The growth of ecommerce and data-driven digital marketing has leveled the playing field for manufacturers and retailers. Consumer Package Goods (CPG) companies, manufacturers, wholesalers and other B2B companies are finding more opportunities to sell direct to consumers (D2C) than ever before. In fact, according to recent data, 40% of internet users expect D2C brands to account for 40% of their purchases within the next five years.
We’ve asked ecommerce experts what D2C marketing is, why it’s growing and how companies can get started with D2C retail.
What Is D2C Marketing?
Traditionally, D2C marketing meant skipping channels like television and radio ads and serving consumers with branded catalogs or engaging with them in-person at events. Today, the definition has expanded to include manufacturers and CPG brands that wish to market directly to the end-user, instead of going through retailers and resellers. “From 1879 - 2010, brands used to sell indirectly to consumers, characterized by capital intensive supply chains and third-party partnerships with retailers,” said Justin Kwong, Founder of ISM. That meant there were traditionally high barriers to entry for B2B companies looking to sell to customers directly. Supply chains and relationships were too well established for companies to sell their products independently.
Kwong believes, however, that this is quickly changing with ecommerce. “The barriers to starting a D2C brand are lower than ever,” he said. It’s easier now for companies to cut out the ‘middleman’ and offer consumers the same products as retail competitors at much lower prices. That’s why many B2B retailers are focusing on building strong online brands and delivering great digital experiences that attract consumers directly.
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Why D2C Marketing Is Growing
According to Jonathan Chan, head of marketing at Insane Growth, the accessibility of data is behind the growth of D2C brands and D2C marketing. “Because marketers now have more access to consumer data than ever before,” Chan said.
Nowadays, marketers can track nearly everything about their customers, and this leads to highly data-driven marketing campaigns. B2B companies can find out much more about the customers that are interested in their products. That’s why Chan believes today’s marketers — whether B2B or B2C — have more opportunities to leverage this data for personalized and targeted campaigns.
Along with opportunities for data insights, D2C is fueled by customer demand. “Traditional retail has been disrupted,” agreed Raj Nijjer, VP of marketing at Yotpo, “and ecommerce has emerged as an equalizing force for brands, inspiring them to reimagine the relationships they have with their customers.” Traditional retailers no longer have complete control over developing consumer relationships. That’s because many millennials identify strongly with particular brand values and seek their favorite companies out directly online. As long as B2B retailers have a strong web presence, therefore, they can engage these consumers directly.
“Instead of relying on other platforms to carry your message,” added Chan, “D2C marketing cuts out the middleman and aims to engage with the consumer directly.” Companies know their own brands best, so they can deliver their message to consumers more effectively than the average retailer. That’s why D2C is being fueled by innovative online customer experiences.
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How Companies Can Get Started With D2C Marketing
The experts have a number of strategies for getting started with D2C marketing.
“Existing brands can get started with D2C marketing by leveraging their existing retail partnerships,” suggested Kwong. These partnerships can help ease the transition into D2C by providing a starting point for targeting potential consumers. For example, “many D2C brands use the narrative that their products are made with the same quality and from the same manufacturers as incumbent brands, but at a fraction of the cost.” Competing on price is one approach until companies can build relationships with consumers and grow an audience.
Nijjer believes the company’s online presence is crucial. “In the D2C approach,” he explained, “the website is both the brand and the store: story, mission, style, products, transaction and service.” The digital experience needs to be seamless and engaging to maximize D2C conversions. In most cases, that means highly personalized content and omnichannel support. Web presence often wasn’t a priority for traditional B2B companies that were wholesalers for retailers, but for the D2C approach effective digital marketing is essential.
“Moving marketing budget from traditional media buying to paid social and influencer marketing can be another effective way to drive direct traffic to a D2C store,” Kwong recommended. And Nijjer agreed that social proof is vital for online brands — whether it’s through influencers or customer reviews. He suggested, “the best way to get started is by establishing a customer review program.” Positive reviews from influencers, or even normal customers, can drive D2C conversions.
While there are many ways for B2B companies to get started with D2C, Chan said, “The best way to get started is to adopt a culture of experimentation and testing.” The most effective D2C approaches are specific to particular brands, so companies will need to find what works best for their intended audience.