D2C in E-Commerce: Ultimate Guide 2024

12 min.

Article Overview

More and more online shoppers are buying directly from brands: in 2022, this figure had already reached 64%. Which is a good reason for manufacturers to look closely into the possibilities of D2C in e-commerce. In this guide, you'll learn all about the benefits, challenges and how to get started.

What is D2C? Direct-to-Consumer, Explained

In addition to B2C and B2B, there's another abbreviation that e-commerce professionals need to know: D2C. This stands for Direct-to-Consumer.

D2C is a business model in which manufacturers sell their products or services directly to end consumers. This approach makes them less dependent on intermediaries and their processes, and gives more control over the customer experience.

What's the Difference Between D2C and B2C?

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B2C and D2C pursue the same goals - namely satisfied customers and sales growth. However, the way to achieve this is different: 

  • B2C companies receive sales support from partners. The distribution chain includes wholesalers, suppliers and intermediaries who take care of advertising, picking, packing and shipping the goods, among other things
  • Pure D2C brands handle marketing, sales and fulfillment on their own, using the company's own sales channels and shipping from their own warehouse.

Traditional brands such as Nike or the leather manufacturer Braun BĂŒffel have long pursued a pure B2C approach, and are subsequently expanding their D2C business. Digital start-ups such as Kapten & Son, on the other hand, began their success story as "D2C pure players".

Both approaches have the same prerequisites for D2C success: digital sales channels and sales processes that interlock.

Why D2C? Significance for E-Commerce

Crises, globalization and digitalization have shaped the last few years. Companies need to find new strategies if they want to remain successful in the long term. With D2C, they can achieve more sales and greater customer satisfaction while remaining true to their brand.

1. More Revenue from E-Commerce

Forrester forecasts that the retail sector in France, Germany, Italy, Spain and the UK will reach a total turnover of €2.7 trillion by 2028, with e-commerce accounting for 22% of this figure at €579 billion. 

Why it matters: With direct sales, manufacturers benefit more directly from this e-commerce growth. At the same time, they strengthen their brand and get closer to their customers.

2. More Brand Consistency on Marketplaces

Marketplaces worldwide play an important role in e-commerce - 181 million people visit Amazon alone every month. And according to Gartner, mobile traffic on marketplaces is ten times higher than for all major D2C brands combined. 

Why it matters: Gartner recommends using marketplaces as D2C channels. Unlike intermediaries, manufacturers have more control over the brand-compliant presentation of their products and benefit from existing fulfillment processes.

3. More Proximity to Customers

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According to PwC, more and more people are buying directly from the manufacturer: 63% of consumers surveyed have already used the D2C channel, while a further 29% are open to it.

These are the most important reasons for D2C purchases:

  • Authenticity of the products (50 percent)
  • Wider product selection (47 percent)
  • Competitive prices and better availability (43%)

According to a Capgemini survey, Gen Z is particularly D2C-savvy: 74% of those born around the turn of the millennium purchased directly from a brand in the second half of 2022. 

Why it matters: D2C brands can specifically address customer wishes and address important target groups such as Gen Z in a targeted manner. At the same time, they offer their customers seamless shopping experiences through direct sales - both via their own channels and those of platforms such as Zalando or Instagram.

7 Advantages of D2C for E-Commerce

  1. New opportunities for innovation: With a D2C sales channel, you enjoy more independence from third parties and are more flexible when implementing new tools and trends.
  2. Personalized brand experience: With intermediaries, the possibilities for personalization are limited. In direct sales, on the other hand, you can package your products individually and strengthen your brand and customer loyalty.
  3. Better customer experience: As a D2C manufacturer, you can collect customer feedback directly and improve the customer experience more easily - for example with loyalty programs or subscription models.

