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D2C eCommerce Explained: Why Manufacturers are shifting towards selling Direct to Consumer

While there are many benefits to a direct-to-consumer (D2C) business model utilising D2C eCommerce, there are of course challenges.

Lyndsey Turner (Marketing Executive) Written by Lyndsey Turner (Marketing Executive) 26 May 2020 in Manufacturing
D2C eCommerce Explained: Why Manufacturers are shifting towards selling Direct to Consumer

Increasingly traditional supply chains are evolving to bring products direct to the consumer from the manufacturer or producer.

Demand for competitive pricing, more brand control and simpler logistics are driving the change from both the buyer and producer. But while there are many benefits to a direct-to-consumer (D2C) business model utilising D2C eCommerce, there are of course challenges.

So what exactly is Direct-to-Consumer or D2C eCommerce?

The definition of direct-to-consumer e-commerce (D2C eCommerce) is simply selling online directly from the manufacturer or producer to the end-user.

D2C eCommerce is the technology which enables traditional B2B companies, like manufacturers and even wholesalers, to sell directly to the end-user in an easier way using their D2C website.

In the traditional supply chain, the process to get a product in the hands of the consumer typically involves manufacturers sourcing the raw materials, then using machines and labour to produce the goods; wholesalers buy these goods from the manufacturer and sell them on to the retailer directly or through a distributor; the retailer then sells the product to the consumer, via a physical store and more increasingly through both a physical and online store using a B2C eCommerce platform.

The reason many manufacturers haven’t yet moved to a D2C business model is they typically produce and sell in large volumes. That’s where D2C eCommerce comes in. It aids the move towards a simpler D2C supply chain and allows the consumer to directly engage with the brand.

Your Brand, Your Way!

A D2C business model has multiple benefits for both the business and the buyer. D2C selling means the manufacturer has complete control over the brand’s products and its reputation and basically all aspects of the business from conception to completion.

You can engage directly with the end consumer to forge closer and deeper relationships and understand your customer like never before. Packaging, marketing, sales strategies and customer experience and support are all controlled by the producer.

New products can be brought to market faster allowing you to be reactive to market trends. And when it comes to brass tax the simpler D2C business model means the manufacturer should be able to make a higher profit margin while still giving the consumer a more competitive price than the retailer.

D2C Challenges

Moving away from traditional supply chains and going D2C isn’t without its pitfalls. The basic elements of the typical supply chain exist for a reason, right?

From competing with experienced retailers who understand the market and the consumer to the logistics behind actually getting the product to the consumer, there are many challenges.

Order fulfilment means everything from the initial order taking and processing to shipping and delivery. Many large retailers are very experienced at this and offer very efficient delivery so D2C businesses would need to compete with this. All this extra work around order fulfilment, marketing, sales and customer service will inevitably involve additional staff and wages, so this must be taken into consideration too.

As manufacturers increasingly move away from traditional business models and supply chains towards D2C sales they gain a better understanding of their customer, more control over their brand, and attain more freedom to innovate.

A D2C eCommerce site on the right platform is what allows this all to be possible. It is the game changer and the only way those at the very start of traditional supply chains can move to sell directly to the consumer.