In marketing and business, you’ll get a bunch of terms thrown around: SEO, SEM, CTR, CPC, CPG, DPL, etc. etc. They can be mind-numbing and seemingly never-ending (LOL). But what do they actually mean?
One, in particular, is used by yours truly: DTC.
But what is DTC and why don’t we stop talking about it?
What is DTC?
Whichever way you choose to spell it – DtC, D2C, DTC – it stands for “Direct-to-Consumer”. And it is neither as complicated nor as simple as you think.
Direct-to-consumer (DTC) is when someone with a product – a manufacturer, or an individual, etc. – sells that product directly to their customer, bypassing all middlemen, like retailers or wholesalers.
Are All DTC companies solely online?
Nope. But most do have an online presence. Some DtC brands started on social media sites, through newsletters, or by having a website. Some have expanded from those roots to having a brick-and-mortar stores. Others have gone the other way, starting with a physical location and expanding into online spaces.
Direct to Consumer ≠ Website
DTC doesn’t just mean “you have to have a website”, however, in today’s digital world your eCommerce website can be one of the many direct lines you have to your customers. DTC is actually one of the oldest business models we have – since before electricity, never mind the internet!
For example, someone bakes a loaf of bread and sells it from their bakery. Someone catches a fish and sells it at their market stall. You produce wine and sell it directly from your cellar door. It is a business practice and WithWine is a software solution provider that helps you embrace all the various DTC avenues.
For many years, large corporations usurped smaller independent businesses and in order to survive many smaller businesses made deals with these large corporations to sell their products. Even today, there are many hybrid models. You’ll find wineries that sell their wine directly to their customers and some of their ranges also show up in larger retailers.
One of the largest DTC brands is Apple which sells primarily through its brick-and-mortar stores. They aren’t the only ones. There is a trend of larger companies deciding to bypass wholesale and go direct. Like Nike, TOMS (in the US), and many more. If the website was their priority, the retail stores would be more like outpost collection points rather than flagship display stores.
What Are The Benefits of DTC?
The benefits of DTC are nearly limitless. Selling through third-party retail channels means selling through channels that you don’t own and have no control over. By implementing a DtC business model you can provide more authentic and personalised experiences for your customers. You can learn about their buying habits, interests, and preferences in real-time.
Oftentimes larger third-party retailers don’t share that kind of customer data. Amazon for instance famously limits customer data and doesn’t allow any type of branding or promotional material in their packaging.
This can make it difficult for customers to form a loyal relationship with producers. They are more likely to attribute any positive experience of the product to the party they bought it from instead of who made it. When that’s the case, customers are more likely to go for the best deal from a party they trust (i.e. the third party) thanks to major brand discounts, cashback incentives, coupons etc.
If a customer walks into a bottle shop and purchases your wine, they are the bottle shop’s customer, not yours. They capture the customer’s data and can follow up with them. By selling directly, you also have a clear line of communication. You decide what goes on in the box their order is shipped in. You can decide what’s said in email marketing, on social media posts, or on your website. These customers are yours and they are here for your product. You have the ability to communicate with them directly and not rely on a third party to market your product.
It keeps the cost lower for the customer because there’s no markup on the price of the product on sale. So they get a higher quality product at a lower price. They also know exactly where their money is going, and when they are supporting small independent wineries it makes for a nice warm fuzzy feeling.
What Are The Disadvantages of DTC?
We are all about being fair and balanced here.
First, off the bat, you don’t have the advantage of “piggy-backing” on a larger third party’s existing traffic and customer base. Everything is the producer’s responsibility and it can be more costly to acquire new customers. Producers are solely responsible for order management, fulfilment, shipping, customer service, returns and exchanges. However, software providers like WithWine and others can take some of this out of the producers’ hands.
The larger third-party sellers can potentially give your brand greater exposure both by having a presence in their store and by being included in their advertising campaigns. It can also build customer trust in your brand, if the customer trusts the third-party seller, they will likely believe the products they stock are trustworthy by extension.
However, the benefits far outweigh the disadvantages. This is why so many businesses are switching to a DTC model.
Consumer expectations are constantly changing. Your customers expect a seamless experience between offline and online, personalised communication, straightforward delivery, and much more. The only way to ensure that your customers have the experience they want is to have your hands at every touchpoint.
That means selling direct, having an awesome cellar door experience, sending engaging emails to customers that want to support you and your winery, and speaking directly to your customers across your social media channels and face to face.
DTC is here to stay, and we want to help you optimize your DTC strategy at every touchpoint.
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