Direct-to-consumer (DTC) marketing involves e-commerce in which a manufacturer sells directly to a consumer, bypassing the supply chain and retail outlets. Convenience is one of the main reasons shoppers choose this model, as online purchasing and shipping of products has become the norm this century. Here are important facts to know about the DTC model and why it’s thriving.
Shopping online is rewarding to customers on several levels. Not only does the Internet save people time and money from driving around, it allows for easy searching of products. A person no longer has to leave their home to order products, as shipping tends to be fast and free to low cost from the smartphone. A recent study by Diffusion found that in the next five years a third of American consumers plan on doing at least 40 percent of shopping online from DTC companies.
Meanwhile, 81 percent of Americans say they’ll make at least one direct-to-consumer brand purchase within the next five years. At the same time only 9 percent say they think customer service of such firms is superior to traditional stores. Only 7 percent think the return process is easier with DTC brands.
So this information should be a wake up call for DTC companies to improve customer service. Physical retail lives on, but now more than ever it depends on customer service delivering a positive experience. Whether the purchase is in-store or online, the customer still judges the vendor partly based on customer service.
Plenty of savings can be realized by purchasing directly from a manufacturer. Cutting out the “middleman” allows manufacturers to sell items at lower prices. DTC brands are particularly targeting millennials, who grew up in the internet age. The key to e-commerce is that consumers are more likely to find exactly what they want through online research, which also helps them find the best prices. Some DTC companies have used exclusive memberships to offer deals that reward customer loyalty.
Marketing Through Digital Channels
Direct-to-consumer companies aim at reaching markets through digital channels for brand building. They often are perceived by consumers and competitors as market disruptors who offer solutions that cannot be found through traditional channels. This form of marketing works well for innovative products. These companies can broaden their markets by opening up physical retail stores in addition to the direct selling model.