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

retail Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholes ...

ers,

wholesale Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...

rs, or middlemen. Direct-to-consumer sales are usually transacted

online In computer technology and telecommunications, online indicates a state of connectivity, and offline indicates a disconnected state. In modern terminology, this usually refers to an Internet connection, but (especially when expressed as "on lin ...

, 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. Examples of DTC brands currently in business include:

Allbirds Allbirds is an American public benefit company originating in New Zealand that sells footwear and apparel, co-founded in 2015 by Tim Brown and Joey Zwillinger. The company is headquartered in San Francisco, and is known for their minimalist ...

, Away,

Dollar Shave Club Dollar Shave Club, Inc. is an American company based in Venice, California, that delivers razors and other personal grooming products to customers by mail. It delivers razor blades on a monthly basis and offers additional grooming products fo ...

Everlane Everlane is an American clothing retailer that sells primarily online. Headquartered in San Francisco, California with stores in New York City, Washington, D.C., Boston, Los Angeles, Austin, and Palo Alto, the company was founded in 2011 by Mic ...

Glossier Glossier is a beauty brand founded by Emily Weiss in 2014. It started as an online-only company, building on the popularity of the beauty blog ''"Into the Gloss"''. Glossier was one of the first direct-to-consumer beauty companies when it launched ...

, and

Warby Parker Warby Parker Inc. is an American eyewear brand and retailer of prescription glasses, contact lenses, and sunglasses, based in New York City. Founded in 2010, it was initially an online-only retailer. It now receives (about two-thirds) of its r ...

History

Direct-to-consumer became immensely popular during the

dot-com bubble The dot-com bubble (or dot-com boom) was a stock market bubble that ballooned during the late-1990s and peaked on Friday, March 10, 2000. This period of market growth coincided with the widespread adoption of the World Wide Web and the Interne ...

of the late 1990s when it was mainly used to refer to online retailers who sold products and services to consumers through the Internet.Business-to-Consumer (Direct-to-consumer)
May 20, 2019 This business model originated before modern

transportation Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...

and

electricity Electricity is the set of physical phenomena associated with the presence and motion of matter possessing an electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described by Maxwel ...

when people consumed locally due to geographical distance and business competition was more limited. As new modes of transport kept emerging (

steamboat A steamboat is a boat that is marine propulsion, propelled primarily by marine steam engine, steam power, typically driving propellers or Paddle steamer, paddlewheels. The term ''steamboat'' is used to refer to small steam-powered vessels worki ...

train A train (from Old French , from Latin">-4; we might wonder whether there's a point at which it's appropriate to talk of the beginnings of French, that is, when it wa ... , from Latin , "to pull, to draw") is a series of connected vehicles th ...

automobile A car, or an automobile, is a motor vehicle with wheels. Most definitions of cars state that they run primarily on roads, Car seat, seat one to eight people, have four wheels, and mainly transport private transport#Personal transport, peopl ...

airplane An airplane (American English), or aeroplane (Commonwealth English), informally plane, is a fixed-wing aircraft that is propelled forward by thrust from a jet engine, Propeller (aircraft), propeller, or rocket engine. Airplanes come in a vari ...

), 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

employee Employment is a relationship between two party (law), parties Regulation, regulating the provision of paid Labour (human activity), labour services. Usually based on a employment contract, contract, one party, the employer, which might be a cor ...

s, purchasing costs, mailing confirmation, and

renting Renting, also known as hiring or letting, is an agreement where a payment is made for the use of a good, service or property owned by another over a fixed period of time. To maintain such an agreement, a rental agreement (or lease) is sig ...

or establishing a physical store. DTC enables smaller companies to compete with large and successful companies in terms of

price A price is the (usually not negative) quantity of payment or compensation expected, required, or given by one party to another in return for goods or services. In some situations, especially when the product is a service rather than a ph ...

, availability of the products, and quality since costs are lower. Direct-to-consumer sales can drive stronger

brand loyalty In marketing and consumer behaviour, brand loyalty describes a consumer's persistent positive feelings towards a familiar brand and their dedication to purchasing the brand's products and/or services repeatedly regardless of deficiencies, a ...

and customer retention. The primary risks in the online Direct-to-Consumer (DTC) model include increasing liability, cybersecurity threats, and growing

supply chain A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distri ...

demands. DTC exposes a business to tasks that would otherwise be taken up by

rs and retailers, such as shipping, labelling, and

cybersecurity Computer security (also cybersecurity, digital security, or information technology (IT) security) is a subdiscipline within the field of information security. It consists of the protection of computer software, systems and networks from thr ...

Data privacy Information privacy is the relationship between the collection and dissemination of data, technology, the public expectation of privacy, contextual information norms, and the legal and political issues surrounding them. It is also known as data ...

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

onto the firm itself; rather than selling to only a few distributors, the products must be delivered to many individual customers.

References

{{reflist Business terms Retailing Marketing strategy Merchandising

History

Advantages and disadvantages

See also

References