D2C brand wants the drop shipper to stock and fulfil its orders.
5. Better customized offerings and quicker customer service
For businesses, customer service is of vital importance. Having a D2C model helps them offer their products more conveniently and to evaluate feedback from consumers faster. D2C models allow businesses to check several items off of their list in order to grow and reach new levels.
No intervention of retailers gives you the full control you get from selling direct to consumer. In d2c eCommerce, there are no compromises with respect to pricing, marketing, location. You enjoy full authority over the entire customer experience and can craft the perfect retail showcase for your product.
For instance, the Bengaluru-based Wakefit.co, which is a D2C sleep and home solutions brand, noticed how most customers hated the elaborate and confusing process of buying mattresses and decided to simplify the process by meeting the expectations of most buyers. To ensure a seamless pre-purchase, purchase, and post-purchase journey for its customers, the brand partnered with MoEngage in 2020. MoEngage is a fully integrated, AI-powered customer engagement solution to drive deeper consumer insights, greater efficiencies, personalization at scale, and cross-channel automation.
In accordance with the Direct-to-Consumer Purchase Intent Index, over 80% of end consumers are expected to make at least one purchase through d2c eCommerce brand within the next 5 years.
If you’re an entrepreneur at heart and haven’t used the D2C model until now or if you have been using marketplaces like Amazon/Flipkart for promoting your brand so far, it’s time to set up your business and leverage the D2C model. D2C allows you to connect with your target consumers directly and provide them with customized experiences. You will have a chance to tell your brand story to your customers.
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