Table of Contents
What is D2C Model?
There are lot of business model which occur traditionally like
- B2B
- B2C
- B2G
- C2C
But recently one more business model has been evolved which is quite often used to identify certain brands. This model is called D2C agency(Direct to Consumer) Model.
D2C Model means where you sell your products directly to the customers. Essentially, it means we are selling products directly to the consumers eliminating various third parties like distributors, dealers, retailers or any other network.
D2C model has been recently used to differentiate the brands which are hard to categorize into traditional brands. D2C terminology has been used more recently to differentiate between the various private label brands, local brands and national brands. More specifically, you will see D2C brands are internet only brands.
One of the things which should intrigue us is why new terminology? Whats so special in D2C model that traditional models didn’t had. Well the answer is E-commerce. Yes, because earlier we had national brands like Apple, Nike, Colgate etc. Then you had some local brands like Mohini tea, pataka 555 etc.With the rise of modern organized retail, we saw emergence of private brand which were sold in big hypermarkets like RIght Buy, Aro etc
Recently, E-commerce goliaths like Amazon and Flipkart also launched their fleet of multiple private label brands like Solimo, Amazon Basics, Marq, Adrenex etc . While these were sold purely online their respective platforms stil they are not D2C brands. They are private label brands launched by the aggregated business intelligence of lakhs of sellers
But there are certain brands which gained momentum recently and registered obnoxious sales like Mamaearth, Realme, Wow etc. These are all D2C brands which sell directly to the consumers by the use of E-commerce platforms or their own website and social media handles. They dont have any distributor,dealer or retailer whos is selling but company itself is selling directly to the consumers thus eliminating the various supply chain costs, time and other overheads.
So lets define D2C model simply,
D2C model is Direct to Consumer model. It allows companies to market their brands and sell their products directly to the consumers through E-commerce platforms or their own websites or their social media accounts. Essentially, manufacturer or private label brand owner is selling directly to the consumers via their own platforms or sales channels.
What are D2C Brands ?
D2c Brands meaning are the brands which uses D2C model to market their products and sells via their own e-commerce platforms.
These brands are generally Internet only brands which exploit the power of social media to generally market their brands. Social Media platforms like Facebook,Instagram & pinterest acts good engagement platforms for them. They have widely used various inbound marketing and affiliate marketing techniques to promote their brands.
For example, Mamearth has over 120 products in its portfolio but it has over 990 web pages which helps users to make informed decisions. Their website blog is itself a source to generate a lot of traffic which helps in conversions. They implore a lot of push notifications to share deals,drive traffic and conversions.
Now, you may ask does all these digital ads,social media, inbound marketing or other digital marketing strategies aren’t used by traditional or private label brands?
Well the answer is pretty tricky. Lets check this out:
I can’t find any website or social media page for one of the most popular private label brand Amazon Basics.
I even couldn’t any ad for Flipkart own private label brand Adrenex
If you notice clearly, there is No Website for neither Adrenex nor Amazon Basics. If you notice both SERPs even with more curiosity is that they don’t have any social media channels like facebook, instagram, twitter etc. And, there aren’t any brand videos on Youtube or any other informative blog on their products.
Curious…Why are such internet goliaths aren’t using the power of social media or Google PPC?
Well, the answer lies within them only. They have become so huge and have accumulated such petabytes of data that they feel they have the Right Product at Right Price at Right Place.
Also, if you forgot, the primary purpose of creating private label brands is to get better ROI from these brands. These should help them in generating positive cash flows which otherwise its hard to get from other brands. So, they don’t want to spend time and money on Ads/Social media as these internet goliaths are already spending millions on their own marketing.
But, these private label brands have something which D2C brands generally dont have. That is the sophisticated supply chains to distribute and deliver products across India. While Amazon has over 33 FCs and warehouses, flipkart also has various FCs & warehouses across India. So they do have a slight upper edge on product distribution and faster delivery. That is the reason you will see brands like Wow and Mamaearth quite aggressive on E-commerce platforms
So, now lets refocus on D2C brands and traditional brands. While, national brands or even local brands do also exploit modern digital marketing techniques but they have one thing which is core to their business. They rely extensively on their B2B distribution chains like distributors,dealers,retailers to market and sell their products. While they use Google Ads or Social Media to market their brand or to create brand recall. They aren’t very keen on using them for sales channels. They might use it for social listening but they tend to refrain from direct selling fearing that their distributors /dealers might get upset.
