D2C stands for Direct-To-Consumer. The term refers to when businesses deliver products to their own facilities or distribute them through their own channel. Some of the company’s channels are e-commerce, so they don’t need to own a physical store.
The D2C business model can be applied in various industries and businesses.
What is Direct-to-customer Model Business?
Nowadays, most companies are adopting the D2C business model which is in line with the advancement in technology that encourages customers to change their behavior. Selling or distributing can be done direct or indirectly.
Companies that chose to sell their products directly to customers, it means they use the D2C business model. There are several reasons why companies choose to implement the D2C model for their business.
The specific profit of this method depends on its type of industry. Here is the benefit of the D2C business model,
- Fully controlled on profit
Companies that sell their products directly to their customers have control over their desired profit. For instance, Glossier, a cosmetic brand, sells high-quality cosmetics.
Their products are only available on their websites. They promote their products through social media by giving storytelling to increase their value brand.
With direct selling, they do not have to cut their profits for resellers. They build the image of their products on their platform and sell them directly to their customers. A successful social media campaign makes the product popular.
- Getting access to customers data
Direct-to-customers model business means handling the whole production process and distribution which at the same time they can collect a lot of data about their customers.
Then, how do they get the customers’ information?
The first step is collecting customers’ responses and reviews. Today, it is possible to track which websites receive a lot of visitors through software. This software will assist companies to monitor which part of selling needs to be improved.
When selling through third parties, companies will not have detailed information about their customers. Aside from online stores like the web, social media has a crucial role to make people aware of their products.
You can promote your products not only through social media but also through pay-per-click (PPC) and email marketing. Those media provide companies with customers information
- Higher products personalize
If companies have detailed information about their customers, then they can offer better products tailored to their needs. A better understanding of your customers will help you develop the products they need.
In order to be able to obtain the information, you can create an event such as quizzes with several questions such as model, design, or which type of product they love. Companies can also offer try-for-free promotions.
- Profit optimization
The benefit of using this model is that companies do not need resellers. Companies will produce, sell, distribute and promote their own products.
Thus, the whole of budgeting is controlled by companies without sharing with other parties. As a result, the profit will also go directly to the companies.
Implementing this model will require a lot more work, however, companies will be in control of the entire process.
- Having more control over brand reputation
Companies have little control over their products when they are sold by resellers. Through D2C model business, companies can take full control of the products.
It means companies manage their own marketing, sales strategies, and direct contact with their customers. In addition, companies can also control customers’ experience in purchasing products.
The Challenges of D2C Business Model
Nevertheless, D2C business models are not without their flaws. Companies will have many responsibilities. When companies partnered with resellers, the distribution will be handled by the distributor.
However, companies with this model will have to handle the whole process. Here are some of the challenges that companies will face when using D2C.
Marketing, selling, and customer service
The companies that use this model must develop their own market strategies and direct selling approaches. In addition to that, companies can also provide customer services. To do those roles, it requires many employees.
Companies that use this business model often have trouble fulfilling their orders, not only in preparing but also in packaging the products for each customer.
There will be competition in delivering the products between companies and retailers who sell similar products or with large companies.
Build Brand in social media
It’s not as easy as it seems to sell products online, especially when a company does it by itself. Companies should build their own brand that attracts many customers. A brand that implements a direct-to-customer model business needs to focus on marketing.
Those challenges can be resolved if companies perform the right planning and strategy. They need to prepare it thoroughly so that this model business can run smoothly.
Tips to Start D2C Business Model
In implementing a business model, first you need to understand its benefits and weaknesses. For companies to gain profit, they must show the benefits of D2C models first. Here are the tips that you can do to start using the D2C model.
A great idea
A business that uses D2C as its model business needs to have a brand that amazes its customers. Their brand must be better than their competitors. Therefore, they need a great and unique idea. However, the product needs to be accepted by the market.
A deep market analysis
Starting a business using this model needs to have a deep analysis since we need to understand many aspects in marketing.
It is crucial to have a better understanding of customers. It will assist companies to understand brands, products, or services that are suitable for them.
Cosmetics products, for instance, whether they are marketed to women or teenage girls. Customers with different characteristics or profiles need different products as well.
Companies need to define the purpose of their products that they sell. They should know what messages their products can deliver. Brand identity plays crucial things in building trust and special relationships with potential customers.
When you plan to launch a product or brand and you implement the D2C business model, then you must consider how much it will cost.
You can plan and note it in business planning. There are additional aspects such as the sales team and marketing team. Hence, it will require a lot of money.
It is important for businesses to understand where the fund came from whether it is your own fund or getting from other parties. D2C can be an option in running a business. You can also utilize today’s technologies.
You can use software that can assist you to grow direct-to-customers business. That software can be employed to analyze the market and collect data from customers.
Increase Customer Retention With LOKASI Intelligence
While attracting new customers is an important aspect of business, we should also remember to protect our existing customers. Digital customer intelligence can help you retain your existing customers.
By definition, customer intelligence is the process of collecting and analyzing customer data to find the most efficient way for companies to interact with their customers.
A thorough analysis of your customers provides your business with useful information, such as identifying your target market, what kinds of products they like, what types of places they frequent, and so on.
LOKASI Intelligence is a geospatial software that provides demographic data such as population and socioeconomic status. Additionally, the platform has telco data. It displays information related to customers.
Among the information are customer movements, origin, interest, preference, occupation, lifestyle, and their device brand.
Using both Telco data and company’s customer data, you will be able to create the best retention strategy for your customers.
Find out more on how we assist businesses to expand their business spatially by contacting [email protected] or WhatsApp at 087777977731.