Nearly 90% of dropshipping businesses close shop within their first year. That’s because the general public has come to view it as nothing more than a quick way to get rich.
They take everything they need from the internet and offer no originality in return. Although this strategy has shown intermittent success over the course of several months, eventually it will run out of steam.
To achieve sustainable success, it is essential to establish your company’s identity. And that can’t happen until you turn your business into a brand.
In light of this, it could be instructive to study the methods and successes of direct-to-consumer businesses. Thankfully, that’s the topic of this manual.
To help you build a successful brand and stay ahead of the competition, we’ll explain the ins and outs of the Direct to Consumer (D2C) business model from the ground up.
How about we just get started?
What Is Direct to Consumer?
One type of business model known as “Direct to Consumer” involves selling items straight to consumers. The sales process is streamlined by eliminating the need for distributors and other middlemen. Direct-to-Consumer (or DTC) is another common abbreviation.
Why Are D2C Brands Successful?
D2C brands have experienced a meteoric rise in popularity and financial success in recent years, with sales projected to hit $175 billion by 2025.
This success can be attributed to the manageability provided by this business strategy. Even if you sell the goods to consumers at a discount, you can still make more money than you would if you sold them through traditional channels.
In the meantime, you get complete customer information through direct contact. In this way, you can adapt to their ever-changing needs and use their comments to further enhance your product.
But obviously not every direct-to-consumer brand is a smashing success. In a later section of this guide, we’ll go over the many factors to think about before launching a direct-to-consumer business.
What are the Benefits of a D2C Brand?
The majority of startups now prioritize creating a direct-to-consumer identity. Not surprisingly, given those advantages, interest is rising.
Now, let’s look at some of the upsides of developing a direct-to-consumer brand:
Access to Customer Data
As was previously mentioned, in a D2C business, neither distributors nor middlemen play a role.
When you sell your product directly to the consumer, you also gain access to all of their personal information.
Furthermore, it is not an exaggeration to claim that data is one of the most economically valuable assets a company can possess in the present day.
Control Over the Prices
Typically, conventional retailers discount their wares for sale to wholesalers, who then resell them at a higher price to end users. On the other hand, business-to-consumer transactions are not like that.
Since there are no retailers or middlemen involved in a D2C brand’s pricing, the brand has greater leeway to set its own prices.
There is room in the market for you to sell your products below cost to the consumer while still making a healthy profit.
Better Customer Relationship
One of the hallmarks of successful direct-to-consumer brands is a dedicated following. It’s a testament to how well you manage your company. As a result of their focus on profits, many stores either ignore customer feedback or fail to relay it to the manufacturer.
It stands to reason, though, that if you can interact with your target demographic more frequently and promptly implement their suggestions, you will have a more positive relationship with them.
Further, if your product is the most reasonably priced option out there, more customers will pay attention to you.
Opportunities for Innovation
Conventional companies are often reluctant to try new things. They become content with making modest profits from the retailer’s purchases of the most “in-demand” product.
All prosperous corporations share the same trait: they aren’t afraid to try new things. They consistently offer up novel suggestions, and when those are ultimately unsuccessful, they take the lessons they can glean and apply elsewhere.
Creating a direct-to-consumer (D2C) brand, however, can help you pave the way to new innovations. When dealing directly with consumers, you can test the waters with a new product launch on a smaller scale with fewer personnel and fewer financial resources.
If it’s well received, carry on; otherwise, scale back.
What Are the Drawbacks of a D2C Brand?
D2C brands may be on the rise, but there are still dangers associated with operating in this manner. The disadvantages of direct-to-consumer brands are listed below.
Potential Security Threats
Cybersecurity Ventures estimates that by 2025, we will lose $10.5 trillion worth of people every year. This is a clear indication of how commonplace cybercrime and data theft have become recently.
As the owner of a direct-to-consumer company, it is your duty to safeguard your clients’ privacy.
The complexities of online security can be difficult to grasp for those without technical training. Therefore, the danger to your business from your ignorance is real.
An enormous challenge when introducing a direct-to-consumer brand is managing the shipping logistics. There is nothing more frustrating for customers of product-based businesses than receiving a shipment that arrives late or is flawed.
In the beginning stages of building your brand, nothing is worse than hearing from unhappy customers.
So this is an entire division that needs your attention. Without the right network, just keeping up with order volume can be a huge strain.
Dependency on Marketing
Nowadays, a company can’t even hope to succeed without a dedicated marketing plan. Of course, for direct-to-consumer (D2C) brands, the stakes are sky-high. Without retailers or wholesalers, you’re pretty much on your own when it comes to turning a profit.
You won’t get very far without a strong marketing plan and the ability to make your brand known to your target audience.
In order to succeed in direct-to-consumer brand management, you need to master many skills. Product discovery is just one part of the job; ensuring orders are fulfilled on time and resolved in the supply chain are also crucial.
Those without prior knowledge may feel completely overwhelmed. As a result, many business owners remain hesitant to take the plunge into creating a direct-to-consumer brand, despite widespread enthusiasm.
Hallmarks of Launching a D2C Company
Here are five steps you should take before launching your direct-to-consumer business or transforming your dropshipping operation into a brand.
