D2C: understand how the direct-to-consumer business model works.

Jun 16, 2023 1:16:29 PM | entrepreneur D2C: understand how the direct-to-consumer business model works.

D2C refers to the expression 'direct to consumer' in English. With the expansion of the internet, this type of sales has been gaining popularity, as e-commerce, or online commerce, is clearly on the rise.

Discover what the acronym means and how it is applied in commerce.

D2C refers to the expression "direct to consumer." With the expansion of the internet, this type of selling has become popular, as e-commerce is thriving.

A survey conducted by Salesforce shows that 99% of leading consumer goods brands already utilize D2C-based sales strategies.

Essentially, D2C is a business model in which a company sells its product directly to the end consumer without any intermediaries during the purchasing process.

As one can imagine, D2C enables a faster sales process. By eliminating intermediaries, expenses related to sales representatives, franchises, distributors, or physical stores are reduced.

Organizations can showcase their products online, operate through various online channels, gather data, and, through this, attract customers, understand their consumption habits, and establish closer relationships with them.

The advantage of D2C in terms of business is that, by saving time and resources, a company can stand out from its competitors by providing a better customer experience and reducing costs associated with transactions.

The only drawback is that even without certain expenses, the brand will have to assume other costs, such as logistics and acquiring new customers.

The company must also be careful not to harm its relationship with its resellers. Some tips include initially selling online products that are not available in physical stores or selling discontinued items.

To implement D2C, the company also needs to integrate its management system with e-commerce and marketplaces to have better control over its business strategy in each channel and ensure there are no obstacles in direct sales.

Other business models

In addition to D2C, there are other forms of direct-to-consumer business. They are:

C2C: Consumer to consumer, which refers to sales that occur between consumers (e.g., platforms like OLX);

B2C: Business to consumer, where sales happen between a company and its customers (the most common business model in the market);

B2B: Business to business, which refers to sales between companies;

B2G: Business to Government, when a business sells products or services to government entities;

G2P: Government to public, which is sales that occur between the government and the public;

G2G: Government to government, where a government engages in commercial transactions with other public institutions or governments.

Some examples of companies that practice D2C sales models are Tesla Motors and Nike.

The footwear giant aims to achieve a revenue of up to 50 billion dollars this year, with D2C being the flagship of the company's sales. Out of this total, the brand plans to generate 16 billion or 32% of its target through direct sales.

Has your company considered investing in D2C? Schedule a conversation with one of our consultants and explore the products and services that Startup Venture Builder can implement in your business.

Written By: Marco Santos