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  4. Data-based decisions: With the D2C approach, you have access to valuable data along the entire customer journey. In addition to first-party data for a 360-degree view of customers, performance insights from your business processes are available for improved decision-making.
  5. Higher profit margins: Your profit margin increases without intermediaries. You are also more flexible in your pricing and can make better use of your cross-selling and upselling potential.
  6. Faster growth: With the D2C approach, a shorter time-to-market is possible - which means rapid optimization and effortless scaling.
  7. Greater flexibility: As a D2C provider, you have more control over all touchpoints between your brand and your customers. This allows you to adapt your processes more easily and flexibly to trends or market changes.

Would you like to benefit from these and other advantages? Then the digital transformation of your e-commerce processes must be a top priority.

Actindo's Core1 platform accompanies your transformation. It makes your processes D2C-ready and remains flexible enough to easily map even disruptive trends such as artificial intelligence.

What Are Some Popular D2C Products?

Worldwide, 44% of online shoppers have already purchased clothing and accessories directly from the manufacturer. Electronics is also one of the top product categories in D2C, and is already in the digital shopping cart of around 40% of online shoppers.

In the USA, but also in Germany, fitness and wellness products are very popular with e-shoppers. GfK also found that 26% of US shoppers also like to buy food and beverages directly from the manufacturer in addition to clothing and skincare.

Three Best Practices to Consider

Direct sales in e-commerce are particularly popular with young brands that pursue the D2C approach in different ways:

  • The founder of Gitti started her business directly from her dining room and uses customer feedback to further optimize her D2C brand.
  • HelloFresh has taken a different approach: the Berlin-based start-up combines the advantages of D2C and subscription commerce with subscription cooking boxes for the home.
  • Customer proximity was also crucial to the success of Kapten & Son: the D2C brand for watches and accessories owes its rapid growth to a strong social media community and influencers, among other things. The company uses an online store and seven flagship stores as sales channels - and orchestrates them in the Actindo Core1 platform.


 

D2C: Is it Worth Starting?

Identifying the right product groups and markets for D2C entry takes time. Companies have to evaluate a lot of data and develop new business models. In addition, direct sales means a high marketing and support effort. 

Only if your company is prepared to make this commitment is it worth getting started. The good news: with the right tech setup, it's easy to evaluate data efficiently, synchronize processes and offer your customers the best possible customer experience.

3 lessons learned from successful D2C brands

Have the practical examples inspired you to try out direct sales? The following lessons will also help your company succeed:

  • Stay flexible: D2C approaches requires agile, scalable processes. Say goodbye to monolithic legacy systems and rely on flexible tools.
  • Stay consistent: In direct sales, customers come into contact with your brand via various channels. Achieve consistency across all touchpoints with a digital control center for all processes and channels.
  • Stay open: Customer needs are at the heart of your D2C strategy. For a seamless shopping experience with first-class service, fast delivery and maximum personalization, you need seamlessly connected data and processes. Therefore, when selecting your tools, make sure that they offer integration options.

The Ideal Tech Setup: How to Get Started in D2C

D2C brands are in control of their own sales and shipping processes - from marketing to returns processing. The tech stack of successful D2C brands therefore includes the following tools: 

  • Content management system (CMS) for landing pages and blogs
  • Online store with self-service functions
  • Merchandise management system for accounting and warehouse management
  • Customer relationship management system (CRM) for customer data
  • Product information management system (PIM) for product data

In addition, one thing above all else must not be missing: an agile and flexible e-commerce platform in which you can organize and optimize your processes. The following requirements must be met by such a business platform for D2C manufacturers:

  • Integrations: The platform must integrate seamlessly into your IT ecosystem so that process islands become a seamless D2C workflow. This is possible with composable commerce: with this approach, you combine various e-commerce applications in a central platform that you can expand flexibly.
  • Data hub: As a D2C provider, you have direct access to data from customer support, warehouse, order management, accounting and fulfillment. In order to derive measures for better D2C performance, you need an overview. An e-commerce platform must therefore be able to streamline data from systems such as CRM, ERP and PIM.
  • Process orchestration: The platform must give you the freedom to orchestrate and automate all business processes, even in a heterogeneous IT environment. With a platform based on the MACH principles (microservices, API-first, cloud-native and headless), you can achieve the flexible and modular software environment required for this.

