D2C eCommerce: a millennial-friendly business model
It wasn’t that long ago when D2C was a new, emerging concept.
Warby was turning heads. Casper was blowing minds (I mean, who would’ve imagined buying a mattress online, let alone having it delivered in a compact box?).
Needless to say, D2C is a widely adopted model these days, expected to reach $175 billion in U.S. sales by 2023. This begs the question, could D2C be the right business model for your brand?
To help you out, we’ve put together this guide that covers all the essential elements of D2C eCommerce and what you need to know to get started.
Table of contents
What is D2C eCommerce?
For starters, D2C is short for “direct to consumer.”
It’s considered a type of business-to-consumer (B2C) model, except that D2C involves one brand owner as opposed to a seller of multiple brands (check out our guide on types of businesses for even more). Under the D2C model, manufacturers cut out the middleman: wholesales, resellers, retailers, and the like.
Though online-only brands are the poster children of D2C, many legacy brands like Nike, Dyson, and even Pepsi have expanded into the space. It has become a popular type of eCommerce business among players big and small.
Read Also: How to start a business
Iconic D2C brands
Among the brands whose bread-and-butter are in D2C ecommerce, Warby Parker, Casper, and Care/of come to mind. Each has disrupted a category that was long overdue for a shakeup.
Warby Parker for its part revolutionized eyewear shopping. While today the company leverages virtual try-on tools and other eCommerce tech, in 2010, it was simply looking to buck one trend: the high markups on eyewear. Plus, the fact that a reported 80% of major eyewear brands were manufactured and distributed by a single company.
Meanwhile, Casper made the concept of mattress-in-a-box hip. It provided an alternative to a traditional furniture showroom and made the unboxing experience, well, truly an experience.
And last but not least, Care/of delivered on the “personal” side of personal health, selecting vitamins based on a self-administered evaluation online.
Convenience is the gold standard for all three brands, as is selection and a direct connection to the brand. In its best form, D2C eCommerce fosters authentic relationships, allowing customers to attribute a good customer experience with the overall brand itself.
Why D2C is popular with millennials and Gen Z
D2C brands have taken off, thanks in large part to its younger advocates. Fifty-eight percent of millennials bought directly from brands within a matter of six months, according to a survey by Capgemini Research Institute. For Gen Z shoppers, that number spiked to 68%.
Gen Zers also reportedly prefer D2C brands over traditional retailers by a margin of 40-45%. A few reasons why:
Younger buyers are digital-first. D2C brands are a natural choice for millennials and Gen Z, who’ve been online shopping since they first began wielding their own credit cards. Call this the “Amazon effect” or the impact of social commerce—most millennials and Gen Zers are comfortable researching and buying products on the web, in addition to trying brands they may have never heard of before.
Better experiences. Six in 10 U.S. shoppers say they have a better experience shopping directly with D2C brands, mainly because of customer service. D2C brands have the advantage of being product experts and stakeholders in the success of their brands; good customer service is essential for achieving their goals.
Shared values. Brand values are a key consideration among younger shoppers—62% of millennials prefer to buy from sustainable brands (on par with Gen Z), compared with 39% of Baby Boomers. Buying directly from brands themselves enables consumers to align directly with a brand’s values, spanning both social and environmental causes.
Pros and cons of D2C eCommerce
With all that said, D2C eCommerce may seem like a no-brainer. But it’s important to be aware of both the pros and cons of running a D2C business.
Pros
You have full control. Whether in regards to the price point of your products, brand messaging, or other aspects of your operations, D2C gives you—not a retailer—total control over the customer experience.
Earn more, while customers save more. Because selling D2C cuts out the middleman, you get to keep more of the proceeds, benefiting your bottom line. Depending on your production costs, you can opt to pass on those savings to consumers in the form of better prices.
You can engage with your customers directly. Unlike on marketplaces, where you have limited communication with customers, D2C lets you build up your contact list and manage the full relationship. You can reach out to buyers via email, social media, SMS, and other channels (assuming you’ve received proper consent). You can also ask for feedback or retarget consumers via ads.
Time-to-market is shorter. Finding retailers and resellers for a product can be a huge time-suck. You’ve got to source leads, negotiate terms, tag-team on promotions, and check off other tasks—before you can release your product to the public. By contrast, D2C allows you to launch products on your own time. You could even run limited-time sales on a prototype of your product in order to test its popularity, collect feedback, and make modifications before its general release.
Product personalization is easier. By selling directly online, you can offer services like monogramming, engraving, or custom recommendations more easily than if a middleman were involved. You can even experiment with radical customization, allowing consumers to choose their own color combinations or style details. (Shameless plug: you can easily offer this level of product customization with Velo by Wix.) This could be an attractive option considering how nearly half (49%) of consumers have expressed interest in purchasing personalized products.
You can establish recurring revenue programs. With the freedoms that D2C grants, you can offer subscription boxes or memberships that keep your customers coming back. This can help with product discovery, AOV expansion, and brand loyalty—three things that are difficult to achieve when the customer journey is out of your hands.
