In the simplest possible terms, Direct to Consumer sales entails eliminating the shopkeeper, middleman, or supplier who historically collected goods from the manufacturer and then promoted and sold them to consumers. By way of example, every winter in the 1950s, the great department stores in large American cities would fly their buyers to Europe. These buyers would attend fashion shows and draw up lists of soft goods they wanted to purchase. As spring approached, these European styles would be displayed in American department stores and advertised in newspapers. Shoppers would come to the department stores and purchase these new fashions.
By contrast, today, anyone who wants to find a new outfit for a special occasion picks up a smartphone or tablet computer and voices what she is searching for into the search function. Instantly, photos and a plethora of information about all this apparel appears on the little screen; a purchase is made and two days later, the new outfit appears on the front doorstep: no flight to France, no transporting bulk orders of clothes, no going downtown to check out racks of clothes. It’s all accomplished over the Internet while lying on the couch.
This, of course, is an oversimplification on my part, but you can see the difference in these two models. It works for the consumer, who can shop from dozens of different merchants without leaving home. It works for the manufacturer, who is able to sell to the consumer at retail rather than wholesale prices. The one who is left out of the new paradigm is the old-fashioned merchant. In one interesting article that discusses the difficulties traditional merchants face in dealing with D2C startups, the observation is made that fledgling entrepreneurs would do even better against the old merchants if they had more expertise in Internet marketing: “The scary part for legacy brands is, now they have to compete against all of these hip upstart brands that are digitally native.”
This is not to say that there is no place for the middleman in the new sales structure. Indeed, there are a great many enterprising startups and small businesses that are able to market items on behalf of producers and manufacturers. If you check out some of the social media sales platforms, you’ll find marketers selling identical goods—sometimes even with the same labels on them. Take a look at the reviews and sales numbers and you’ll see that some merchants are much better than others at promoting and selling the same goods. D2C means marketing and selling products directly to the consumer. The question is, will it work for you?
The quickest answer to that question, and a disclaimer on my part, is that D2C takes a multitude of forms. We’ll discuss that more going forward. Many entrepreneurs tend to make a snap judgment in this regard, thinking that marketing directly to consumers is not applicable to their individual circumstances. Before simply writing off the notion of using D2C, however, I encourage you to keep an open mind as we take a look at the basic pros and cons of the D2C model and sort out which kinds of businesses have done well with it and which haven’t.
- Your profit margins are higher without the middleman
- You don’t have to rely on retailers to promote your goods; you aren’t at the mercy of the retailer when it comes to shelf space, etc.
- Building on that notion, there is no pressure from middlemen to give large discounts; this makes you more able to offer special incentives directly to consumers
- You get to decide what you want your marketing message to be
- You have to be involved directly with packaging, distribution, and shipping
- You have to be willing to learn how to market directly to the consumer
- You have to understand and utilize web design and ecommerce marketing
- Converting to a D2C marketing model is a financial as well as an intellectual and emotional commitment
What sort of company should adopt a D2C marketing paradigm? As a general rule, the less baggage a company has in terms of making decisions and being rooted in a certain location or a historical way of operating, the more likely it will be that D2C will work for you. To say that another way, if you are nimble and can make swift adjustments; if you enjoy learning new things and are not afraid of pursuing new business strategies; and, above all, if you have a genuine willingness for your company to grow, D2C is likely the best marketing paradigm for you.
What sort of company is not well suited by a D2C marketing paradigm? Again, I’m making generalizations here and every business is unique. History and research indicate that certain types of businesses will be better served by remaining with the traditional producer to retailer to customer model. Here are some of the business types that might not be best served by D2C.
- Companies where all the important members of the leadership team are not on-board with the D2C model. Are you able and willing to get everyone in leadership invested in D2C? If not, and if you don’t want to get rid of the unwilling, you might consider going out on your own. Nobody is nimbler than the individual entrepreneur.
- Companies that are not interested in individual sales and individual customer service
- Companies that do not want the liability of dealing with individual customers
- Companies whose goods cannot be sold as an entire unit. For instance, if you sell birthday cakes and you aren’t willing to sell candles, you are forcing your customers to find a second merchant.