Very often you will see that their national distributors or dealers sell on E-commerce platforms on behalf of brand.Even, to further demarcate the internet market and offline market, most intelligent brands are coming Online only models for E-commerce platforms and offline only models so that both distribution models don’t clash with each other.
Why D2C Model
So the question of the hour is, why D2C model. What are the advantages of this model over other models.
Well, the key to this answer lies in the marketing and distribution side. It has been often seen that MAD costs account for nearly 40% of the price which are paid by the consumers. That means, a huge amount of money goes into marketing, advertising and distribution.
D2C brands essentially try to reduce this 40% of the MAD costs but are still looking to create the brand which can easily be known and accessible to lakhs of users with the click of their smartphone.
Internet penetration was already booming D2C brand in Delhi, India. With Covid-19 pandemic, its digital adoption has been accelerated multiple times. Now, even people in semi urban and rural areas are also using E-commerce for buying products.
So actually COVID-19, pushed a lot of brands to think about the D2C route to sell their products and actually to survive. Offline markets completely shut led brands to think digital as medium to still connect with masses. This led to many brands seeing massive sales in their own brand stores.
D2C model actually puts the whole business around your customers. If you are consumer centric brand and has well defined customer personas it can really help you to target and register sales.
What are D2C Brand Jargons?
D2C (Direct-to-Consumer) brands focus on selling their products directly to customers, skipping traditional retailers and middlemen. This approach gives them more control over the customer experience and allows for direct communication with the people who buy their products.
Here’s a list of key D2C brand jargons explained in simpler, more relatable terms:
D2C (Direct-to-Consumer)
D2C means brands sell directly to customers, skipping the middlemen. This gives them full control over the experience and a direct connection with customers.
ROAS (Return on Ad Spend)
ROAS is how much money you make for every dollar spent on ads. It helps you figure out if your advertising is actually paying off.
CPA (Cost per Acquisition)
CPA tells you how much you spend to get a new customer. It helps you understand whether your marketing budget is being used wisely.
CRO (Conversion Rate Optimization)
CRO is all about improving how many website visitors turn into customers. Small changes can make a big difference in boosting sales.
AOV (Average Order Value)
AOV tracks how much customers typically spend when they buy from you. It’s useful for understanding buying patterns and looking for ways to encourage bigger orders.
CLTV (Customer Lifetime Value)
CLTV shows how much revenue a customer is likely to bring over their entire relationship with your brand. It’s great for understanding how valuable your customers are long-term.
PPC (Pay-Per-Click)
PPC is a type of online ad where you pay only when someone clicks on your ad. It’s an easy way to drive traffic but requires careful management to be effective.
CTR (Click-Through Rate)
CTR measures how many people click on your ad compared to how many saw it. A high CTR means your ad is catching people’s attention and getting them to act.
SEO (Search Engine Optimization)
SEO is the process of improving your website so that it shows up higher in search results. The better your SEO, the more likely people will find your brand online.
SEM (Search Engine Marketing)
SEM is paying for ads to show up in search engine results. It helps increase visibility when people are actively looking for your products or services.
CPM (Cost per 1000 Impressions)
CPM tells you how much you pay for 1,000 views of your ad. It’s a way to measure how much exposure you’re getting with display ads.
CAC (Customer Acquisition Cost)
CAC calculates how much it costs to bring a new customer in. It’s useful for evaluating the effectiveness of your marketing efforts and knowing when your business is profitable.
LTV (Lifetime Value)
LTV shows the total value a customer will bring over time. It helps you understand if it’s worth investing in retaining customers for the long haul.
CRM (Customer Relationship Management)
CRM is a system that helps businesses manage their relationships with customers. It tracks interactions and improves communication, helping brands keep customers happy.
UX (User Experience)
UX is all about how easy and enjoyable it is for customers to interact with your website or app. A great UX keeps customers coming back because it makes everything smooth and user-friendly.
UI (User Interface)
UI is the design and layout that people interact with on your website or app. It includes buttons, forms, and menus that need to be intuitive to make the experience enjoyable.
Landing Page
A landing page is where a person arrives after clicking an ad or link. It’s designed to guide visitors toward a specific action, like making a purchase or signing up.
CTA (Call to Action)
A CTA is a prompt that tells people what to do next, like “Buy Now” or “Sign Up.” It’s the key to encouraging action on your website.
