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, 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, Glossier, and Warby Parker.

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

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