3 reasons brands should switch to a direct-to-consumer model

In the new era of online shopping, it pays to create a direct connection between your brand and its customers.

July
27, 2021

Read for 4 minutes

Opinions expressed by Entrepreneur Contributors are their own.


Long gone are the days of getting out of the house, worrying about the traffic, finding parking, and battling the crowds in a retail setting. Online shopping is no longer as alien to most consumers as it used to be. It's mainstream now, and it's preferred for its convenience, ease of use, and cost-effective options.

Many companies sell online, but they sell through marketplaces like Amazon, eBay, and Walmart. Then there are brands that went straight to consumers right away and in a short amount of time grew into billion dollar whales that dominated their market.

Brands like Dollar Shave Club, Casper, Purple, and BarkBox launched, gained momentum, and grew by selling direct to consumers, with no retail partners or third-party marketplaces.

Related: The Secrets of Success for a Direct Selling Company

There are some additional details and costs, though such as warehouse, order processing and customer service There are several advantages to taking the D2C route into account.

1. You control and collect valuable consumer insight data

When you sell directly to consumers, you keep control of all your customer data and have access to analytics and data that you won't get when you sell on Amazon, for example. Sure, your seller account gives you some information, but if you own and control the platform, you can't access it.

Seeing where your conversion traffic is coming from before making a sale can help you learn more about your customers and identify potential advertising opportunities. When you see how your website visitors interact on your website and what flow they follow before making a purchase, you can provide a better overall customer journey.

Every action a consumer takes on your website has a reason. The ability to track and analyze this data allows you to discover the “why” part, which can then help you better market and serve your audience. The advantage is more conversions.

Having control over your data also eliminates the possibility of receiving the backlash due to a data leak. Even if it's not the brands' fault, consumers often report such a bad experience with the product they bought on the platform.

Similar: How Consumer Insights Can Boost Your Brand Marketing

2. Existing demand drives new income

For brands that sell through third-party outlets and platforms, the consumer is typically introduced to them when visiting a physical retail store or shopping on a platform like Amazon or Walmart. That retail store or third party platform will be compensated in the form of a profit margin or a percentage of the sale for this introduction.

A brand that builds a loyal fan base and satisfied customers through a D2C model doesn't need this other channel for this launch. The demand is already created, and once it is, that "middleman" is not needed to meet it.

A brand can take the money saved by skipping a third party vendor (revenue cuts from platforms and the lower margins at wholesale) and invest that money in increasing their social media presence. This alone can help create a large fan base and demand.

Related: Is the direct-to-consumer segment experiencing a revival?

3. You can ensure a pleasant direct customer experience

Nobody can tell the story of your brand as directly as you. Today consumers are attached to a particular brand because they feel connected. The only way to even make that connection and maintain that relationship is to sell directly to the consumer.

This connection is never made in a retail setting or on Amazon or any other major online marketplace. Also, by selling directly, you can ensure that every customer has a pleasant experience. You have no control over how a third-party marketplace treats your customers, or how a retail rep interacts with someone who buys your product.

The only way to be 100% sure that every customer is treated properly and that your brand is professionally portrayed and represented is to eliminate the middleman. If a customer is not satisfied with their experience, it is nobody but you to blame. In that case, you can locate the problem, make changes, and then provide your customers with an even better, face-to-face experience.

21 Posts Related to 3 reasons brands should switch to a direct-to-consumer model