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Direct-to-consumer (DTC or D2C) or business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party retailers, wholesalers, or middlemen. Direct-to-consumer sales are usually transacted online, but direct-to-consumer brands may also operate physical retail spaces as a complement to their main e-commerce platform in a clicks-and-mortar business model. In the year 2021, direct-to-customer e-commerce sales in the United States were over $128 Billion.
History
Direct-to-consumer became immensely popular during the dot-com bubble of the late 1990s when it was mainly used to refer to online retailers who sold products and services to consumers through the Internet.
This business model originated before modern transportation and electricity when people consumed locally due to geographical distance and business competition was more limited.
As new modes of transport kept emerging (steamboat, train, automobile, airplane), consumers gained access to a wider variety of goods and service providers, increasing business competition.
The emergence of the Internet further increased access to many different types of goods and services, and increased competition meant that businesses had to put additional effort to win and keep customers.
Advantages and disadvantages
Direct-to-consumer enjoys lower costs compared to physical retail, as it has reduced the number of different business components like employees, purchasing costs, mailing confirmation, and renting or establishing a physical store.
DTC enables smaller companies to compete with large and successful companies in terms of price, availability of the products, and quality since costs are lower. Direct-to-consumer sales can drive stronger brand loyalty and customer retention.
The main risks in the online Direct-to-consumer are expanding liability risk, cyber risk, and more supply chain demands. DTC exposes a business to tasks that would otherwise be taken up by wholesalers and retailers, such as shipping, labelling, and cybersecurity. Data privacy and cybersecurity are especially important in online businesses. Accepting online payments can make DTC businesses a target for hackers and cybercriminals, exposing them to the risks of fraudulent payments and false chargebacks. The direct-to-consumer business model puts the entire burden of the supply chain onto the firm itself; rather than selling to only a few distributors, the products must be delivered to many individual customers.
See also
- Retail
- Disintermediation
- Consumer-to-business
- Over-the-top media service
- Marketing channel
- Wholesale fashion distribution
- Types of e-commerce
References
- "U.S. D2C e-commerce sales 2024". Statista. Retrieved 2023-10-20.
- Business-to-Consumer (Direct-to-consumer), May 20, 2019
- Advantages and disadvantages of Direct-to-consumer Archived 2021-12-31 at the Wayback Machine Study for Business, October 15, 2018
- Advantages and disadvantages of Direct-to-consumer Archived 2021-12-31 at the Wayback Machine study4business.com October 15, 2018
- Braverman, Alan; Fu, Samantha (March 22, 2021). "Direct-to-Consumer Challenges: Assessing Risk, Liability and Cyber Threats". EisnerAmper.
This article needs additional citations for verification Please help improve this article by adding citations to reliable sources Unsourced material may be challenged and removed Find sources Direct to consumer news newspapers books scholar JSTOR March 2020 Learn how and when to remove this message Direct to consumer DTC or D2C or business to consumer B2C is the business model of selling products directly to customers and thereby bypassing any third party retailers wholesalers or middlemen Direct to consumer sales are usually transacted online but direct to consumer brands may also operate physical retail spaces as a complement to their main e commerce platform in a clicks and mortar business model In the year 2021 direct to customer e commerce sales in the United States were over 128 Billion HistoryDirect to consumer became immensely popular during the dot com bubble of the late 1990s when it was mainly used to refer to online retailers who sold products and services to consumers through the Internet This business model originated before modern transportation and electricity when people consumed locally due to geographical distance and business competition was more limited As new modes of transport kept emerging steamboat train automobile airplane consumers gained access to a wider variety of goods and service providers increasing business competition The emergence of the Internet further increased access to many different types of goods and services and increased competition meant that businesses had to put additional effort to win and keep customers Advantages and disadvantagesDirect to consumer enjoys lower costs compared to physical retail as it has reduced the number of different business components like employees purchasing costs mailing confirmation and renting or establishing a physical store DTC enables smaller companies to compete with large and successful companies in terms of price availability of the products and quality since costs are lower Direct to consumer sales can drive stronger brand loyalty and customer retention The main risks in the online Direct to consumer are expanding liability risk cyber risk and more supply chain demands DTC exposes a business to tasks that would otherwise be taken up by wholesalers and retailers such as shipping labelling and cybersecurity Data privacy and cybersecurity are especially important in online businesses Accepting online payments can make DTC businesses a target for hackers and cybercriminals exposing them to the risks of fraudulent payments and false chargebacks The direct to consumer business model puts the entire burden of the supply chain onto the firm itself rather than selling to only a few distributors the products must be delivered to many individual customers See alsoRetail Disintermediation Consumer to business Over the top media service Marketing channel Wholesale fashion distribution Types of e commerceReferences U S D2C e commerce sales 2024 Statista Retrieved 2023 10 20 Business to Consumer Direct to consumer May 20 2019 Advantages and disadvantages of Direct to consumer Archived 2021 12 31 at the Wayback Machine Study for Business October 15 2018 Advantages and disadvantages of Direct to consumer Archived 2021 12 31 at the Wayback Machine study4business com October 15 2018 Braverman Alan Fu Samantha March 22 2021 Direct to Consumer Challenges Assessing Risk Liability and Cyber Threats EisnerAmper