Focus on Customer Pain Points
There is a common thread shared by other leading direct-to-consumer brands, such as Casper and Dollar Shave Club.
They are experts at addressing consumers’ problems.
Each of them recognized an issue, then offered a workable solution, in an effort to pique the interest of potential customers.
As disheartening as it may sound, purchasing a mattress wasn’t exactly a walk in the park prior to the advent of Casper. Prices would be through the roof, but the quality wouldn’t be worth it.
The process was simplified by Casper, and the company’s mattresses were not only more affordable but also of higher quality.
The bed would be shipped to your door in a simple-to-move box.
It’s as straightforward as it sounds; they set out to solve a problem that a large percentage of the population had, and as a result, their business took off.
Survey the Market for Similar Solutions
The introduction of a “new” product to the market is now extremely difficult. The best strategy is to improve upon an existing product by discovering a new iteration.
A survey of the market can help with this. There is always an opportunity to succeed in a market, no matter how competitive it may seem at first glance.
A fantastic illustration of this is the Dollar Shave Club. Prior to their success, Gillette monopolized the razor market.
The question is, how did The Dollar Shave Club become so successful? In fact, their subscription service made purchasing razors even more convenient than with Gillette.
Since shaving is a regular part of most men’s routines, the subscription model ensures that new razors are always on hand when needed.
As an added bonus, their razors aren’t flashy, but they do the job well.
The moral of this story is to do some research into the marketplace. Find a way to differentiate yourself from the competition even if they are offering similar products. Also, consider the needs of your target market before finalizing the brand you develop.
Evaluate your Resources
It’s a big deal to start a direct-to-consumer or even a private-label dropshipping business. You should take stock of your equipment and supplies before diving in headfirst.
D2C companies put a greater burden on your shoulders than do conventional online merchants.
An upmarket product must be identified as a first step. There’s also the matter of branding, labeling, and other such nonsense.
These challenges are only the beginning, though; you’ll also need to educate yourself on supply chain problems and shipping.
Developing a direct-to-consumer brand requires a substantial financial outlay. And it’s going to be very difficult to make it through if you just jump in blindly.
For the same reason, B2C brands are much rarer on the web than their B2B counterparts.
It’s a long-term investment, and you need to lay the groundwork for the brand before you can start constructing the tower.
Form a Product Strategy
D2C companies aren’t the only ones who need a solid product strategy; dropshippers and other eCommerce businesses are as well.
Your first order of business should be to put your product through rigorous testing. Your quality assurance team or a paying customer can perform this test.
Giving the product away to customers is just one part of the testing phase. Free shipping, bulk discounts, and BOGO deals are all examples of tactics that could be used.
Discovering what works for your company and how to attract more customers is the focus of this stage.
The cost of the products is another factor to consider. There is more leeway in pricing for direct-to-consumer brands, but finding the sweet spot still takes some work.
Rates should reflect the values and goals of your company.
Clearance sales can be a great way to move old inventory, especially if you’re having trouble selling it at full price.
Develop a Powerful Marketing Funnel
Establishing a consistent marketing plan is a must for any business, but it is especially crucial for direct-to-consumer brands running online shops.
Advertisements, influencers, blogs, and other online mediums are just some of the modern brand promotion tools at your disposal.
There’s nothing more exciting than coming up with original viral videos.
We’ve covered the D2C marketing strategy in depth, but there are many other ways to promote a brand directly to consumers.
Golden Takeaways for Dropshippers from D2C Brands
Direct-to-consumer and drop shipping are not the same thing. However, here are some lessons that all dropshippers should learn from a discussion of the D2C model and its advantages and disadvantages.
Focus on Building a Brand
Establishing a distinct identity for one’s brand is essential to achieving commercial success. The same rules apply to drop shipping.
Direct-to-consumer (D2C) businesses, in contrast to dropshippers, focus entirely on building brand awareness.
To be sure, a dropshipping store that sells generic goods has the potential to increase your income in the short term.
But if you’re after sustainable profits, you’ll need to ramp up production and refine your private-label offering.
Control the Quality of Suppliers
Direct-to-consumer (D2C) companies have extensive say over the standard of their wares.
While there are restrictions on quality assurance in dropshipping, there are many ways to overcome these obstacles and give customers exactly what they expect.
You may not be able to influence the final product, but you can influence the quality of your suppliers. If you’re looking for a supplier, don’t just look for the cheapest one; look for the most reliable one as well.
Read up on the company, order some samples to see if they live up to the hype, and only trust professionals with product sourcing if you’re short on leads.
Build a Solid Marketing Strategy
Successful direct-to-consumer brands invest heavily in creating an efficient marketing funnel.
So, once you’ve established your PL dropshipping company, you shouldn’t rely solely on Facebook ads if you can help it.
You could experiment with influencer marketing, video ads, or even a blog
Offer Top-Notch Customer Service
Even if your orders are being fulfilled by a different company, you still bear ultimate responsibility for your customers’ happiness.
Direct-to-consumer companies always aim to please their customers. Any issues are dealt with swiftly, and their refund and return policies are simple to follow.
You should give the impression that your dropshipping business is legitimate if it is a private label or white label. You should always try to resolve customer complaints quickly and to the customer’s satisfaction in customer service and dealings.