The rise in direct-to-consumer (DTC) marketing is fueled by the demand for convenience with style. At a time when millennials are at the forefront of driving change in the economy, customer expectations are shifting with preferences for more streamlined purchase experiences, maximum convenience, and an authentic experience.
This strategy comes as no surprise when considering that many corporations have been dabbling in DTC marketing for years now. However, there is a recent trend of businesses, both small and large, moving away from the intermediary model to selling their products and services directly to consumers.
What Is DTC Marketing?
DTC marketing is a business strategy in which a company promotes and sells its product or service directly to consumers without using any intermediaries. This means that companies can reach out to customers more easily and cut costs associated with using middlemen.
There are various ways that businesses can execute this type of marketing, but it typically entails creating a direct relationship with the customer either through digital channels or physical stores.
Why Millennials Are So Into DTC
In recent years, there’s been a notable shift in the way millennials shop. This generation has shown an affinity for buying products and services online and through direct channels, as opposed to going through middlemen.
Millennials are more likely than other generations to shop at smaller, local establishments that offer a unique experience. They want to buy from brands that speak to their interests: convenience, low cost, authenticity, and a smooth buying process. Companies that concentrate on direct consumer marketing have done just that.
Top 3 reasons why millennials are into DTC products:
- Millennials have come of age during a time of massive technological change, so they’re more comfortable with buying things online or through apps than older generations.
- They’re also extremely value-conscious and want to get the best deals possible. Buying directly from the source often means getting lower prices and skipping out on any extra costs that traditional retailers might charge.
- Finally, millennials appreciate transparency and authenticity in their brands. They want businesses to be upfront about what they’re selling and what they’re made of, rather than hiding behind a veil of advertising and marketing.
The Pros of DTC Marketing
Here are some pros of the DTC model:
There are several reasons why ditching the middleman could be advantageous for businesses:
- Increased control over marketing efforts: ditching the middleman means you can put your resources into creating a more direct relationship with customers and this will allow businesses to control what is being said about their products. Businesses are not only in charge of how they want to engage consumers but also have full control over when and where it happens.
- Improved brand recognition: ditching the middlemen could improve brands’ online presence as well as physical exposure by taking advantage of social media platforms that increasingly give greater visibility for DTC brands. Additionally, ditching intermediaries saves companies from spending money on advertising space or services which would otherwise be used to promote customer’s content rather than theirs’.
- Cheaper prices: Cutting out unnecessary costs associated with using third-party retailers and distributors can lead to cheaper prices for consumers. Additionally, DTC brands often allow customers to customize their orders, resulting in even further savings.
- More engaging customer service: When customers buy direct from the source, they have access to customer service that is more personalized, attentive, and convenient than what they would get by going through a middleman. This could be anything from online chats or videos explaining how the product works to personal phone calls with company representatives.
- A more sustainable business model: By selling directly to consumers, businesses are able to build a closer relationship with their target market while bypassing third-party entities who may not share the same values of commitment to sustainability. Building this kind of trust and transparency is essential for businesses looking to sell environmentally and socially conscious products.
- Increased brand awareness: When a company sells directly to consumers, it has more opportunities for consumer education and engagement than when relying on distributors or retailers to do the marketing work for them. DTC companies can control the entire customer experience, from beginning to end, which allows for a more streamlined branding process that leads to increased loyalty and word-of-mouth marketing.
The Cons of DTC Marketing
Here are some of the cons of a DTC model:
- Increased costs: DTC marketing can be expensive, as businesses need to invest in creating and maintaining their own sales channels. This includes building a website, developing an e-commerce platform, creating product content and videos, and undertaking digital marketing initiatives.
- Limited reach: Without the help of intermediaries such as retailers or distributors, DTC companies can only reach consumers who are already aware of their brand and have made the effort to seek them out. For DTC brands looking to expand beyond their current customer base, this presents a significant challenge.
- Difficulty scaling: It can be difficult for DTC companies to scale up their operations if they experience rapid growth, as they may not have the resources in place (such as staffing or infrastructure) to handle the increased demand.
- Less control: DTC businesses do not have much control over who their customers are or what they decide to purchase, so it can be difficult for them to ensure that their brand stays consistent and is portrayed in a positive light across all touchpoints consumers. This poses challenges when trying to reach out through social media platforms such as Facebook, Instagram, Twitter, etc., which DTC companies may lack experience using properly—causing further complications down the line.
5 Successful DTC Brands To Learn From
Warby Parker, an online eyeglass store that was founded in 2010, has completely disrupted the business. It offered $95 glasses, a home try-on program, and fast delivery through direct sales to consumers. Warby Parker gained momentum and market share by using savvy pricing, viral marketing, and a simple value proposition. It is now a $1.2 billion firm thanks to smart pricing, viral marketing, and a basic value proposition.
Harry’s was founded in 2013 and allegedly raised more than $450 million, according to Crunchbase. Then it bought a factory outside of the United States so it could manage products and processing. It has rapidly risen to become the No. 3 internet razor business, outgrowing Dollar Shave Club by more than 6 times. According to Rakuten, Harry’s is achieving approximately six times the growth of the normal market.
Casper, which was founded in 2014 and has over $400 million in sales today, is a direct-to-customer mattress business. The firm eliminated retail overhead and middlemen (which allowed them to save money while still having respectable margins), as well as the value proposition, which translated to market dominance in the multibillion-dollar industry.
Dollar Shave Club
Dollar Shave Club is a razor subscription company that was founded in 2012 and sold to Unilever for $ billion in July of 2016. The company shipped over 12 million razors in the United States in 2017 and is valued at more than $750 million.
Glossier is a cosmetic DTC firm that was founded in 2014 on the principle that beauty isn’t produced in a boardroom. Glossier has been able to establish a community where consumers are encouraged to be honest about their skin and beauty objectives because it has abandoned the conventional retail approach in favor of direct-to-consumer sales. 5 reasons that Glossier is so successful … read on
The bottom line is that direct-to-consumer marketing is becoming an increasingly popular way for businesses of all sizes to reach their target markets. By cutting out the middleman and selling directly to customers, businesses can save money while also providing enhanced convenience, sustainability, and brand awareness. It’s no wonder this strategy is on the rise.
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