Direct to consumer (D2C) is a business model in which brands sell their products directly to customers, bypassing traditional retail channels. This approach allows companies to build stronger customer relationships, gather data, and offer competitive pricing by eliminating intermediaries from the process.
Direct to consumer is big business: D2C ecommerce sales in the US recently surpassed $213 billion. And it’s not set to slow down anytime soon. Revenue from brands’ D2C channels is expected to grow by 11% over the coming year.
Before you start selling direct to consumer, you need to know why you’re doing it. The model takes both time and money to execute successfully—you’ll waste both without a clear objective.
This guide shares how to craft a winning D2C ecommerce strategy, with examples from brands that have paved the way for D2C’s takeover.
What is direct-to-consumer (D2C) ecommerce?
Direct-to-consumer ecommerce is a business model in which brands sell products or services directly to consumers, bypassing intermediaries. This approach allows brands to have complete control over the customer experience, from browsing to delivery.
Direct to consumer has more benefits than just driving sales. It can help you:
- Identify new product development opportunities
- Collect customer data for remarketing purposes
- Supplement existing marketing campaigns
- Forge a direct relationship with customers
- Improve profit margins by cutting out marketplace or reseller fees
- Gain control over how your brands and products are positioned
The growth of D2C ecommerce has been propelled by tech-savvy younger consumers who prefer buying directly from brands. A recent PYMNTS report found that 42.5% of Gen Z and 32% of millennials prefer to buy from a brand’s own online store, versus just 21% of baby boomers.
There are various reasons for this: Social commerce platforms cement direct purchasing patterns by making brands’ D2C websites easily accessible. Younger audiences also value community and authenticity—two pillars of an effective D2C ecommerce strategy that shoppers don’t experience elsewhere.
The key components of a successful D2C strategy
Implementing a successful D2C ecommerce strategy requires careful consideration of several key components: a seamless ecommerce platform, compelling brand storytelling, effective digital marketing, a customer-centric approach, strong supply chain management, and data-driven decision-making.
Customer-centric approach
A customer-centric approach is at the heart of a successful D2C strategy. Customer feedback gathered through direct interactions and data analysis allows you to tailor products, services, and marketing efforts to meet customer expectations. Understanding your customers’ needs, preferences, and pain points allows you to prove you’re the best solution for them.
A branded community can go a long way in cementing these relationships. When people know who you are and what you stand for, you’ll be top of mind when they need to buy.
Branded communities have the added benefit of scaling your customer interactions without a proportionate increase in the time you spend communicating directly. Communities remove the pressure of you igniting conversations one-on-one because people within the community can ask each other.
Chubbies is one brand that takes this approach. Its community, built for people who don’t believe life should start at 5 pm on Friday, encourages people who follow the same ethos to share their stories on social media and tag the brand.
In an interview with Yotpo, Chubbies’ cofounder Rainer Castillo said: “It’s really important to treat your customers like your friends. I think that was really natural for us because our customers were our friends out of the get-go.
“That went to all reaches of our company and it was a mantra that we all have been attached to for a long time,” Rainer says. “We still talk about it today. We have a cultural tenet, which is “customers greater than company, greater than self.” And a lot of what we do is bring the customer to the forefront.”
Effective digital marketing
Digital marketing plays a crucial role in the success of D2C brands. With increasing competition in the space, a carefully thought-out combination of digital channels can promote brand awareness and drive customer acquisition at a sensible cost.
Popular channels in the D2C marketing mix include:
- Social media. Use social commerce features like in-app storefronts to encourage D2C sales without forcing users to exit the app and visit your website. Evaluate the platforms that your target audience uses—Facebook, Instagram, Pinterest, or TikTok—and create social media marketing strategies that help you grab their attention.
- Influencer marketing. Some 69% of online shoppers trust endorsements from influencers—but creators don’t need millions of followers to make a collaboration worth your while. Micro-influencers with fewer than 5,000 followers have higher engagement rates. Use Shopify Collabstorecruit, vet, and manage these creator collaborations from your ecommerce platform.
- Email marketing. Connect with people who’ve opted in to hear from your brand through their inbox. Segment your audience—like VIP customers, first-time shoppers, or those who haven’t yet made a purchase—to offer the personalized content that’s most likely to resonate with them.
