The direct-to-consumer business has crossed an important threshold. According to Insider Intelligence, more than half of consumers (64%) regularly buy directly from a brand, up from 49% in 2019.
As DTC commerce grows, brands using this approach have begun to partially or entirely cut out wholesalers and retailers from their distribution channels. While this is great for reducing overhead, it also places the responsibility of online order fulfillment on the brand itself. To get DTC orders to customers on time, brands can take advantage of the many benefits of crowdsourced delivery.
The benefits — and challenges — of DTC sales
The direct-to-consumer model isn’t new. Decoupling from cable took off in the late 2000s when Netflix provided an alternative, and some of the oldest subscription box services launched in 2010. In a 2021 Forbes article, some retail experts suggested the trend toward customized experiences emerged in response to “market saturation and the constant influx of new brands, as well as experiences like ‘one-stop online shops’ that can be overwhelming for shoppers.” This shopping approach has become so popular that DTC sales have more than doubled since 2019, estimated to reach nearly $175 billion in 2023.
With such meteoric growth, it’s easy to think that DTC brands have it made. Using a model that generally requires lower overhead (fewer buildings to rent, reduced staffing needs and no wholesale markups, for example), these companies often see higher margins than other manufacturers. They also get the benefit of direct feedback from their customers, a clean dataset of sales trends for their products and the ability to tailor their messaging and marketing moments with more agility.
But that’s not to say there are no downsides to DTC sales. Without the established infrastructure enjoyed by traditional retail, DTC brands can run into hurdles that could stunt their growth or keep them from following through on their brand promises. We’ve taken a look at a few of the most common issues below. Thankfully, these three challenges aren’t insurmountable, and crowdsourced delivery is a turnkey solution that can help prevent or resolve each one of them.
Challenge: Meeting demand for same-day/next-day delivery
Direct-to-consumer sales are made almost exclusively online. As McKinsey reports, ecommerce sales in the past 20 years have skyrocketed, while shipping times have simultaneously plummeted. Amazon’s fast delivery through its Prime membership has conditioned shoppers to expect a turnaround time of two days or less for almost any product under the sun. Can DTC brands compete with that expectation?
McKinsey researchers estimate that retailers can provide two-day delivery to 80% of the U.S. by having three distribution centers (DCs) in their network, but that more than eight distribution centers are needed for next-day delivery. While many brands have begun using brick-and-mortar stores as defacto fulfillment centers for these types of orders, DTC sellers don’t usually have this capability – and may not have enough DCs to meet these fast-shipping needs in the first place.
Crowdsourced solution: Warehouse direct delivery
By partnering with crowdsourced delivery offerings like Roadie, DTC brands can lean on a network of hundreds of thousands of drivers that can get customers’ orders where they need to go quickly, without compromising the DTC model by entering retail spaces.
Solutions like Roadie Direct™ warehouse delivery, combined with everyday low rates for local same-day and next-day delivery, make logistics affordable while reaching 95% of the country. To sweeten the deal, Roadie can provide more flexible options for inventory repositioning among existing warehouses without incurring additional less-than-truckload fees. For DTC companies without a substantial warehouse footprint, on-demand warehousing providers like Ware2Go can help to distribute inventory more evenly to reach a broader customer base with same- and next-day capabilities.
Challenge: Less-than-simple returns
In addition to fast shipping, ecommerce shoppers have come to expect an easy returns process too. This often means an in-store drop off. While some DTC companies are opening brick-and-mortar shops, most aren’t. Even when they do, those locations are few and far between. With nearly 21% of ecommerce goods getting returned by shoppers, can DTC companies afford not to provide easy avenues for returns?
Crowdsourced solution: Easy reverse logistics
Since returns need to happen fast, it makes sense that companies leverage crowdsourced drivers to make good on this consumer demand. With Roadie, reverse logistics becomes easier than ever. The same driver network that delivered your customer’s items can be used to pick them up again and return them to the warehouse where they can be processed back into your supply chain.
Unlike more traditional returns pickup methods, Roadie drivers can handle returns even if the original labeling and packaging has been destroyed. Sellers using Roadie’s returns options don’t need to impose extra hassle on consumers by requiring labels or barcodes for the returned item unless a label is required for intake at your facility.
Challenge: Retaining customers in a shoppers’ market
Fast shipping and easy returns are just two of the customer expectations an ecommerce brand has to manage these days. Elements like order tracking, customer service and shipping delays also need attention — and that’s all after you’ve earned a customer’s business.
While direct-to-consumer sales got its start by standing out from the crowd, there are now an estimated 110,000 DTC companies in the market. Competition is fierce, so brands must work just as hard at retaining their customers as they do at earning them.
Crowdsourced solution: a suite of tracking services
Having the right capabilities at your disposal will set your business up for customer loyalty. With partners like Roadie, services will go far beyond the basics of getting orders from here to there. Roadie’s crowdsourced platform ensures that orders arrive when customers need them, but offers added benefits like order tracking, photographic delivery confirmation and smooth returns processing that keep customers coming back for more.
Take action today
Altogether, these services give DTC companies the capabilities they need to grow in a competitive marketplace while still running lean. After all, DTC brands pride themselves on being more agile than their traditional counterparts, and their delivery partners should be too.
The team at Roadie is ready to help your company keep the brand-to-customer connection strong. Reach out today to learn more about adding this affordable, flexible option to your logistics tech stack.