The direct-to-customer (DTC) approach to selling products or services enables businesses to reach end customers directly, bypassing the traditional middlemen. To reach a larger audience, adopting this practice requires leveraging digital marketing tools and e-commerce platforms. DTC allows businesses to save money in the long run as they do not need to pay sellers’ fees, which they eventually can spend on delivering a superior customer experience. Also, as it enables direct communication with the end customers, businesses have a better understanding of customer needs and better control over the need fulfilment process. Numerous clothing brands, smartphone brands, electronic appliance brands, furniture brands, etc., in Bangladesh are already reaping the benefits that DTC offers.

Concepts of DTC

Today’s customers seek not only differentiation and an individual approach but also sincere communication with the brands they are going to buy. Hence, businesses are now required to create unique shopping experiences for customers. This is challenging, especially when businesses are selling through big outlets that sell various products in their large stores from different brands. It is hard to create a presence given the fact that there are competitors who have similar products being sold in the same physical stores. On the other hand, sales on e-commerce platforms are on the rise. Retail partners will become useless in the future when customers will not go inside the stores anymore. To address these two issues, the idea of DTC has come into existence.

To generate sales by adopting DTC, businesses need to perform marketing of the products and services directly to customers rather than passing through stores or sellers. They need to send customised messages to their customers regarding their products and services through different channels. Following such an approach, they get to eliminate middlemen such as wholesalers or distributors who go into the market in the name of the brands. Hence, DTC brands can exercise more control over their target audience. But this also means that they have to deal with more aspects of the sales process of the products than mere branding and marketing, such as shipping and customer service.

Differences between the Conventional Approach and DTC

There are some primary differences that are observed between the conventional approach and the DTC approach in terms of distribution, brand experience, customer relationship management, margin, pricing, scalability, and so on.

a. Distribution Channel

Conventional Approach: Traditional distribution entails the distribution of goods through normal channels such as wholesalers, distributors, and retailers. One thing that may be noted is that the product is cascaded through a number of sub-players before it reaches the ultimate customer.

DTC: In terms of distribution, brands are engaged in direct selling of their products with little or no input from middlemen such as retailers and wholesalers. This is done mostly on online platforms, company websites, or physical stores belonging to the brand.

b. Brand Experience

Conventional Approach: When compared to DTC, brands are in a weaker position when it comes to the way they promote their products. Retailers control many aspects of communications with customers.

DTC: Marketing and branding tools are entirely managed and controlled by the brands. Ensuring overall customer satisfaction as well as product delivery also fall under the responsibilities of the brands. This means that it is easier to build relationships and offer direct feedback to customers.

c. Customer Relationships

Conventional Approach: Generally, brands delegate the task of handling customer relations to retailers. They might not even have the privilege of customer databases unless they are made available by the retailers.

DTC: Brands can directly interact with customers and understand their needs. This data can be used for the future production and promotion of particular product types.

d. Margins and Pricing

Conventional Approach: The gross and net profit margins become less because sharing of profits with wholesalers, distributors, and retailers is required. The margins of the intermediaries and the intensity of competition in the market also affect the pricing strategies.

DTC: Brands get to keep almost the entire portion of the profits. Also, they get to exercise better control over pricing.

e. Scalability and Market Reach

Conventional Approach: Access to the markets and expansion might be defined by the contracts with the retailers, for which it usually takes more time to expand.

DTC: Businesses can expand their markets in the shortest time using social networks and digital media.

f. Logistics and Fulfilment

Conventional Approach: The lead times are longer, and the fulfilment process is relatively rigid.

DTC: Brands can respond more rapidly to customer demands, such as faster delivery or special packaging.

Adoption of DTC in Bangladesh

DTC businesses are gaining traction globally, including in emerging markets like Bangladesh. The DTC model has recently been implemented in several industries. This shift is being driven by advancements in technology, changing consumer behaviours, and the desire of brands to establish direct relationships with customers while bypassing traditional retail channels.

a. Clothing Products

DTC enables clothing brands to retain sovereignty over their brand identity, prices for products, and customers’ relations, which is very essential in creating customer loyalty. Direct communication allows brands to interact with customers, get feedback, and even design products for the market in response to customers’ needs. DTC helps in responding to fashion trends and consumers’ needs much faster than it is possible through traditional retail points of sale. Gorur Ghash, Madkoffee, and Turaag are some of the clothing brands that have been successful in adopting the DTC approach in Bangladesh.

b. Electronic Appliances

Electronic appliance vendors have adopted the DTC model all across Bangladesh, particularly because of the surging demand. For instance, Walton directly markets and sells to end customers through its official website and own showrooms. Such an approach enables Walton to have control over prices, outlets, and customers, thus offering a competitive advantage.

c. Smartphones and Gadgets

The local smartphone market has grown substantially over the years. Local and international brands are adopting the DTC approach to reach tech-savvy buyers. Symphony is one of the most-known smartphone brands in Bangladesh and has adopted the DTC approach.

d. Furniture

Hatil is a leading furniture brand in Bangladesh and is involved in the manufacturing and selling of furniture. Hatil offers a variety of furniture directly to customers through its website and showrooms. Using the DTC strategy, Hatil offers customisation opportunities, superior product quality, and after-sales services, aiming to satisfy customer requirements.

Challenges in Adopting the DTC Model

While adopting the DTC model, brands have to spend a lot of money on establishing brand images, unique customer experiences, efficient deliveries, and so on. There are also other challenges involved.

a. Increased Competition

The DTC segment has become extremely crowded over the years. Already-established brands are lined up to make the transition, and the level of competition is set to rise even further. Competition from established brands as well as new entrants means that DTC brands need to carve strategies to serve in the congested market differently.

b. Need for Customised Customer Relations

It is difficult to adapt to changing consumers’ needs and expectations, and the growing need for more individualised and targeted interaction is one of the challenges that DTC brands face. The traditional concept of producing products in bulk is not sustainable in today’s world, as consumers are willing to shop more from brands that make it easier for them to shop according to their preferences. 

c. Advertising Costs

Reaching the target customers through social media ads is expensive. DTC brands are continuously forced to come up with new techniques of advertisement through less costly channels, such as influencer marketing.

d. Omnichannel Shopping

Delivering the same level of experience over various channels, such as websites, social networks, and physical stores, is challenging. Providing the same level of excellent customer service is expensive and challenging to coordinate.

e. Logistics

Faster and more efficient shipping to customers is challenging. Unless there are third-party vendors involved, faster and more efficient shipping incurs increased costs due to the large number of people involved.

The adoption of the DTC model in the retail market, driven by the rise of e-commerce, represents a significant shift in how businesses interact with customers. By cutting out intermediaries, DTC brands can offer better prices, greater transparency, and a more personalised shopping experience. The success of companies like Warby Parker, Dollar Shave Club, and Glossier illustrates the potential of this model to disrupt traditional retail industries.

To keep growing, brands must navigate the complexities of logistics, manage customer acquisition costs, and differentiate themselves in a competitive market. Brands must adopt effective tools and develop infrastructure to overcome these challenges.

The DTC model, empowered by e-commerce, offers a compelling alternative to traditional retail. By leveraging technology and focusing on direct customer relationships, DTC brands can thrive in the modern retail environment, providing a win-win for both businesses and customers. As more brands adopt this model, it can be expected to see continued innovation and transformation in the retail industry, ultimately leading to a more efficient, transparent, and customer-centric market.