- Content marketing and SEO. Capitalize on the 29% of shoppers who start their purchasing journey with search engines like Google. Conduct keyword research to uncover which terms they’re using, then target these through product and category descriptions, blog articles, and heading tags.
- Word-of-mouth and loyalty programs. Sometimes, the most effective marketing campaigns don’t require a constant streak of genius. Let your customers do the talking by incentivizing loyal fans to talk about your brand in exchange for store credit—a strategy that increases customer lifetime value and encourages retention.
Data-driven decision making
The beauty of the D2C ecommerce model is that you own the experience a customer has with your brand, and your ecommerce platform collects information about how they interact with your site.
Collect customer data to deliver personalized experiences and ultra-relevant marketing messages that convert from the following data sources:
- Polls
- Quiz results
- Post-purchase surveys
- Reviews
- Customer support inquiries
Data also allows you to gain actionable insights and make informed decisions about the future of your business. Other sales channels wouldn’t provide access to this information readily.
Brands selling on marketplaces, for example, don’t have access to detailed information about who their customers are. You might think that customers of your luxury skincare line are affluent women in their mid-40s and 50s, but in reality, it could be younger women investing in expensive skincare as a preventative.
This misunderstanding of your ideal customer profile could throw off your entire business strategy. You might invest money into advertising to older audiences, or develop new products designed to reduce the signs of aging—both costly mistakes that could drive away the customer base you’ve worked hard to build.
When managing this data, decide what should be your single source of truth: your current enterprise resource planning (ERP) system or your new ecommerce platform. Larger companies may integrate stores with supply chains and business systems—other D2C brands start with their ecommerce platforms as their single source, and integrate business systems as their D2C strategies become more sophisticated and complex.
Exploring different D2C business models
Direct-to-consumer brands have revolutionized the retail industry by eliminating the need for intermediaries and establishing a direct connection with customers. In this section, we’ll explore different D2C business models, each offering unique advantages and catering to diverse consumer needs.
Vertical integration
The vertical integration model involves D2C brands owning and controlling the entire supply chain, from manufacturing to distribution. This approach to cutting out the intermediaries means you can maintain control over product quality, assortment, positioning, pricing, and customer experience.
Vertical integration also allows you to pivot and quickly respond to market changes. With full control and visibility over the entire supply chain, D2C businesses can respond more quickly to trends, customer feedback, or market changes, launching new products faster and staying ahead of the competition.
Subscription services
Subscription-based D2C models have gained significant popularity in recent years. These businesses offer curated product-boxes or regular deliveries of specific items to their subscribers.
Subscription services provide a convenient and personalized shopping experience. Subscribers are automatically billed at the start of their subscription period. Their box arrives in the mail—oftentimes as a pleasant surprise. The approach fosters brand loyalty and drives repeat business without constantly reminding people to come back.
Alpha Box & Dice is one business leaning into the subscription model. Its wine club—a recurring subscription that underpins its entire D2C ecommerce business strategy—moved to Shopify and installed Recharge to process recurring payments, build customer portals, and offer a unified checkout experience for those wanting to manage their subscription.
Since moving to Shopify, Alpha Box & Dice’s subscription revenue has grown by 700%. Revenue from the wine club is up by 38%, with subscription sales accounting for 30% of the brand’s total D2C revenue.
“With Shopify Plus, everything feels integrated and like one product, giving our customers a world-class digital experience online,” says Alpha Box & Dice’s head of digital Jared Brown. “We aim to be the largest wine club in Australia and Shopify Plus gives us the tools to make this a reality.”
Online marketplaces
Owned channels don’t have to be the sole lever in your D2C ecommerce strategy. Brands can leverage ecommerce marketplaces like Amazon, eBay, and Etsy to complement sales through their D2C website.
Selling through these platforms provides access to a vast customer base and takes advantage of the marketplace’s established infrastructure. Amazon, for example, receives over 2.5 billion website visitors each month and owns a vast international fulfillment network. Ship your inventory to one of its distribution centers and Amazon’s warehousing team, complete with packing robots, will pack and ship orders directly to your customers—often within 24 hours.
However, these marketplaces aren’t the most reliable sales channels—platforms can change their algorithms and requirements overnight. Marketplaces also charge fees for selling on them, which eats into profit margins—and there’s the obvious downside of fierce competition.
