What is a D2C business model?

The D2C model is a business trend that has increased enormously the past few years due to the stay-at-home economy. In short, a D2C (Direct to Consumer) approach is defined by a model where a company sells products and services directly to their end customers without selling it via a wholesaler, retailer or any other form of intermediary. 

Covid-19 has shifted the way many companies do business. With most consumers at home, companies have adapted their marketing efforts as well as their business strategies. A great way to show how things have changed is the way brands sell to their customers, prioritizing a direct to consumer relationship in order to build loyalty bonds and earn consumer trust.

Advantages of a D2C Business Model

1. Creating a close relationship with your customers

A close relationship with your customers is a great competitive advantage. It allows you to connect deeper with them and provide better customer service. As a result you build stronger relationships with your customers.

This type of relationship also allows you to test new products before launching, which brings a big advantage in providing products you know are in line with the market’s needs..

2. Eliminating intermediaries

A Direct to Consumer approach implies selling your products and services directly to your customer. By eliminating the middlemen, you can generate higher margins.

With traditional CPG (Consumer Packaged Goods) brands, your profit comes only from their markup on the cost of the product. By removing the middlemen, you can sell the same products at lower prices (or increase profits), offer better customer service, and drive customer retention through targeted marketing campaigns.

3. Deeper insights about your consumers

A Direct to Consumer business model offers businesses the opportunity to learn more about who shops for their products.

It allows us to collect consumer data and insights which enables brands to deliver authentic and personalized experiences. Besides that, it creates direct access to consumer feedback which is valuable to understand which products are more popular amongst consumers and what products need improvement.

4. More control over your brand

When adopting this business model, brands own the totality of the purchase journey. Information like this is crucial to create and implement the right marketing strategies and provide the tools to streamline the buyer journey.

Companies that shifted D2C

Many companies have been actively launching new D2C programs during the covid-19 crisis. Below are some examples of companies that have shifted their efforts towards a D2C business model in order to face covid-19 challenges. These companies are in the frontline of an evolving economy that goes away from the traditional business models.

Heinz

Heinz recently entered the D2C world launching its first e-commerce website. The result, Heinz to Home provides large items or bundles which ensures large sized baskets to offset shipping costs. On the website it is also possible to register and buy a subscription plan ensuring convenience for consumers and fixed income for the brand.

Disney

Since cinemas have closed their doors as part of lockdown Disney has recently launched their own streaming platform – Disney+. The company announced that new movies would be released directly on this platform. This action faces the struggle consumers had while in lockdown without the opportunity to consume this type of content and with so much free time.

Nike

In response to the stay-at-home economy, Nike have stepped up their digital game by opening up the premium features of their training app. The brand also created “The Living Room Cup”, encouraging all people at home to turn sport into a daily habit indoors.The Living Room Cup offers a new space to compete against Nike Pro athletes through weekly fitness challenges. This created close relationships between the brand and its customers while it certainly retained new ones.