During the epidemic, DTC selling saw a notable increase in popularity. DTC sales are expected to cross $213 billion in 2023 after surpassing $128 billion in 2021, according to Statista data.
Investors have also shown a great deal of interest in DTC Commerce Solution companies.
According to statistics on DTC startup investment, Grove Collaborative, a DTC business that specializes in eco-friendly home and personal care goods, raised $474.5 million as of December 2021.
What about today, though? Is DTC e-commerce on the decline or is it still expanding? Should brands use direct-to-consumer (DTC) marketing or not?
The definition of DTC, how it differs from other e-commerce tactics, its benefits and drawbacks, its potential in retail, and how Better Commerce enables DTC vendors will all be covered in this article.
What is meant by DTC?
“Direct To Consumer” is what DTC stands for. Additionally, the acronym “D2C” will be used, with the “2” in lieu of the “T.”
Although DTC and D2C are interchangeable, DTC is more widely utilized in the US and most other countries.
What Is the Process of Direct-To-Consumer?
DTC operates by avoiding typical roles in retail and e-commerce. Online marketplaces, distribution routes, and wholesalers are unnecessary.
In a direct-to-consumer (DTC) sales approach, the producer or brand offers its items to customers straight from their website.
Here’s a brief rundown of how DTC varies from conventional retail and e-commerce.
Manufacturer → Website → Customer (DTC).
Traditional retail and e-commerce: Manufacturer → Distributor → Wholesaler → Retailer (online and physical storefronts) → Customer.
In what ways does DTC differ from wholesale?
The distinction between wholesale and DTC is rather straightforward. Selling to wholesale entails distributing goods in large quantities to middlemen and other third parties, such as retailers, in order to reach a wider market.
Because goods are passed through several hands before they are even purchased by the customer, wholesale selling, a type of third-party selling, may result in reduced profit margins.
In the end, it makes goods more costly for buyers and keeps producers from communicating with consumers.
DTC, on the other hand, concentrates on producers selling directly to individual customers. In addition to giving producers more control over their brands, this frequently results in larger profit margins and less expensive consumer goods.
Are B2C and DTC the same?
DTC is not the same as B2C, or “business to consumer.” Due to their similar sounds—both ending in “2C”—and the fact that both are about companies selling goods to customers, it is simple to confuse the two.
The distinction is that in a business-to-consumer (B2C) model, sales are made from a store to the customer. Direct-to-consumer (DTC) sales bypass merchants and reach the customer directly from the manufacturer.
Because of these similarities, DTC is occasionally viewed as a subset or variation of B2C.
Many popular brands engage in both direct-to-consumer and business-to-consumer sales. Nike footwear, for instance, are available for purchase on their website (DTC) and physical shop or online marketplace (B2C).
Is Dropshipping and DTC the Same?
No, dropshipping and DTC are not the same thing. In order to generate sales for the producer, dropshipping still depends on retailers.
The main similarity between dropshipping and direct-to-consumer (DTC) is that the supplier handles order fulfillment and that no outside parties (possibly excluding couriers) handle the inventory while it is being delivered to the client.
Products are sold on the retailer’s website and then shipped straight from the manufacturer to the customer via dropshipping. The manufacturer still gives retailers a portion of the sale.
This differs from DTC because, although if the merchants do not own the goods, they still handle the transaction and interact with the customer, and the sale most likely happened on their platform.
The manufacturer handles each of these duties in a DTC model.
Is Direct-To-Consumer Sales More Affordable?
The primary justification for adopting DTC is that it is more cost-effective for both the manufacturer and the customer. It’s mostly about saving, as the aforementioned figures demonstrate.
Because it eliminates the middlemen who would normally receive a portion of the earnings from your product—wholesalers, marketplaces, retailers, and distributors—it is less expensive.
In example, marketplace fees from sites like Amazon and eBay can significantly reduce a seller’s earnings.
However, there is a trade-off: markets draw a lot of buyers, so DTC may not always be more profitable than selling on marketplaces.
Additionally, DTC selling may need you to collaborate with additional service providers for items that marketplaces would provide, which, if you’re not careful, might make DTC selling more costly.
Why Sell to Customers Directly?
because customers prefer to purchase products directly from companies. The top three variables that drive customers to purchase DTC, according to a 2022 survey, were:
49% more affordable.
Delivery is 47% free.
35% returns are free.
Additionally, businesses may establish stronger bonds with consumers through wholesale.
They may create better items and enhance their marketing by learning more about the likes and dislikes of their customers as well as their spending patterns through this interaction.
Additionally, companies may use marketing strategies to connect with customers, who may then learn more about your offerings and make additional purchases.
