HomeA D2C Subscription Business Is for You — Here’s Why
A D2C Subscription Business Is for You — Here’s Why
December 6, 2021
Updated May 25, 2022
If you’re an established or emerging product manufacturer, you naturally want to grow your business. Including a distributor or reseller in your sales pipeline makes plenty of sense. What’s not to like about someone who takes your goods to a wider audience and then markets, distributes, and ships them to your customers?
Still, when the pandemic arrived, you likely experienced the flip side of the traditional approach.
Shipping delays, delivery snarl-ups, and stock management have become the new headache in the new normal and may even have sent your customers to your competitors, leaving you with no chance to win them back.
This is just one situation where the direct to consumer model, or the D2C subscription model, outperforms the reseller to consumer one, as it gives you more opportunities to retain customers who weren’t satisfied with your service.
If you’re looking to take the plunge into D2C with a subscription business, it’s a great time to get started. In this article, we’ll discuss what direct to consumer is, the benefits of building a D2C brand, and how to ensure the growth of your D2C subscription company.
What Is D2C?
Direct to consumer (D2C) is a business model where a company manufactures, markets, distributes, ships, and deals with returns of products without the help of third-party retailers or distributors. In other words, it cuts out nearly all the outside players involved in production and delivery.
Even though this is nothing new, the D2C model is growing, and research suggests that many US companies will soon have adopted D2C either partially or fully.
It’s both a manufacturer and a seller. As the name implies, there are no middlemen involved in delivering the product to the consumer.
It’s digitally native. Advertising, ordering, shipping, returns, and resolving product-related issues are all organized primarily online.
It’s omnichannel. Even though a direct to consumer brand is considered e-commerce, it can also be present in physical or online retail stores. For instance, Dollar Shave Club sells its products through its own website, on Amazon, and in brick-and-mortar Target outlets.
It’s value-driven. Successful D2C business founders are relentless researchers. Often, their business is somewhat niche, even if it covers consumer staples like razor blades or feminine care. And this is why they succeed — they identify a gap between what the market is offering and what consumers want. Combined with a smart marketing strategy, this has given us success stories such as Dollar Shave Club and LOLA.
It’s highly personalized. In the direct to consumer business model, there’s no one-size-fits-all when it comes to product, service, and engagement. D2C companies often put the customer in charge and encourage them to manage what, how, and when they want their products or services to be delivered.
All of these things can sound like a lot of work for a D2C company, but there are also plenty of advantages of shifting to this strategy.
Let’s take a look at what D2C can bring to your business.
The Benefits of Building a Direct to Consumer Brand
Whether you use D2C exclusively or only partially, the model offers plenty of benefits compared to promoting and selling your goods through resellers. Here are the most important ones.
Full control of your profit margins. Eliminating your middlemen keeps your distribution costs low and means you can invest more in building customer relationships, creating better USPs, and customizing offers.
The ability to customize experiences. Tailored marketing and personalization are no longer a perk for consumers: they’re the norm. A D2C brand — and a D2C subscription brand in particular — gives you more power to create them, as you can interpret data collected directly from your customers.
A tighter grip on data. When you delegate selling your product to a third-party distributor, you rarely get to know your customer. While market research can give you valuable insights, it’s not enough, and you risk missing your true target audience. With a D2C brand, however, you get exclusive access to your customers’ data. This gives you more opportunity to create a working marketing strategy based on facts.
All the perks of digital marketing. With more people shopping online, implementing a multi-channel digital marketing strategy is crucial for e-commerce companies. The ones that operate online have complete control of their branding and conversion power. The result? Full, 360-degree communication with their customers throughout the whole shopping cycle.
D2C works especially well for business models involving subscriptions and memberships. And it’s no wonder since they involve more client-based feedback, put personalization first, and depend on first-hand customer data to operate.
The question is, how can you build a successful D2C subscription company?
Check out our top tips to get started.
6 Tips for Integrating a D2C Subscription Model in Your Business
First things first: you have to decide whether a direct to consumer approach will be a part of your strategy or your whole business model. As we’ve already pointed out, you can combine online sales with a physical store presence or go digital-only.
The good news is that there’s no wrong strategy once you know where you want to take your business. Once you’ve taken this first step, here are the top tips that will fit either scenario.
Research Where You Can Fit
When US mattress manufacturer Casper was starting out, the founders came up with just one mattress type while other brands were offering up to 200. That might sound foolish, but limiting the choice was exactly what they needed to enter the market, despite the presence of reseller giants.
