Starting a DTC Business: 4 Tips for Success

Direct-to-consumer (D2C) businesses are upending traditional sales models: Many brands have found significant success by skipping intermediaries and selling directly to customers.

The D2C business model allows brands to cut costs, while also offering consumers the shopping experiences they seek. It’s no wonder the D2C cosmetics company Glossier is now worth more than $1.8 billion, according to Forbes, and that D2C athleticwear company Lululemon is on track to make $3.7 billion in sales in 2024, according to Statista.

But breaking into this market doesn’t come without potential pitfalls. Here’s a look at the current D2C market challenges and opportunities, along with a four-step guide to help get your D2C ecommerce business off the ground.

The D2C Market: Challenges and Opportunities

Naturally in the D2C market, there are opportunities and challenges.

D2C Opportunities

There’s a massive opportunity for organizations to develop D2C brands that drive increased conversion while lowering total costs:

• According to Influencer Marketing Hub, there are now an estimated 110,000–120,000 D2C businesses in the U.S.
• Statista research found that more than 13% of all D2C brands are based in Europe.
• A 2021 report from The Drum noted that 97% of chief marketers in the U.K. said that D2C channels became a priority during the pandemic, and 46% anticipate that these channels will account for 30% of total sales through 2026.

But it’s not all good news. As noted by CNBC, D2C potential doesn’t always align with market realities. 

D2C Challenges

Two problems loom large: unstable supply chains and the increasing cost of online ads.

Under a traditional sales model, brands offload much of their supply and logistics work to third parties.

Using a D2C approach, however, means shifting this responsibility in-house. Thanks to online shipping portals and cloud-based ordering, this is now entirely possible for brands.

Unexpected supply chain disruptions, however, put D2C companies in the unenviable position of potentially missing predicted delivery dates.

Skyrocketing ad costs, meanwhile, require businesses to carefully pick and choose where, when, and how they advertise their products.

Picking the right social media sites and targeting the right users can drive substantial sales — while missing the window can mean money spent with minimal returns.

Retail Dive notes that about 75% of D2C brands in the U.S. generate less than $1 million in sales online, and, of those, 77% still have a physical storefront.

D2C is still a work in progress, albeit one with plenty of potential for brands that do it right.

How To Start a D2C Business

Creating a thriving D2C business starts with finding your niche. There’s no intermediary brand helping you earn business, so to gain shoppers’ trust and loyalty as a D2C brand, you need to deliver a solid product that meets their needs and helps you stand out in a highly saturated market.

Start by identifying what your customers need and how you can help solve a problem or fill a gap for them. From there, it’s all about connecting with your customers through the channels that resonate most with them.

Consider these steps for starting a D2C business:

• Diversify your sales and customer engagement channels to reach your target audience online, through social media, and everywhere they prefer to shop.
• Gain a strong understanding of your customers’ buying journey and shopping preferences — and adjust your marketing efforts to meet them.
• Get creative by tapping influencers, launching cross-channel marketing campaigns, or hosting live shopping events to engage customers.
• Having a great product is one thing. But driving revenue means creating a consistent, cohesive omnichannel presence that engages customers at every stage of their buying journey.

4 Tips for D2C Success

What exactly does “doing it right” look like when it comes to D2C? Four steps can help get your brand on track for success.

1. Create High-Quality Product Detail Pages

Great product detail pages (PDPs) help give your customers a better sense of what they’re buying — and why they should buy from your brand instead of your competition.

As a result, it’s critical to create PDPs that stand out from the crowd. This means making sure all PDP content is high quality.

From optimized product images and thorough text descriptions to a cohesive page layout, there are a variety of factors that empower consumers to more easily find the information they’re looking for, add items to their cart, and start the checkout process.

It's also worth considering the adoption of new technologies such as 3D imaging, virtual photography, and augmented reality (AR) to help customers visualize your product in their home and customize it to meet their needs.

2. Develop an In-Depth Marketing Plan

As noted above, online ad space is getting more expensive, meaning that effective ad targeting is key to driving D2C sales.

This starts with an in-depth marketing plan that:

• Pinpoints your target customer segment;
• Identifies their pain points; and
• Introduces campaigns that position your brand as the ideal, direct-to-their-door solution.

3. Assess Channel Alignment Regularly

With many D2C brands still maintaining brick-and-mortar stores, it’s critical to create consistent, high-quality shopping experiences across physical and digital channels.

For example, if your online store offers personalization of products to help capture consumer interest, your physical store should provide the same capability.

While not everything has to be lockstep — for example, you might have an online-only sale for a set period or offer online discounts to new members — it’s critical to ensure your product content is aligned (and up to date!) across channels.

Doing so enables your customers to have a consistent shopping experience across every touch point through which they interact with your brand.

4. Measure, Measure, Measure

The success (or failure) of your D2C brand depends on measuring what matters.

You can gain a greater understanding of what’s working in your D2C brand, what isn’t, and what needs to change by understanding:

• Where consumers are interacting with your brand;
• How they’re impacted by the experience; and
• How this translates into sales numbers, repeat purchases, or abandoned carts.

The Advantages of a D2C Business

D2C comes with massive opportunities for brands if they can navigate potential pitfalls and build a business that consistently delivers what customers want — and keeps pace with changing market conditions.