Understand Direct-to-Consumer (DTC) Fulfillment
by Jaidyn Farar
Ecommerce has become a normal part of life for consumers across the globe, and you’d be hard-pressed to think of an item that can’t be purchased online. Groceries, household items, electronics, clothing, and more—all can be ordered in minutes and arrive on the doorstep in days.
Direct-to-consumer (DTC) fulfillment is a popular type of ecommerce, one that comes with benefits for both businesses and customers. This article will explore what DTC is, why it’s risen in popularity in recent years, and what the DTC fulfillment process looks like.
What is DTC fulfillment?
DTC fulfillment, or direct-to-consumer fulfillment, is an ecommerce model where your brand sells products directly to customers, leaving retailers, wholesalers, and third-party marketplaces out of the equation.
By eliminating these middlemen, your brand can engage directly with their customers. This allows them to boost profit margins, maintain greater control over the customer experience, and streamline their logistics operations.
While DTC fulfillment has plenty of advantages, it doesn’t need to be your only sales strategy. In fact, many digital-first brands—those who began as strictly DTC ecommerce stores—have recently begun partnering with retailers in addition to selling directly.
As consumers have started making the move back to in-person shopping, having products on the shelves at physical retail stores can be beneficial for expanding brand awareness. According to one 2024 survey, consumers are evenly split: 51% prefer to shop online, while 49% prefer to shop in person.
Online marketplaces like Amazon and eBay can also help build brand visibility, eventually directing consumers to your website, where they can buy from you directly.
DTC fulfillment vs. traditional ecommerce fulfillment
Both DTC fulfillment and traditional ecommerce fulfillment involve selling products and shipping them to customers. However, traditional ecommerce is a broader concept, referring simply to any online transaction. It can involve selling your products through third-party platforms like Amazon or running a business-to-business (B2B) ecommerce business.
On the other hand, DTC fulfillment is when your brand sells directly to consumers via brand-owned channels like their website or app.
DTC fits within this larger ecommerce landscape, offering a more streamlined and controlled experience, while traditional ecommerce fulfillment provides a broader reach across different sales channels.
The rise of direct-to-consumer fulfillment
The DTC fulfillment model became popular in the early days of ecommerce.
It provided a lower barrier to entry for smaller brands looking to gain a customer base; rather than competing for space on store shelves, businesses could engage with—and sell to—customers directly.
DTC hit its stride when the COVID-19 pandemic started in 2020, confining people to their homes as non-essential businesses shut down. In 2019, 49% of consumers regularly purchased from DTC ecommerce brands. Just a few years later, in 2022, that number had risen to 64%.
Now that the pandemic has ended, why is DTC still such a popular model? It’s largely due to consumer preferences. As a direct-to-consumer brand, you can offer lower prices, customer-friendly policies, and high-quality products. Because you collect customer data, you can also tailor the shopping experience to each individual.
Consumers recognize and appreciate these benefits! Close to 60% of online shoppers say they go out of their way to buy from a brand rather than a retailer when possible.
How does DTC fulfillment work?
DTC fulfillment is straight forward. It cuts out third-party sellers like retailers, allowing brands to sell directly to consumers.
In contrast, with traditional retail, the brand sells and ships products in bulk to a retailer, which then sells them to consumers. This process adds extra stages to the supply chain, often increasing product costs and reducing the brand’s control over the customer experience.
Let’s look more closely at DTC fulfillment and break down the process.
- The brand attracts customers. When brands adopt a DTC model, they’re in charge of running marketing campaigns to attract new customers. Social media plays an important role in DTC marketing, with most businesses cultivating online communities and forming partnerships with brand advocates.
- An order is placed. Once a customer visits the ecommerce site and places an order, an order management system (OMS) processes the request, ensuring that all necessary details are correct and ready for the next steps.
- Inventory is updated. The inventory management system checks whether all the ordered products are available, preventing issues like overselling and stockouts. After a purchase is made, it updates inventory levels so future shoppers can see what’s in stock.
- Warehouse staff pick and pack products. Once an order is confirmed, the fulfillment team picks the products from the warehouse and carefully packs them for shipping. At this stage, brands have an excellent opportunity to enhance the customer experience with thoughtful packaging and branding elements.
- Packages are shipped. After packing, the products are shipped directly to the customer. The business usually partners with shipping carriers to deliver packages, and tracking systems help maintain full visibility and control over the shipping process.
- Returns and exchanges are processed. If the customer needs to return a product, the brand manages the return process. This step is crucial for maintaining customer satisfaction, as it addresses any issues that arise post-purchase.
Why DTC fulfillment?
Direct-to-consumer fulfillment is a win-win for brands and customers. Let’s explore some of the benefits of this ecommerce approach.