The best approach is to treat D2C as your main sales channel, but supplement sales from other marketplaces to mitigate risk. You can also drive first-time marketplace buyers over to your D2C website. A note in their parcel with a QR code to visit your store, combined with a discount on their next D2C order, can be enough to pry marketplace customers away from those platforms and toward a direct channel you control.
Evaluating potential challenges and risks
While embracing a D2C ecommerce strategy offers numerous benefits, it’s essential for businesses to be aware of the potential challenges and risks that come with this approach. Here are some common challenges, along with insights on how to navigate them.
Customer acquisition costs
Acquiring new customers can be expensive for D2C brands, especially with rising advertising costs. It now costs about $377 to acquire a single customer in competitive industries like electronics.
Unfortunately, these costs aren’t set to come down anytime soon. Technology platforms like Apple and Google are giving users more control over their data, limiting the information D2C brands can collect on their audiences for personalized ads and retargeting. Social media platforms are also limiting organic reach to push brands toward a pay-to-play model.
These challenges are especially troublesome for D2C brands who rely on large customer bases to generate revenue. Those previously relying on B2B ecommerce, for example, need substantially more direct customers to generate the same income as one bulk order.
To mitigate these rising customer acquisition costs:
- Highlight best-selling products or bundles to reinforce social proof and credibility
- Build a community around your brand, like Duradry does with its creator program
- Prevent visitors from exiting your site by using heat maps or session recordings to fix holes in the conversion funnel
- Run cart abandonment campaigns to drive people back to your site
- Use Shopify Audiences to build retargeting lists that drive up to 2x more conversions on average
- Experiment with untapped marketing channels like Shop Campaigns
Leading cookware brand Caraway experienced this problem first-hand. “We do see continued pressures and costs elevating in the customer acquisition space,” says its VP of growth and digital product, Connor Dault. “It's what 50% of my team is focused on 100% of the time, so it's obviously a huge, huge area of priority for us.”
Connor and his team turned to Shop Campaigns to mitigate these rising costs and the negative impact of iOS privacy changes. With this approach, Caraway could provide exclusive offers to first-time customers—like boosting the value of Shop Cash in their wallet after they made their first purchase.
Minimal upkeep let Caraway run Shop Campaigns on autopilot. That, combined with a fixed cost per acquisition that meant the D2C brand was only billed when a sale occurred, let Caraway generate $1 million in revenue from Shop Campaigns. As Connor puts it: “We were looking for efficient customer acquisition, and we found it.”
Scaling operations
When successful D2C brands experience growth, scaling operations can pose significant challenges. D2C ecommerce requires significant investment in technology, infrastructure, and personnel to support growth and maintain excellent customer service. It takes top-down buy-in, and a massive cultural shift.
Figure out whether you have personnel within the company to manage the D2C site, including marketing, sales, and customer service. If you have existing IT staff with bandwidth, you can tackle the D2C ecommerce build out internally. Otherwise, you can partner with a design and development agency with expertise in the platform you’ve selected.
Packaging must also be designed to withstand the shocks of last-mile delivery, and be branded to leave an impression. Consumers expect a more elegant unboxing experience than the B2B customers used to pallets and crates.
Consider the impact your packaging will have on consumer perception, and design accordingly. For example, consumer packaged goods (CPG) manufacturer Mondelez International, the parent company of Oreo, had to completely redesign its D2C packaging when it decided to sell D2C. Its cookies needed extra protection and the option to customize the packaging at scale.
Similarly, evaluate whether your supply chain is optimized to deliver products to customers, instead of bulk distribution only. Retailers are increasingly turning their stores into mini-warehouse and fulfillment centers for their own online orders, using a warehouse management system to manage order fulfillment across multiple storage facilities.
If you’re not confident in your ability to build out logistics and fulfillment capabilities, or are just testing D2C as a sales channel, outsource the work to a third-party logistics (3PL) company.
The Shopify Fulfillment Network is a geographically dispersed network of Flexport fulfillment centers with smart inventory-allocation technology. It uses machine learning to predict the best places to store and ship your products, so orders get to your customers as fast as possible.
