What is D2C ecommerce, and what does it mean? Simply put, D2C stands for direct to consumer. D2C companies sell and ship their products directly to their customers.
In this guide, we’re taking a closer look at D2C, including the D2C meaning, and the opportunities and challenges faced by D2C brands in the ecommerce space.
- D2C Meaning & Explanation
- How Does D2C Compare to Traditional Retail?
- What D2C Ecommerce Means For Brands
- Direct-to-Consumer Brands: Success Stories
- What’s The Difference Between D2C, B2C, and B2B?
- The Future of D2C
D2C Meaning & Explanation
D2C means direct to consumer. When companies sell and ship their own products to customers, they’re D2C.
An increasing number of brands are adopting the model of D2C, meaning they’re managing the entire process in-house, from manufacturing the goods to marketing, selling, and shipping them directly to individual end consumers.
The D2C model has grown rapidly in recent years, with D2C ecommerce sales forecast to hit almost 175 billion dollars in 2023. Direct-to-consumer brands have seen sales increase year on year, as customers opt to purchase their goods directly from the people who make them, instead of buying them from marketplaces such as Amazon or Target.
Direct-to-consumer brands can take control of the entire product and customer journey, cutting out the middlemen. There’s no limit to what goods or products can be sold D2C — if the brand can produce it, then they can sell it.
How Does D2C Compare to Traditional Retail?
If a brand produces, markets, and sells their goods directly to customers, they’re D2C. This might seem simple enough, but to really understand what sets direct-to-consumer brands apart, it’s important to understand how traditional retail operates.
In traditional retail models, a product starts its life with the manufacturer. It then moves on to a wholesaler, before making its way to a retailer, often via a distributor. Once stocked by the retailer (whether that’s an online marketplace or in a brick-and-mortar store) it can then be purchased by the end customer. If you’ve purchased a named-brand product from a store like Amazon or Walmart, then it has most likely been through this journey.
There are a considerable number of steps in traditional retail to get from production to final purchase, with goods changing hands several times before ending up on the store’s rails (or website). With direct-to-consumer ecommerce, brands play the roles of both manufacturer and retailer, streamlining the process.
What D2C Ecommerce Means For Brands
D2C ecommerce can create both opportunities and challenges for brands. As we’ve seen, it can streamline the sales process and remove the need for middlemen, and for businesses that want complete control over their brand, customer insights, and sales journey, this has benefits.
But dealing directly with customers requires brands to consider business areas like marketing and customer service, which many traditional manufacturers don’t have to think about. Whether it’s establishing competitive shipping terms, growing an engaged community on social media, or writing returns policies, operating as a D2C brand comes with many additional business requirements.
Direct-to-Consumer Brands: Success Stories
Brands such as Casper, Warby Parker, and Glossier are often held up as prime examples of D2C growth and success. They prove that there are no limits as to what D2C brands can successfully market — from mattresses to mascara, they’ve all found a loyal customer base.
Search for direct-to-consumer brand examples and you’ll see these brands listed time and time again as success stories. Even huge names in the retail world have moved away from their traditional retail models to explore D2C, thanks to the appeal of higher margins and increased control.
What’s The Difference Between D2C, B2C, and B2B?
While we’ve covered what D2C means, it’s important to understand where it sits within the wider ecommerce world. There are three key terms often used to describe ecommerce businesses: D2C, B2C, and B2B.
B2C ecommerce means business to consumer, a broad term that includes any business providing a product or service to the end consumer. That can be physical goods, like apparel, and experiences, like vacations. The defining element of B2C is that it’s an individual customer making the purchase, as opposed to a business (and we’ll come to that one in a moment).
The difference between D2C and B2C businesses is that B2B businesses can source their products and services from anywhere. When it comes to starting an online store, many successful B2C companies opt for the wholesale model, which doesn’t require any manufacturing and instead allows them to act as a marketplace. This is what sets direct-to-consumer brands apart from other B2C businesses—and why D2C ecommerce is a retail model of its own.
B2B ecommerce means business to business. Within this retail model, businesses only sell to other businesses, with the goods sold being anything from finished products to raw materials required for manufacturing.
Wholesale is a model of B2B. Not all businesses can (or want to) manage their product journey from end to end. Maybe they don’t have the time or capacity to effectively market themselves and their products, or perhaps they don’t have the infrastructure required to fulfill and ship individual orders. Wholesale allows manufacturers to sell their products in bulk orders to retailers, who then take care of the marketing, sales, and last-mile logistics.
Many wholesale sellers may also be direct-to-consumer brands. For D2C brands, wholesale can provide an additional revenue stream while allowing their products to be discovered by retailers and a wider audience. Wholesale marketplaces are the best way to start selling wholesale for D2C and B2C brands looking to sell in bulk.
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The Future of D2C
Having taken a deep dive into the D2C meaning, there’s one question you might still be asking: what does the future hold for direct-to-consumer brands? If the last few years have shown us anything, it’s that the more control you have over your supply chain and your brand, the better.
With the D2C market forecasted to grow year on year, it’s likely that even more big names will be tempted out of the traditional retail model. But D2C ecommerce isn’t an either/or situation. With online brands expanding into the physical retail space with brick-and-mortar stores, signing deals with big-box retailers, or adding a wholesale model to their business, the future of D2C looks to be full of possibilities.