The Direct-to-Consumer (D2C) Channel: Refers to the selling of products by firms to their end customers without selling through retailers, distributors, wholesalers or other outlets. While today the direct-to-consumer model is most often associated with products sold through internet and social media platforms, historically the direct-to-consumer channel was characterized by products sold door-to-door and/or through catalogues.
Sears Roebuck, LL Bean and other famous merchants employed catalogues to reach a national consumer market long before the establishment of retail outlets. Today firms such as: Bonobos, Cotopaxi, JustFab, ModCloth, Primary and Tommy John use the direct-to-consumer model to compete with traditional retailers.
Modern models of D2C selling include:
Why firms choose the Direct-to-Consumer Channel: Establishing a retail presence is expensive and time-consuming. Until recently, the best retail locations in malls and shopping districts were either not available or prohibitively expensive for new firms. As a result, those entrepreneurs wishing to sell to consumers embraced the internet and social media platforms.
Promoting products and services through the internet, Facebook, Instagram, Pinterest, Twitter and TikTok are a relatively inexpensive way to reach a national/international audience not possible with traditional retailing. That said, competition for consumer attention has grown exponentially over the past decade and many firms are looking to more traditional direct-to-consumer tools like catalogues to connect with their target markets.
The Direct Selling Model: The direct selling model is a specific form of direct-to-consumer channel marketing. Firms that use the direct sales model use a variety of person-to-person (P2P) selling approaches to promote products and services directly to their end customers. Specifically, these firms engage entrepreneurs referred to as independent sales consultants (ISCs) to introduce, sell and sometimes deliver products directly to the customer. Interestingly, prior to becoming entrepreneurs and product distributors, many ISCs began their relationship with the direct selling firm as customers. This relationship has prompted some to refer to direct selling as a form of customer-to-customer marketing and others referring to this channel as the original “social network.”
The direct selling channel has been employed by firms such as AVON and Fuller Brush, who have used direct sales for over 100yrs, while Mary Kay, Tupperware and other popular brands have promoted products using this sales model for over half a century. More recently, firms such as Arbonne, Pampered Chef, PartyLite, Nu Skin, Sipology and USANA have all chosen to promote their products using the direct sales model.
Visit the Direct Sellers Association of Canada to discover more about direct selling.
Why firms choose the Direct Selling Model: As one might expect, firms choose the direct selling model for many of the same reasons as discussed previously: inaccessible retail markets, cost and a desire for national/international scale.
However, what often differentiates firms choosing the direct selling model over more traditional catalogues, internet or social media approaches are the products being sold. The direct selling model is often used to introduce products that: offer unique benefits to consumers, are focused on highly specific target markets and/or require education or demonstration for effective use.
For instance, when it was first launched Tupperware was a “new-to-the-world” product that had to be explained before consumers understood its value proposition – to safely store, serve and refrigerate food. Perhaps most importantly, the product’s patented “Tupper Seal” needed to be demonstrated so that consumers knew how to use and thus realize the full value of the Tupperware products.
Sipology by Steeped Tea: A Canadian success story, as featured on Dragon’s Den.
Tori Belle: From a game-changing innovation in 2018, to a $60M business in 2020.
Tocara: See how a market stall became a jewelry empire.
Pampered Chef: Berkshire Hathaway saw greatness in this home party business, which started in a basement.
Cotopaxi: Fundamentally realigning the balance between profit and philanthropy.
Peloton: Tapping into a need that keeps growing.
ModCloth: A lesson in navigating growth and change.
Wayfair: From a single website and to more than 250.
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What it the Canadian Academic Entrepreneur Challenge?
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