Shopify has negotiated low rates with a growing network of warehouse and logistics providers, and the Shopping Fulfillment Network supports multiple channels, custom packaging and branding, and returns and exchanges.
“When we onboarded with Shopify Fulfillment Network, we had 1,000-plus preorders backlogged,” says Blake Van Putten, founder of CISE. “[They] pushed out the orders in literally a day and a half. We didn't have to spend any time on it and were instead able to focus on creating a complete, top-notch mobile experience for our customers.”
Analyzing success stories: Case studies of D2C brands
D2C brands have disrupted traditional retail models and achieved remarkable success in a relatively short period. In this section, we’ll analyze case studies of D2C ecommerce brands that have flourished by leveraging innovative strategies and customer-centric approaches.
Glossier
Glossier has carved its name into the D2C hall of fame. Since founder Emily Weiss launched the cosmetics line off the back of a cult following from her beauty blog, Glossier has expanded into retail partnerships. However, the brand’s website is still the first port of call for consumers who want to shop direct.
Glossier uses strategic marketing campaigns that blend offline and online experiences to stand out in the competitive D2C beauty industry. Most recently, they teamed up with Shop to create billboards that promoted their new product in New York, Chicago, and Los Angeles. Glossier fans in each location could go on a scavenger hunt to scan the QR code on the billboard and get early access to the brow pencil.
Shop’s location-based technology ensured only those who participated in the branded scavenger hunt and physically scanned the billboard could get early access to the new product—there was no way to game the system.
Glossier’s CMO Kleo Mack said: “Our goal with this campaign was to be disruptive, find a fresh way to bring a new brow product to the market, and generate engagement within our community.”
Nanoleaf
The LED lighting company Nanoleaf previously relied on retailers and distributors to grow its brand presence. But this approach came with issues—notably the inability to increase profit margins, tap into a global audience, and be less beholden to wholesale partners.
“The traditional thinking was that a retail presence would be how we make money," says Paul Austin-Menear, VP of commerce operations at Nanoleaf. “Ecommerce disrupted that. Prices started to decline in an environment where brands can sell direct-to-consumer. Retail margins for a lot of consumer electronics is only 5%-10%. A retail-only model is not a sustainable business model in this industry.”
Nanoleaf upgraded to Shopify Plus to build a customer-centric website that offered personalized shopping experiences to international customers. Now, the brand can charge customers in their preferred currencies, localize website copy, and mitigate slow international shipping alongside the complexities of duties and taxes.
D2C has since become one of Nanoleaf’s highest revenue generating channels. It offers 25% faster shipping to customers, and 82% quicker gathering of business intelligence through Shopify’s global ERP program.
Implementing your D2C strategy
Establishing a strong D2C channel can provide you with greater control over your brand experience, customer relationships, and ultimately, your revenue. These steps will help you create a successful D2C ecommerce strategy that resonates with your target audience.
Identify your target audience
Selling D2C online gives you the opportunity to tap into customer data and figure out exactly who you’re selling to. That’s the foundation for any marketing or business strategy—it informs decisions like the marketing channels to use, products to stock, and messaging and positioning of your brand.
Use Shopify Analytics to define customers’ demographics, preferences, and pain points. Supplement this with external data—such as surveys, social media analytics, CRM data and market research—to create customer personas.
A thorough understanding of your customer personas, including the journey they take prior to making a purchase, enables you to tailor your marketing efforts, product offerings, and customer experiences to meet the needs of your target audience.
For example, Shopify Analytics might show that two-thirds of your customers are women aged 20 to 35, with corporate jobs, who buy your leggings to work from home in comfort.
Leggings were traditionally seen as workout clothes, but this insight allows you to pivot and share content that will resonate with your target audience—like photos of people wearing your leggings when they work from home. It also impacts future product development: You might prioritize comfort and phone pockets over sweat-wicking materials that need to withstand intense workouts.
Build an engaging D2C website
As a D2C ecommerce business, your website is your business’s virtual home. It’s the channel with which you can connect directly with customers and have ultimate control over how your brand is portrayed.