- Finally, inpatient companies that aren’t willing to invest the time and energy to learn how the new D2C paradigm works. While business at a point may boom, shifting your marketing strategy straight to the consumer will take money, time, and patience, and it seldom works overnight.
If there is one thing the pandemic has taught us all, it’s that we need to get out of the house once in a while. This principle applies to consumer purchases. While you can shop, order, and receive a brand-new outfit while lying on the couch, there isn’t much joy or variety in that. You need to get up, put on that new gear, and go somewhere. Enjoying a new purchase should be a holistic experience that stimulates the mind and the senses. As a D2C marketer, you can be part of that holistic experience through the use of omnichannel marketing.
Many people don’t know what that expressing means, so let me share a simple definition. Omnichannel marketing is “utilizing multiple marketing channels to create a single user experience. The entire point is to unite the strengths of each of your communication channels to deliver a consistent and compelling brand message.”
Omnichannel marketing is first and foremost a way of retaining customers by engaging with them through several digital channels. Importantly, each contact that you make with the customer should serve a singular purpose. A key insight behind this concept is that today’s consumers move from one type of device or one type of application on a device to another many times during the day. Smartphone apps definitely should be part of this experience, given that the average American checks his or her cell 96 times a day (no joke). Smartphones now handle not only apps but text messages, emails, and special notifications. Oh yeah, and you can phone somebody with one as well.
All of this is a lot to take in. Even if you had a good grasp of these concepts, trying to put them successfully into play as you gear your business up for a D2C marketing campaign is a lot to ask. If you’re wise, you’ll choose to involve an experienced professional with plenty of experience who has been a part of this ongoing revolution from its inception.
That said, let me tell you a little about myself. For 25 years, I’ve helped businesses understand our new digital, eCommerce marketplace. I’ve not only observed but been an integral part of the evolution of online sales, D2C strategies, and particularly omnichannel marketing. Over the years, it’s been my pleasure to help many businesses move into D2C sales and step up to the next higher level of success. I’ve worked with an amazing variety of companies to develop unique sales strategies, demonstrating to leadership teams how to develop and include omnichannel marketing plans.
While it’s heady to be known as an expert in a growing, essential field that most folks have never even heard of, I would say my most important skill is the ability to listen to the leaders of the businesses I partner with so that together we can develop the marketing plan that works perfectly for you.
The world of selling goods has irrevocably changed and it will not be changing back. The Internet first made it possible and then essential for merchants to interact with their customers online. As tech and Internet-capable devices have grown, the need to utilize those devices to engage your customers has grown as well.
If you have questions about Direct to Consumer or omnichannel marketing, I hope you’ll feel free to contact me. I’m always delighted to hear from other businesses who are about to join this amazing, ongoing revolution that has changed everything about sales and marketing.
About the Author
For over 25 years, Jay Sung has been a passionate leader in driving sustainable growth through direct-to-consumer, e-commerce, and customer acquisition strategies. Mr. Sung oversees corporate branding and growth initiatives utilizing a continuously evolving toolkit of digital marketing strategies and technologies to drive innovative direct marketing programs for portfolio companies – from startups to Fortune 500 organizations.
Previously, Mr. Sung served as the Chief Marketing Officer for Guthy-Renker, a $1.3 billion industry leader in the direct-to-consumer health and beauty market. He is best known for developing consumer acquisition and marketing strategies for leading brands such as Meaningful Beauty® with Cindy Crawford, Wen® Haircare by Chaz Dean, IT Cosmetics™, and many others. In addition, he served as the CEO of such well-known brands as The Proactiv Company and Lot18.
Mr. Sung lives in Los Angeles, enjoying all Southern California has to offer. You’ll frequently find him reading the latest business journal, cooking or practicing the piano to relax. Mr. Sung earned his Bachelor of Science degree in economics with a double concentration in marketing and accounting from the Wharton School at the University of Pennsylvania.