Cons
Additional responsibilities and costs. Beyond designing and manufacturing your products, you’ll need a strategy for marketing, storing, and shipping them to customers. You’ll need to invest money into new staff, channels, software, and storage space—not to mention time into managing all of these extra duties. If you’re a new brand, you’ll need to build up brand authority, which in a traditional retail model would have been aided by the fact that a big-name retailer is stocking your wares.
You’ll need to resolve channel conflict. If you already sell products via distributors or retail partners, it’s unwise to alienate them by undercutting them with your D2C offerings. Your strategy will therefore need to accommodate both channels. Think: offering exclusive products or subscriptions via your D2C site while giving retailers exclusive rights to specific models or product lines. You’ll additionally need to align (and monitor) pricing across channels, ensuring that two channels aren’t at odds with each other.
You must meet high consumer expectations for fulfillment. Nine in 10 U.S. consumers now expect free two- to three-day shipping (thanks Amazon). And while there are many ways to handle eCommerce shipping, meeting customer demands can be exhausting. That said, you can always tag a third-party logistics provider (3PL) or experiment with dropshipping. But this will require a clear strategy and additional budget.
Customer service is your responsibility. At a minimum, you need to offer manuals, assembly instructions (if applicable), and post-purchase support. But you’ll most likely be fielding customer inquiries of all kinds at each stage of the purchase cycle. Between questions about sizing to error reports for promotional codes to “Where’s my order?” requests, the definition of customer service broadens when you own the entire D2C operation.
Getting started with D2C eCommerce: 4 essential steps
If you’ve weighed all the pros and cons and decided that D2C is the right route, it’s time to take the plunge. Once you've properly registered your business (learn how to start an LLC) and set up your business accounts, here are a few steps to get you ramped up and get the most out of D2C eCommerce.
01. Create your eCommerce website
Assuming that you already have a product in hand, the first order of business is to create a site where your customers can purchase your products. Your site is the cornerstone of your online brand. It’s also a hub where vital actions occur: checkout, payment, and customer service.
It’s therefore essential that you pick a website builder that’s secure, scalable, and easy to customize.
Read also: The true cost of an eCommerce site crash
Fortunately, if you choose a platform like Wix eCommerce, you get a plethora of baked-in store features. These include 50+ secure payment gateways, express checkout, shipping rates, multichannel sales, and inventory management. You additionally benefit from a drag-and-drop builder, plus optional coding capabilities to design your store however you want.
02. Invest in strong branding and site content
Having high-quality site content (product photos, descriptions, etc.) is a priority for every kind of online store, but is especially important for D2C sellers.
Not only do consumers expect you to offer definitive information on the product detail page, but since there’s no retailer to field customer questions, it’s important to offer detailed customer service content—from buying guides to shipping information.
You’ll also want to make sure your branding is reinforced across all of your pages. The success of your business relies on customers remembering your brand. So, you’ll want to choose an eCommerce website template that accurately reflects your brand aesthetics. Not to mention that if you don’t have a strong logo, you’ll want to hire a designer or use a logo maker to set your business apart.
03. Optimize your shipping strategy
Finding the right shipping strategy can feel a lot like trying on Cinderella's shoe. You may have to test a few suitors before landing on the right fulfillment partner(s).
There are a number of ways to handle shipping:
Self-fulfillment via major carriers
A third-party logistics partner (3PL)
Marketplace programs, like Amazon FBA or MCF (if you sell on multiple channels)
Curbside pickup (if you have a brick-and-mortar location)
A hybrid approach
As you test each option, you’ll want to consider delivery speed, shipping rates, and other fees (such as storage or handling fees). Consider, also, your contingency plan in the event that your main fulfillment channel gets clogged or has issues.
For your convenience, Wix eCommerce integrates with a number of fulfillment partners and solutions. The platform can automatically route your orders to the right partner, sync inventory, and display custom shipping rules.
04. Establish your marketing channels
Marketing (and advertising) are in your wheelhouse now. It’s up to you to spread the word about your products.
At a minimum, you’ll want to optimize your site pages for search engines and use free channels like email and social media to your advantage.
Note that it’s not enough to create a few TikTok videos and call it a day. You’ll need a plan for how to maintain a steady cadence of posts, respond to incoming comments, sync promotions with website and email offers, and even sell products directly through social channels.
The Wix eCommerce marketing tools, which is included with any Wix eCommerce plan, include built-in tools for SEO, social promotion, promo videos, and more. You can customize your SEO settings, as well as create promo graphics from various designer-made templates.
D2C eCommerce for the win
The rapid growth of eCommerce has given manufacturers fresh incentive to take the plunge into D2C eCommerce. While D2C takes planning and investment, launching your own online store can build revenues and loyal customer relationships that can significantly boost your bottom line.
Allison Lee
Editor, Wix eCommerce
Allison is the editor for the Wix eCommerce blog, with several years of experience reporting on eCommerce news, strategies, and founder stories.