Popular D2C sales channels 

Deciding which sales channels are suitable for your D2C strategy depends on your target group and your product. According to Bitkom, 93% of online retailers rely on their own store and 87% on ordering by email.

The following channels are also popular among successful D2C players:

  • Social commerce via Facebook, Instagram, Pinterest and TikTok
  • Search engine marketing
  • Seller profile on D2C marketplaces such as Amazon or eBay
  • Collaboration with affiliate partners and influencers
  • Email marketing via newsletters
  • Chatbots
  • Hybrid form of online store and stationary retail

According to United Internet Media, the online store of D2C brands is the most popular shopping channel for 86% of online shoppers. 71% prefer to contact brands directly by email and 76% have already been encouraged to make a purchase by subscribing to a newsletter.

Points to Consider When Implementing D2C

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Direct sales boost your turnover and customer loyalty. However, there are a few points you need to consider before starting D2C sales:

  • D2C is more complex than B2C. You need an e-commerce infrastructure, suitable sales channels and have to manage all warehouse and shipping processes, support and returns yourself.
  • In order to create an appealing customer experience, B2C providers can draw on the experience of intermediaries and partners that D2C brands first have to gather.
  • B2C providers achieve a wide reach for their products with intermediaries and marketplaces. D2C providers, on the other hand, must first establish themselves - or launch their direct sales on well-known D2C marketplaces.

Direct sales require a great deal of effort at the beginning. However, with providers such as Actindo, you can streamline your processes for efficiency and scale them successfully.

Implement D2C Efficiently with Actindo

Actindo helps you to take advantage of the benefits of direct sales in e-commerce and overcome D2C hurdles - with the flexible commerce ERP Actindo Core1. It bridges the gap between legacy systems such as SAP and digital D2C channels. 

Kapten & Son was able to achieve a productivity boost of 23 percent in the area of customer care with the platform. And Braun BĂŒffel expanded its digital sales channels within a few months to include D2C channels, which now account for around 30 percent of e-commerce sales.

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How Actindo Pushes Your D2C Strategy Forwards 

Actindo Core1 is the world's most flexible commerce ERP and is MACH-certified, which means it supports microservices, flexible APIs and headless commerce so that you can set up your D2C strategy flexibly. Core1 is also one of the cloud-native platforms that Gartner predicts will be the basis for more than 95 percent of all digital activities by 2025.

Actindo Core1 integrates best-of-breed applications such as store systems, payment providers and shipping solutions to synchronize them with your channels. Many solution providers are part of Actindo's partner network to make integration even easier.

Networked processes are the basis for an agile and flexible e-commerce architecture. Major analyst firms such as Gartner see this composable approach as the "future of companies", which will become more adaptable and implement new functions 80 percent faster than the competition.

You can already orchestrate your digital business processes from Actindo, regardless of the application in which they take place. Core1 connects to sales channels so you can manage them efficiently in one place and automate key processes.

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You can manage all product data centrally in the integrated PIM system and achieve end-to-end brand consistency in your channels. In the other direction, incoming orders from D2C channels can be clearly orchestrated in Distributed Order Management.

Even if complex D2C data and processes converge in the platform, you will never lose track. This is ensured by an integrated data module with ETL function (Extract, Transform, Load). It bundles data streams that enable business decisions and optimizations - which Forrester consider to be the fuel for the "customer-oriented growth engine" of successful D2C companies.

Concluding Thoughts: D2C in E-Commerce

With direct sales, you benefit from strong customer relationships and leave nothing to chance in the sales process. Use the strengths of Actindo's platform to turn D2C challenges into sustainable opportunities for your D2C strategy. 

The Core1 platform offers you the flexibility to react more quickly to changing customer requirements or trends such as artificial intelligence and social commerce

Want to get started? Then get in touch for a no-obligation call with our experts!

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