Bounce Rate
Bounce rate tells you how many people leave your site after viewing just one page. A high bounce rate might mean your site isn’t engaging enough to keep visitors around.
Churn Rate
Churn rate shows how many customers stop using your product over time. It’s a sign of whether people are satisfied or not with what you’re offering.
Product Market Fit (PMF)
Product-market fit happens when your product perfectly matches what your customers want. It’s the point where your brand is ready to grow because people love your product.
Sales Funnel
The sales funnel shows the journey a customer takes, from first hearing about your brand to making a purchase. It helps you see where you can improve and where you might be losing customers.
AB Testing (Split Testing)
AB testing is when you compare two versions of something—like a webpage or ad—to see which works best. It’s a simple but powerful way to improve your marketing.
Upselling
Upselling is when you suggest a more expensive item to a customer. It can be as simple as recommending a better version of a product they’re already interested in.
Downselling
Downselling is offering a cheaper alternative to customers when they seem hesitant about the higher-priced option. It helps secure a sale without losing the customer altogether.
Retargeting
Retargeting shows ads to people who have already visited your site or interacted with your brand. It’s a way to remind them of what they left behind and encourage them to return.
Ad Placement
Ad placement is where your ads appear, like on a website or social media. Choosing the right spots helps you reach your target audience effectively.
Affiliate Marketing
Affiliate marketing involves partnering with others to promote your product, and they earn a commission for sales they bring in. It’s a cost-effective way to expand your reach.
Lead Generation
Lead generation is about attracting people who might be interested in your brand and turning them into potential customers. It’s the first step in growing your customer base.
Conversion Rate
Conversion rate is the percentage of visitors who take the desired action, like making a purchase. A higher conversion rate means your website or ad is doing a good job convincing people to act.
Prospecting
Prospecting is when you search for potential customers who might need your product or service. It’s the beginning of the sales process, where you identify who to approach.
Brand Awareness
Brand awareness is how well people recognize your brand. The more people know your name, the easier it is to turn them into customers.
Customer Acquisition Strategy
A customer acquisition strategy outlines how you’ll attract and convert new customers. It includes marketing, outreach, and sales tactics to bring people into your brand’s fold.
KPI (Key Performance Indicators)
KPIs are the key metrics you use to measure how well your business is doing. They help you see if you’re hitting your goals and where you might need to adjust.
Organic Traffic
Organic traffic refers to visitors who find your site without you having to pay for ads. It’s driven by strong SEO and valuable content.
Paid Search
Paid search involves paying for your website to appear in search results. It’s a way to get immediate visibility, especially for competitive keywords.
Customer Segmentation
Customer segmentation divides your audience into groups based on characteristics like age or interests. It helps you create more targeted and personalized marketing campaigns.
Cross-selling
Cross-selling encourages customers to buy related products to go along with what they’ve already chosen. It’s a way to increase the value of a sale by offering something complementary.
User-Generated Content (UGC)
UGC is content created by your customers, like reviews or social media posts. It’s powerful because it builds trust and shows how real people are engaging with your brand.
Heat Maps
Heat maps show where visitors are clicking or scrolling on your website. They help you see which areas are catching attention and which ones need improvement.
Attribution Model
Attribution models show which marketing efforts helped lead to a sale or conversion. It helps brands understand which channels and strategies are working best.
Search Term
Search terms are the words or phrases people type into a search engine. It’s important for targeting the right keywords in your SEO and paid search campaigns.
Average Session Duration
This metric tells you how long people spend on your site during each visit. More time spent usually means people are engaged and finding your content valuable.
Funnel Optimization
Funnel optimization is the process of refining your sales funnel to increase conversions. You tweak things along the way to make the process smoother and more effective.
Brand Loyalty
Brand loyalty is when customers repeatedly choose your brand because they trust and like it. It’s built by providing consistent value and positive experiences.
Order Bumps
Order bumps are extra items you suggest at checkout to increase the total order value. They make it easy for customers to add something more to their cart.
Referral Program
A referral program rewards customers for recommending your brand to others. It’s a great way to turn happy customers into brand ambassadors.
Subscription Model
A subscription model charges customers regularly for access to products or services. It creates a predictable revenue stream and fosters long-term customer relationships.
Inventory Management
Inventory management is about keeping track of your products so you don’t run out of stock or overstock. It ensures smooth operations and prevents costly mistakes.
Price Testing
Price testing involves experimenting with different price points to find the sweet spot. It helps you understand how price affects demand and sales.
