Direct To Customer/D2C promises
We have seen that many businesses start selling their products directly to the customers and bypassing their old distribution chain, stores and middlemen — selling through a website/eCommerce or social media. Amazon is the biggest and successful example of direct to customer or D2C and others industries follow the approach in D2C such as FMCG and telecommunication.
The comparison flow can be shown as below for traditional and D2C. The cost-saving can be done and can be allocated to other post such as digital marketing, affiliate marketing, influential marketing and its ecosystem.
For example in telecommunication business the industry also follow the D2C approach and it starts in mature like in Europe or US market before started working in develop market like in Indonesia. The D2C will bypass the function of Master Dealer, Dealer, Sub-Dealer, Retailer. In some countries where the traditional distribution system still dominant, the rejection and boycott were happened in the previous year because the role of Master Dealer and its chain used to be very big to help to a telco brand in term of product awareness, availability, advocacy and education but not anymore in this today’s digital era and modern customers where a brand can reach to customers directly.
Above all the new terms that sounds digital sophistication, the ideas of D2C is old concept but now it’s just possible due to technology availability and behavioral shift.
The producer may identify cost cutting in traditional distribution chains as below:
- Sales Support activities such as door-to-door canvasser or trader, using the box/Cartoon in trading/distribution wont be necessary.
- Trade Marketing are the activities to increase the demand of wholesaler, distributors, dealers and retailers level. So the cost dealer of commission, non-returnable goods allowance, free gift, marketing fund/support will be deleted.
At the least two cost components can be removed as the distribution chain has been cut by D2C while the Product Margin can be optimized as discount for regular or seasonal, cash discount, delivery discount with delivery partner, payment channel & partner discount
But again in the modern customers both two-facets in traditional and D2C has to be considered carefully by the brands/manufacturers since many D2C brands has failed. The right strategy in Omnichannels, empowering community, integrate with verticals to increase margin, what about not selling again through voice telesales? What about scale up? warehouse, distribution, warranty?
The reminder came as the “What” customer needs still remain but the “How” the customer gets the products/services has been changed, and it keeps evolving with the technological advancement, social media and behavioral changes. The customer still need pak Ojek/ride-hailing as transport (the “What”) but today the “How” is customer no longer need to come to pangkalan ojek/ride-hailing station. Through application, pak ojek/driver will pick you at your house, very convenient. Also through application inside your smartphone, you have all the foods menu available, select, pay and delivered to your place.
People as users still need to do groceries, shopping, buying things — but since more and more users have super computer(smartphone) within their hands, producers/manufactures/brands can go directly and reach theirs customers in digital forms, e-commerce, social media, website while the combination of online-to-offline activities will still be there.
My take on D2C is …doing it with cautious!