Create a visually appealing and easily navigable website that showcases your products, tells your brand story, and makes the purchasing process seamless. That means:
- Incorporating customer reviews, user-generated content, high-quality images, and detailed product descriptions to build trust
- Ensuring that your website is optimized for mobile devices, since most customers shop on their smartphones
- Offering site search and navigation features that let shoppers find what they’re looking for
- Reducing page load speed by compressing images, minimizing redirects, and performing regular site speed audits
- Split-testing checkout sequences to improve checkout and increase conversions
Although themes are highly customizable, some brands find them restrictive. You don’t need a theme to launch a custom store on cloud-based platforms if you know a bit of HTML, CSS, or the easy-to-learn templating languages that come with some ecommerce platforms. Select a platform that gives you full code control of your front-end and software development kits (SDKs) that let you build custom applications.
Similarly, does the platform you’re considering easily integrate with third-party automation applications, or is it natively embedded with a powerful ecommerce automation platform? SaaS solutions with embedded automation capabilities allow D2C brands to automate many repetitive, manual, and time-consuming tasks with just a few clicks and no coding.
Be sure your platform also lets you automate flash sales, product releases, and major campaigns. Launchpad is a marketing automation tool built for Shopify that lets you make automatic changes to your D2C website based on a predetermined schedule, such as:
- Themes
- Image carousels
- Discount codes
- Announcement bars
“We wanted to build our brand and relationship with our customers, and that was possible because of Shopify Plus providing us the ability to sell D2C,” says Gil Lang, cofounder and CEO of InnoNature. “With Shopify Plus, we have been able to scale and establish the brand, setting us up for long-term growth.”
Leverage omnichannel capabilities
While a strong D2C website is a foundation, consider expanding your presence across multiple channels.
Your website can be the virtual home of your business—a place for customers to stop by and get the full branded experience. However, there’s no denying that utilizing marketplaces, partnering with retailers, or opening brick-and-mortar stores can cover the gaps that the D2C business model exposes, notably:
- The constant drive to find new customers
- The need to reach a large audience and sell smaller quantities (versus wholesalers who buy inventory in bulk)
- The responsibility of handling the end-to-end customer experience
An omnichannel approach can seamlessly integrate your different sales channels to enhance customer convenience and capture a wider audience.
Check that the platforms you’re considering allow you to launch and optimize sales channels across marketplaces, mobile, social, and physical locations. The platform needs to be capable of managing the complexity of omnichannel campaigns on your front end, and orders, inventory, and fulfillment on your back end.
Shopify’s unified commerce platform lets you list your products natively, and sync prices, orders, inventory, and fulfillment from a single hub. Customers get the same seamless experience wherever they’re buying—be that a physical retail store or your D2C website. You also have a central point of reference for customer, order, and product data.
Key takeaways for successful D2C brands
As ecommerce continues to evolve, embracing D2C will be essential for brands looking to thrive in a fast-paced marketplace and create a sustainable competitive advantage.
A well-thought-out ecommerce strategy can build strong relationships with your customers, fostering loyalty and driving repeat business. Remember to stay customer-centric, leverage data-driven decision-making, and continuously innovate to stay ahead of the competition. But above all: Don’t bite off more than you can chew. D2C ecommerce is a tough beast to maintain.
Some of the oldest and largest multinational brands experiment with D2C before going all in. Run relatively small D2C tests to experiment and learn—and ultimately prove you can form direct relationships with customers. Successful tests provide hard data you can take back to your boss as evidence in support of a larger D2C rollout.
FAQ on D2C ecommerce strategies
What is a D2C marketing strategy?
A D2C marketing strategy is a model in which a brand sells products directly to its end customers. Lack of marketplace or retailer input gives the D2C brand complete control over how their products are marketed—including the marketing channels used, positioning, and pricing of their inventory.
How can I increase my D2C sales?
- Build a customer-centric community
- Use marketing channels in which your audience is active
- Incorporate influencer or creator endorsements
- Showcase customer reviews
- Improve website performance
- Offer subscriptions to increase repeat revenue
- Sell omnichannel
- Improve fulfillment and shipping processes
What is the GTM strategy for a D2C brand?
A go-to-market (GTM) strategy is the plan a D2C brand follows to launch a new product through its ecommerce site. The GTM strategy includes product positioning, distribution, pricing, marketing, and customer support.
Why do some D2C businesses fail?
D2C businesses can fail for multiple reasons. Most often, it’s because of a lack of understanding of their audience, poor customer experiences, or poor quality products.
