Why are large distribution companies adopting the direct-to-consumer (DTC) model and how can you prepare for it?

Written‌ ‌by‌ ‌Kingsuk‌ ‌Bhowmik‌ on December 15, 2021

In this reign of flourishing industries and ever-growing customer base there are barely any businesses left who haven't heard of direct to consumer, in short DTC business model. In fact, the number of companies that are adapting to the DTC system is rising by the minute. A lot of the biggest fishes of today's distribution market like Nike, Dell computers, Everlane, Warby Parker, Adidas and many more are adapting to DTC and are proving it to be highly beneficial for everyone. The mighty internet being the helmsman of today's market, DTC is your way to make it to the "IT" league. Learn why the large distribution companies are adopting the Direct to Consumer model and prepare for your own business to take the flight.

All you need to learn about direct-to-consumer model:

If you aren't clear about the model yet, we've got you covered. DTC or direct-to-consumer business model is an entirely different lifestyle for businesses, which means getting rid of the traditional ways of serving and distributing your company goods. Instead of regulating the long chain of deliveries from the factory to wholesaler and retailer in order to finally deliver the goods to the consumer, you can directly reach your customer base, cutting off all the middlemen, additional costs, potential mishaps and also build your brand reputation on your own without relying on others' service. For more in-depth knowledge, click here.

Established companies settling for this cash-cow:

As a result of the vast access the internet has to the entire world in today's date, the distribution market has utilized the platform and got itself a ticket to the exposure. Due to which you can't only reach your demographic in just a click but also easily control things which are crucial to your business, for instance; market reach, public feedback, brand story, handle product returns and also solve service issues faster, offer a wider range of products, building up customer-brand relationship and most importantly mitigating the risks of knock-off products. This is why some of the biggest companies are adapting to this line of service. To begin with, Nike. Born in 1964, Nike is quite an old chap to ditch the traditional methods. However, Nike didn't only adopt the direct-to-consumer model but also set an example of plummeting brand revenue in a large scale. In 2011, the brand had made 2.9 billion $, 16% of the total 18.1 billion $ revenue through the DTC model. Which by the end of the 2020 fiscal year, it rocketed up to 35%, amounting to 12.4 billion USD. Which majorly contributed to the sportswear giant's current revenue of 36 billion USD. Nike bagged more than its competitors' annual turnover alone in DTC sales. And many other companies like Dell computers, Warby Parker, Adidas, Everlane, Dollar Shave Club and many more have adopted this direct-to-consumer business model and added billions to their brand value.

Why adapt direct-to-consumer model for your business:

Now that you know what the model is and the companies who swear by it, learn what's in it for your business:

  1. Customer preference: Since people have been given the luxury of shopping from home through the internet, all of them have utilized the option to the fullest. Especially the all-time-working people who barely get the time off for recreation. Furthermore, with the entire lockdown chronicles people have been put through in the Coronavirus pandemic, online shopping has become a comforting habit. And most of the people worldwide are more likely to purchase through web stores rather than actually dropping by in a physical store. And here, direct-to-consumer comes into play. You will be able to supply to your consumer directly and also cut down huge road time, increase your profit margin by selling the product directly at retail rate rather than wholesale rate and also the advantage of knowing what's high in demands and new window of suggestions and creativity. Which helps build a personalized consumer-brand relationship.
  2. Cut down costs: One of the most significant advantages of direct-to-consumer business is that you don't need any traditional middleman in between. All the cost of a wholesaler, reseller, or retailer vanishes along with the potential mishaps on the way.
  3. Broader market reach: No one will be down to travel 50 km just for the sake of buying a pair of shoes which is only available in stock in a shop so far away. Whereas, through DTC you can reach any and all potential customers by putting up products on your web page so anyone can check them out just sitting at home and getting the product delivered to them in just a matter of days. And with great service comes a loyal customer base, which will also make new product launching extremely efficient and hassle-free.
  4. Faster damage control: Not everything in manufacturing goes according to plan. One or two product flaws happen from time to time. However, it's almost impossible or takes too long to reflect on the mistakes as it's been through several links to end up at your consumer's hands finally. In DTC, you can deliver goods straight to the consumer without delay and also respond to the product issues one on one. Which doesn't only help to give your customer a better experience but also builds brand rep for customer support and damage control.
  5. Brand story: Through DTC you can be responsible for your own brand rep. By not depending on middlemen or any other company who won't be as diligent as you can be in building your own brand rep. Also, by this, you yourself can control your brand's price, promotion and placement which is crucial for your business growth.

Now, to properly manage and adapt to the direct-to-consumer model, Nuport distribution management system can help you every step of the way to make your business execution and service better by a hundred folds.

Why Nuport Distribution Management System?

Amongst many management systems the market has to offer, Nuport provides you with the perfectly minimalist, low-tech, and custom solution suited for your company. With Nuport, you will be able to have both primary and secondary distribution purchase and consumption data and visibility. This helps in identifying sales trends at the granular level. Better yet, by studying the patterns you are better prepared to go straight to the consumer for faster sales and revenue generation.

Furthermore, by using Nuport, manufacturers are now able to get a better grasp on the inventory movement at the consumer level. As route-to-market can become much shorter and more accurate, you will also be able to plan and experiment on new products much faster.

Finally, to get the best possible solutions for your company's adaptation to the direct-to-consumer model, Nuport is the one to choose. To get a personalized consultation by the experts, schedule your demo today!