______________________________________________________________________________________________________ D2C model

If you ’ ve ever purchased a product at a store , you know that these products are coming from manufacturers . However , the relationship the manufacturers have with retailers or stores is not a simple one ; it involves different layers of communication between manufacturers , distributors , redistributors , and retailers , all the way down to the consumer . Each one of those layers adds another degree of separation between the consumer and the manufacturer . Now imagine a scenario where as a consumer you can interact directly with the manufacturer . This is something that more and more manufacturers and brands want to be able to do , and this is the essence of the direct-toconsumer model .

Understanding the transition to direct-to-consumer

Even though more and more manufacturers see these direct-to-consumer models as an opportunity to increase insights into their brands , in the market , this is a shift that does not happen with the flip of a switch .

Companies embracing this model essentially have to move away from the conventional retail paradigms requiring manufacturers to discover new ways to reach their customers . This not only means that they have to implement new methods , systems , processes and controls but also , in some cases , redefine their existing ones with distributors and retailers .

Why embrace the change ?

There are many reasons why manufacturers would prefer this model . Some are drawn by the benefits or the opportunity to have tighter brand control , whereas others are pushed into it by market dynamics or competitive pressures . Equally , others are driven by the potential for increased profit margins and a deeper understanding of customer insights that can be used to improve their brand awareness and even bring new products into market .

Differences between directto-consumer ( D2C ) and traditional retail models

The traditional retail model means that manufacturers will create products , distributors will distribute them , and retailers will basically retail those products . This model means there is a lot of compartmentalization where systems are set up for B2B transactions and interactions between each one of these players .

If you ’ re a manufacturer that is currently working with distributors and retailers , you know what this looks like and things like promotions , rebates , and incentives are things to consider every day . By contrast , the directto-consumer model is more organic . Here , manufacturers need to adjust their processes and systems to the changes of individual consumer demands which is a very different endeavor to that of the B2B world .

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