Direct-to-consumer (DTC) or business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party

retail Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, an ...

ers,

wholesale Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...

rs, or any other middlemen. Direct-to-consumer sales are usually transacted

online In computer technology and telecommunications, online indicates a state of connectivity and offline indicates a disconnected state. In modern terminology, this usually refers to an Internet connection, but (especially when expressed "on line" or ...

, but direct-to-consumer brands may also operate physical retail spaces as a complement to their main e-commerce platform in a clicks-and-mortar business model.

History

Direct-to-consumer became immensely popular during the

dot-com bubble The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet. Between 1995 and its peak in March 2000, the Nasdaq Comp ...

of the late 1990s when it was mainly used to refer to online retailers who sold products and services to consumers through the Internet.Business-to-Consumer (Direct-to-consumer)
May 20, 2019 This business model originated before modern

transportation Transport (in British English), or transportation (in American English), is the intentional movement of humans, animals, and goods from one location to another. Modes of transport include air, land (rail and road), water, cable, pipeline, ...

and

electricity Electricity is the set of physical phenomena associated with the presence and motion of matter that has a property of electric charge. Electricity is related to magnetism, both being part of the phenomenon of electromagnetism, as described ...

when people consumed locally due to geographical distance and business competition was more limited. As new modes of transport kept emerging (

steamboat A steamboat is a boat that is marine propulsion, propelled primarily by marine steam engine, steam power, typically driving propellers or Paddle steamer, paddlewheels. Steamboats sometimes use the ship prefix, prefix designation SS, S.S. or S/S ...

train In rail transport, a train (from Old French , from Latin , "to pull, to draw") is a series of connected vehicles that run along a railway track and transport people or freight. Trains are typically pulled or pushed by locomotives (often kno ...

automobile A car or automobile is a motor vehicle with wheels. Most definitions of ''cars'' say that they run primarily on roads, seat one to eight people, have four wheels, and mainly transport people instead of goods. The year 1886 is regarded ...

airplane An airplane or aeroplane (informally plane) is a fixed-wing aircraft that is propelled forward by thrust from a jet engine, propeller, or rocket engine. Airplanes come in a variety of sizes, shapes, and wing configurations. The broad s ...

), consumers gained access to a wider variety of goods and service providers, increasing business competition. The emergence of the Internet further increased access to many different types of goods and services, and increased competition meant that businesses had to put additional effort to win and keep customers.

Advantages and disadvantages

Direct-to-consumer enjoys lower costs compared to physical retail, as it has reduced the number of different business components like

employee Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...

s, purchasing cost, mailing confirmation,

renting Renting, also known as hiring or letting, is an agreement where a payment is made for the temporary use of a good, service or property owned by another. A gross lease is when the tenant pays a flat rental amount and the landlord pays for ...

or establishing a physical store. DTC enables smaller companies to compete with large and successful companies in terms of

price A price is the (usually not negative) quantity of payment or compensation given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in th ...

, availability of the products, and quality since costs are lower. Advantages and disadvantages of Direct-to-consumer
study4business.com October 15, 2018 Direct-to-consumer sales can drive stronger

brand loyalty In marketing, brand loyalty describes a consumer's positive feelings towards a brand, and their dedication to purchasing the brand's products and/or services repeatedly, regardless of deficiencies, a competitor's actions, or changes in the e ...

and customer retention. The main risks in the online Direct-to-consumer are expanding liability risk, cyber risk and more

supply chain In commerce, a supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products to customers through a distribution system. It refers to the network of organizations, people, activ ...

demands. DTC exposes a business to tasks that would otherwise be taken up by

rs and retailers, such as shipping, labelling, and

cybersecurity Computer security, cybersecurity (cyber security), or information technology security (IT security) is the protection of computer systems and networks from attack by malicious actors that may result in unauthorized information disclosure, th ...

Data privacy Information privacy is the relationship between the collection and dissemination of data, technology, the public expectation of privacy, contextual information norms, and the legal and political issues surrounding them. It is also known as data pr ...

and cybersecurity are especially important in online businesses. The direct-to-consumer business model puts the entire burden of the

onto the firm itself; rather than selling to only a few distributors, the products must be delivered to many individual customers.

References

{{reflist Business terms Retailing Marketing strategy Merchandising

History

Advantages and disadvantages

See also

References