Through research, Casper’s founders discovered that shopping for a mattress is a horrible experience, even if most people have very basic requirements. So they invested time and money in figuring out the formula for the perfect mattress to avoid placing the extra burden of choice on consumers. The result? $100 million in sales in less than two years.
Come Up with an Effective Strategy
A D2C subscription business strategy addresses three key elements: how to sell, who to partner with, and what to do when the company needs to move on. Let’s review each one.
Sales strategy. To market and sell your product, you need a solid and secure platform that will help you throughout the entire sales cycle and deal with checkouts, returns, customer accounts, online payments, and so on. Some e-commerce platforms, like Subbly, also offer data analysis features, creating a one-stop shop for attending to your customers’ needs and making data-driven decisions.
Partnership strategy. If you choose a direct to consumer approach as just part of your strategy, you’ll also need to think of who you could partner with to enhance your physical presence and sell in stores. The perk with this is that you give a broader audience a chance to try your products without a subscription. If they do decide to subscribe, make sure you have some value-based subscription offers ready.
Planning strategy. Finally, you need to understand where your company could head in the future. In 2016, Unilever acquired Dollar Shave Club for $1 billion but continued with subscription sales. In fact, Unilever has seen the opportunities of the D2C model and recently acquired Onnit, a leading health supplement manufacturer that operates on a D2C basis.
Build Your Audience Fast
For a D2C brand, audience is everything. Building a loyal customer base fast and well is the key to success. Here’s how some brands did it.
Celebrity influencers. Some brands partner with social media influencers to spread the word. Casper paid Kylie Jenner and other Instagram bloggers to tag its product in their posts. This worked, and sales skyrocketed.
Building a cult of routine. Sportswear manufacturer Gymshark made going to the gym a cult-like ritual and still promotes this idea. Its campaigns have created a huge “tribal” community of people who see going to the gym as part of their lifestyle.
Referral programs and waiting lists. This is actually our favorite. Harry’s, another men’s grooming brand, managed to sign up over 100,000 people on its waiting list when launching its new product. They offered free goods and packages for people who invited their friends to sign up; the more friends people referred, the more free goods they received. To say this worked well would be an understatement: 77% of emails came from their referral program.
Put Quality First
As a direct to consumer brand, you’ll usually be offering a product that can be found in retail stores, which is why you have to focus on quality. From the product itself to convenience at checkout, along with the ability to purchase on-the-go, no-questions-asked returns, and impeccable 24/7 service… everything has to meet the highest quality standards.
All these little things build customer trust and loyalty to your brand — something that no third-party distributor can give you.
Since the D2C strategy/model is digital-first, creating a viral visual presence and branding is a must for every D2C subscription business. If you also have a physical presence, you can use that as an advantage, too. Let’s see how to do it.
Use the power of micro influencing. For sure, huge Instagram celebrities with millions of followers can perform overnight magic for your brand, but if you don’t have bags of money, you can make use of micro influencing. As a case in point, makeup company Glossier set up “the most Instagrammable room in SoHo” and encouraged visitors to take pictures, tag their IG account, add location, and low-key promote the brand to other people. The same thing happens when browsers use beauty masks as IG filters when creating stories. There’s no direct purchase, but the brand goes viral at no extra cost.
Engage users. Creating unique hashtags and challenges, sharing stories, and initiating similar viral activity are all important ways to make other people advertise and advocate for your brand.
Use humor and creativity. If your ads are disruptive, eye-catching, and simply make viewers want to share them with their friends, this will expose your brand to a wider audience. A great example is the classic Dollar Shave Club video.
When you interpret your data properly, you get to know your clients and measure your company’s market performance, and you can quickly change your marketing strategy when needed.
Subbly offers real-time data analytics and tracking, loyalty programs, and tools for you to create customer surveys, as well as 50 other features that help with collecting and interpreting data first-hand. Just don’t forget to keep your data safe and use it responsibly.
D2C Isn’t Hard with Subbly
Creating a successful D2C subscription company isn’t hard when you know the unique benefits of your product, market it to the right audience, and use the right tools to manage your business.
By combining the useful insights in this article with digital marketing and your own creativity, you can easily create a subscription business that’s ready to win consumers’ hearts.
At Subbly, we’re subscription first. That means it’s our priority to create the best subscription experience for your customers and power you with the best management tools for running your business effectively. Try our services for 14 days at no charge and see it for yourself!