Full control over the brand image
DTC fulfillment gives your brand full control over how you present it in the market, allowing you to create and maintain a unique identity without conforming to a retailer's standards.
DTC brands are uniquely positioned to identify the values and preferences of their target audiences. For example, an outdoor apparel brand might do some research and discover that its customers resonate with the ideas of independence and adventure. A jewelry brand might find that its buyers value creativity and self-expression. And a cleaning supplies brand might discover that their customers prefer products that are sustainable and don’t contain harmful chemicals.
Once you understand your customers’ values and preferences, you can focus on creating an authentic brand image and voice that aligns with those values and preferences—without an intermediary getting in the way.
Full control over the customer experience
With a DTC fulfillment model, your business can manage every aspect of the customer journey, from marketing and shipping to post-purchase support and customer service. When your brand has full control over the customer experience, you’re able to keep things consistent and cohesive. The result? Satisfied and loyal customers who keep coming back.
Customer data collection and feedback
When you sell to customers directly, you get access to customer data. This information, which may include order history, preferences, and behaviors, is invaluable. It can show where you’re doing well and what elements of your business could use adjustment. This data should inform your strategy for product development, marketing, shipping and delivery, and more.
While data is important, DTC ecommerce provides another benefit that’s just as useful: you can communicate directly with customers to ask for qualitative feedback. By asking questions like “How was your buying experience?” and “Did everything go well with delivery?” you’ll gain insights that the hard data might not reveal.
More personalization opportunities
The section above discussed how customer data can be used to drive improvements in the business. It has another use as well—personalization. When you have data about customer shopping habits and past purchases, you can tailor communications to them. A high level of customization boosts customer satisfaction and fosters a deeper connection with the brand.
Most consumers prefer a personalized shopping experience. According to research from McKinsey, 71% of consumers expect personalized interactions from companies, and many get frustrated when this doesn’t happen. The report lists several touchpoints where shoppers want to see that personal touch: checking in post-purchase, sending how-to videos, or asking for a review.
Lower costs, better profit margins
In a traditional retail model, your business has to share profits with retailers. And when selling on third-party ecommerce platforms, you pay fees to list your products. When you go with a DTC model, on the other hand, you don’t need to share profits with the middlemen. This has a few benefits for both businesses and customers:
- Lower markups. Many businesses can offer lower prices with a DTC model, because the prices don’t include the markups that retailers add to make a profit. This is good news for shoppers!
- Better margins. Without the need to share profits with retailers, your brand can enjoy higher profit margins. These increased margins can be reinvested in the business, fueling growth and innovation while maintaining competitive pricing.
More streamlined supply chain
Direct-to-consumer shipping simplifies the supply chain by reducing the number of intermediaries involved in the process. This leads to faster order fulfillment, fewer logistical challenges, and greater overall efficiency.
Your business will also have more control over your supply chain when you sell directly to customers. You get to determine the packaging that will keep products safe and create a good unboxing experience. Additionally, you can provide a great tracking experience, monitor carrier performance, and optimize last-mile delivery.
Greater flexibility
One huge perk of selling directly to consumers? A greater ability to react quickly to change. The following are just a few ways DTC brands adapt to changes, trends, and disruptions:
- Market changes. The market is always shifting, with ecommerce businesses facing economic downturns, new competitors, and more. Without the need to go through a retailer's buying cycle or approval processes, DTC brands can implement new tactics, launch campaigns, or adjust pricing in real time to meet whatever changes or challenges they face.
- Consumer trends and preferences. DTC brands have the freedom to experiment with different marketing strategies and promotions that align with current trends. Using tools like email marketing and social media, they can create targeted campaigns that resonate with specific customer segments.
- Demand fluctuations. DTC brands can easily adjust their inventory, marketing, and promotions to align with seasonal demand. For example, a business might quickly introduce or phase out seasonal products without needing to coordinate with retailer schedules or inventory constraints.
Optimize DTC fulfillment with EasyPost Enterprise
Direct-to-consumer fulfillment is a great strategy for organizations that want to build direct relationships with consumers, keep full control of their supply chains, and stay flexible in the face of ever-shifting market trends.
In order to maintain a strong DTC ecommerce presence and retail loyal customers, it’s critical to get products into customers’ hands as quickly and efficiently as possible. And for that to happen, you need the right shipping system.
EasyPost Enterprise Shipping is a high-performance shipping solution that provides integrations with over 100 carriers, generates labels at sub-second speeds, and offers 24/7 support. With EasyPost Enterprise, your DTC brand can ensure that your packages arrive safely and on time, whether you’re shipping across the state or across the globe.
Talk with a shipping expert to learn more.