What is a Direct-to-Consumer or DTC Brand?

Direct-to-consumer brands, also known as DTC/D2C brands, are brands that sell directly to their customers instead of through other channels such as retailers, wholesalers or distributors. These middlemen (or women) were once the only route to sell a brand’s products to consumers – so consumer businesses were beholden to their models and margins. Eliminating these intermediaries allows a brand to become independent in the commercialisation of a product when selling to the final customer. Typically, DTC brands only sell through digital touchpoints, although more direct-to-consumer brands are creating pop-up shops or other physical locations to compliment the omni-channel journey that consumers expect today.

DTC Brands on the Rise.

Between 2000 to 2010, new brands began to take advantage of the internet as a key distribution channel. Brands like Warby Parker and Everlane launched their eCommerce stores, heavily promoting them via social media to acquire customers and sell directly to them.

At the height of the pandemic, 10 years of ecommerce growth exploded in just 90 days. 84% of consumers shopped online since the beginning of the pandemic. With this shift comes expectation from Consumers, they now want a direct connection and relationship with brands, so brands need to cultivate this to take advantage of the huge potential.

DTC brands continue to rise. In 2022, DTC eCommerce sales are predicted to reach $151.2 billion, a 16.9% increase from the previous year. It’s no surprise, as the business model benefits both the brand and the consumer.

The Benefits of Direct-to-Consumer (DTC).

1. Greater Margin & Lower Cost.

When multiple steps between a DTC brand and the customer are eliminated, you can also eliminate obstacles to profits. For example, if a company sells a product through wholesalers and retailers, they need to offer it at a price low enough for someone to consider reselling it. This does not occur with direct sales, which can result in lower costs.

DTC brands can also reduce their CAPEX or commercial rent costs. As they don’t need to rent costly physical retail spaces in multiple locations to increase growth. With this extra profitability DTC brands choose to sell their products at a lower cost through their owned channels.

2. Compete with Established Brands.

DTC brands have a unique opportunity to build a real distinct brand identity and stand out from the crowd. Free from retailers’ interpretations of their products, D2C brands can get creative and showcase their individual values; sticking to the value proposition and the philosophy of the company as it started. Each DTC brand needs to convince its customers that it offers something consumers can’t find anywhere else for initial purchase and ongoing repeat purchases.

3. Personalise the Costumer Experience.

With the direct-to-consumer brand selling, it gets full control of the entire customer experience. They can access and collect first-party customer data, which is important for CRM initiatives such as personalised email marketing campaigns. Digital marketing strategies are powered by data, helping build countless insights into your customers. This makes it possible to create clusters according to the criteria that most interests  a brand. The more segmented your base, the more personalised a DTC brand’s communication and products can become.

Without the limitations of large retailers, DTC brands can really come into their own at providing customers with personalised experiences.

4. Feedback & Experimentation.

Selling directly to the consumer means you have visibility of the entire customer journey. Having this oversight into a consumer’s experience means you can develop and iterate faster. A DTC brand will understand the barriers and demands from customers without having to fight each retailer for access to customer data.

There has never been a better time to launch a DTC business. If you have any questions, please feel free to talk to one of our consultants via our contact page here