D2C Fulfillment: How Can A Brand Successfully Implement Sales without Intermediaries?
December 22, 2023
Before the widespread use of the Internet, manufacturers interacted with consumers through intermediaries, establishing complex supply chains. However, with the development of online sales channels, this traditional scheme has ceased to dominate. Brands have realized the benefits of direct sales and started delivering their products directly to the end consumer.
In 2019, 49% of consumers wished to purchase a product directly from the manufacturer, and by 2022, this number had increased to 64%. This leap was driven by the rapid development of ecommerce after the pandemic. With the closure of physical stores, customers began searching for their favorite brands on the virtual shelves of their online stores.
The launch of a direct-to-consumer (D2C) oriented brand has become more accessible thanks to electronic trading platforms. However, despite the ease of entry, its development can be a challenging task without effective D2C fulfillment. In our article, we will explain how to implement direct-to-consumer order fulfillment to successfully meet the challenges of this model.
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1. What is Direct-to-Consumer (D2C) Ecommerce?
Direct-to-Consumer (D2C) sales is an ecommerce model that enables brands to sell products directly to their customers, bypassing traditional retail channels. It allows companies to maintain control over all aspects of customer service. They can independently manage marketing, pricing, and delivery schedules while directly interacting with customers to enhance brand loyalty.
The key distinction of the D2C model from B2C is that it does not involve an intermediary. The manufacturer independently controls the entire supply chain from product production to its delivery to the end consume.
In the case of B2C, there is an intermediary in the chain, such as a retail store or an online platform. Besides offering the products of a specific manufacturer, it also provides goods from competitors. In this scenario, the manufacturer is only involved in the production of the product and the development of its brand. All expenses related to order fulfillment and delivery fall on the shoulders of the intermediary.
2. Why Do Brands Choose the D2C Model?
The D2C model is becoming increasingly in demand and attractive for modern businesses. In the period from 2021 to 2022 alone, D2C sales in Europe grew by 23% . Thanks to ecommerce opportunities and technological innovations, brands can effectively promote and sell their products through their own online platforms. This allows them to have full control over their supply chain, receive feedback from customers, and better understand their needs. Such a strategy provides brands with a range of advantages:
2.1 Quality сontrol of the product
Interacting with intermediaries through B2C sales makes it challenging for a brand to track and prevent the sale of counterfeit products. By offering its product through its own platform, it can provide customers with confidence in its authenticity. D2C companies directly control the entire product life cycle. They take responsibility for every stage of production, from selecting raw materials to delivering the finished product.
Therefore, the manufacturer can guarantee its customers reliability, safety, and adherence to the stated product specifications. This transparency will strengthen trust between the brand and the consumer and lay the foundation for long-term relationships.
2.2 More profit
D2C often leads to increased business profitability. The elimination of intermediary services and direct sales to consumers result in higher profit margins. With control over pricing and the ability to avoid distribution expenses associated with traditional retail channels, companies can boost their revenue.
By interacting directly with consumers, the mattress manufacturer Casper was able to earn $100 million in sales for just one mattress model in less than two years. This financial advantage allows brands to invest in innovative products, marketing, and other areas that contribute to their sustainable growth.
2.3 Personalized shopping experience
According to Epsilon research , 80% of customers are more likely to make a purchase from brands that offer personalization. D2C enables companies to directly study the preferences and behavior of buyers. They can use this data to create unique offerings.
Take, for example, the dog food manufacturer JustRight. The company provides its customers with a unique opportunity to customize a diet for their pets. It offers a five-minute quiz on their website. After completing it, JustRight gathers all the necessary information about the pet to tailor a unique food composition and portion size. This approach allows the company to build a closer relationship with each customer, fostering loyalty to its brand.
2.4 Customer loyalty
D2C companies find it much easier to build brand loyalty compared to traditional retail strategies. Customers are generally more willing to return to a brand they trust. If your customer consistently receives quality products and service, they are more likely to become a loyal patron of your brand. Direct communication channels also contribute to the creation of a community around the brand, evoking a sense of belonging in the customer.
3. D2C Fulfillment: How Does It Work?
Direct-to-consumer fulfillment is a comprehensive process that begins when a buyer places an order through the brand's online store or other direct sales channels. In the context of D2C, manufacturers directly process and deliver orders to their customers, bypassing traditional retail channels. The process involves several stages:
3.1 Receiving goods at the warehouse
Goods are transported from production lines to a warehouse or another storage location. Here, they undergo careful inspection to ensure compliance with quality standards and the quantity specified in the specifications. After a successful check, each product is labeled and allocated to respective shelves for subsequent storage. Companies engaged in direct-to-consumer sales store their products in their own warehouse or a fulfillment center until they are ready for shipment.
3.2 Inventory management
Efficient D2C fulfillment requires intelligent inventory management. This includes demand forecasting, monitoring stock levels, and preventing excess or insufficient inventory. Such an approach enables brands to meet the needs of their customers in a timely manner.
3.3 Order processing
The online platform in D2C ecommerce is a key link in the interaction between the brand and the customer. When an order is placed, the system automatically records it, checks the availability of products in the warehouse, and determines the final cost, including shipping and taxes.
3.4 Picking and packaging
After confirming an order, the fulfillment center receives a notification to pick and pack. Warehouse staff picks the items, securely packages them, and generates labels for shipment. D2C companies aim to create packaging that is both functional and visually appealing, providing customers with a pleasant buying experience and highlighting the uniqueness of the brand.
Delivery is one of the most crucial stages of D2C fulfillment. It is essential for the brand to ensure fast and reliable delivery. Therefore, when choosing a carrier, it is important to consider not only the cost of their services but also the delivery speed, tracking capabilities, and coverage area. Provide yourself the flexibility to offer different delivery options, including express delivery, to meet various customer needs.
3.6 Returns and exchanges
An optimized returns process is a crucial stage in the fulfillment of D2C companies. While brands aim to minimize the number of returns, they should have a clear return and exchange policy. Customers should have the option to easily return a product if they are dissatisfied or encounter issues with the order. A convenient and transparent return process will satisfy existing customers and create a positive impression for future buyers.
4. In-House Fulfillment or Outsourcing: How to Implement D2C Fulfillment?
Applying the direct-to-consumer sales model, companies can either handle orders in-house or outsource the fulfillment process. In-house fulfillment means that the brand processes its customers' orders within its own fac