What is D2C? Differences from B2C, advantages, disadvantages, and success stories
D2C refers to the sale of products manufactured in-house directly to consumers, without going through an intermediary. This section presents the advantages of selling D2C, success stories, and how to start selling D2C on Amazon.
4,900 JPY a month (excluding tax) + selling fees
What is D2C?
D2C (Direct to Consumer) refers to a model where a manufacturer or brand sells products manufactured in-house directly to consumers using the company's ecommerce website or social media without involving wholesalers, retail stores, sales agents, etc. It's easy to confuse D2C and B2C, but B2C refers to transactions between companies and consumers in general.
• B2C (Business to Consumer): A wholesaler or sales agent (company) acts as a middleman between the manufacturer and the customer
• D2C (Direct to Consumer): The manufacturer makes direct transactions with the customer
• D2C (Direct to Consumer): The manufacturer makes direct transactions with the customer
The future of D2C sales
Demand for EC has rapidly expanded due to the spread of the internet and smartphones. According to the Ministry of Economy, Trade and Industry's market survey on ecommerce 1, the BtoC-ecommerce market size was JPY 14.676 trillion in fiscal 2023. Meanwhile, the “digital D2C” business is drawing attention as a business model where companies and consumers can have a direct point of contact without going through a store by using social media, etc. A survey of the D2C market size conducted by Ureru Net Advertising2 reveals that the digital D2C market size is growing year by year, making it a growth area.
1Ministry of Economy, Trade and Industry | FY2023 Ecommerce Market Research Report (released in September 2024)
2 Ureru Net Advertising | Press release published on September 8, 2020
2 Ureru Net Advertising | Press release published on September 8, 2020
Advantages and Disadvantages of D2C
Main advantages of D2C
- High profitability - Since everything from product development and manufacturing to sales is carried out in-house, it’s possible to reduce intermediate costs
- Opportunities for repeat purchases - Being able to communicate with customers directly can easily lead to gaining more repeaters
- Maintaining brand image - Since everything will revolve around sales from your brand’s website, you can easily create a website that emphasizes the brand’s image
Main disadvantages of D2C
- Building efforts before starting sales are cost-intensive - Building an in-house ecommerce website and setting up production/distribution systems can incur various costs
- Raising brand awareness and attracting customers are a must - It takes money and effort in terms of marketing, etc. to take action, such as attracting customers to your website, and undertaking SEO measures to raise awareness.
- Requires accepting orders and doing delivery work quickly - You’ll need to establish a process to quickly deliver products to customers
With D2C, since you’re selling to direct consumers without going through a company, intermediate costs can be reduced, which increases profit. But on the other hand, when setting up an in-house website, it takes time and money to create the website and do marketing to attract customers. To see tips for launching your own brand, click here
How to turn D2C disadvantages into advantages
Based on the main advantages and disadvantages of D2C described above, let's first consider which sales channel to sell through so that you can successfully sell D2C. Typically, you’ll choose between setting up your own website or selling products on an existing ecommerce website like Amazon.
When selling on Amazon¹, which provides one of the largest domestic services in ecommerce, the disadvantages of D2C introduced above are more likely to turn into advantages.
When selling on Amazon¹, which provides one of the largest domestic services in ecommerce, the disadvantages of D2C introduced above are more likely to turn into advantages.
Amazon
(existing ecommerce website)
Own website
- Own website - Requires creating a website and doing marketing to attract customers, so the initial cost tends to be high. On the other hand, unlike an existing ecommerce website, in many cases the profit margins are high because there are no selling fees.
- Existing ecommerce website - Since there are already many customers, it cuts down on costs for creating a website and doing marketing to attract customers. Tends to have more products from other companies in the same industry, which makes it more difficult to attract repeat customers compared to having your own website.
- Amazon - ecommerce website boasting one of the largest ecommerce services in Japan with a high ability to attract customers. It’s possible to easily start sales promotions with new seller benefits and the sales promotion tools provided by Amazon. It’s possible to quickly deliver to customers with Fulfillment by Amazon (FBA), which is a delivery agency service.
¹JETRO Global Trade and Investment Report 2022
By using an existing ecommerce website that already has many customers, you could start selling online faster and at a lower initial cost. If you’re selling online for the first time, we recommend going with an existing ecommerce website.
Next, let's take a closer look at the advantages that D2C brands have when selling on Amazon.
Next, let's take a closer look at the advantages that D2C brands have when selling on Amazon.
Benefits of Selling on Amazon for D2C Brands
Let's take a look at what advantages D2C brands have when selling on Amazon.
Here are some benefits of selling D2C on Amazon.
Here are some benefits of selling D2C on Amazon.
- Attract lots of customers - Many customers have shopped on Amazon, which has a high market share in various countries such as the US, UK, and Japan¹. That means there will be more opportunities for consumers to shop, including the ones who were difficult to reach with just your brand’s ecommerce website.
- Access to a delivery agency - You can use FBA (Fulfillment by Amazon) services and let us handle shipping, customer service, and returns. Even when considering fees, there’s a high possibility that D2C will reduce the time and costs it takes to receive order, make deliveries, etc.
- A simple listing process - Getting started is as simple as creating a seller account and adding products one product at a time.
- Brand appeal on the product page - Using a function called A+ Content on the product page lets you promote your products and create brand appeal with images, etc.
- Brand store page - You can use free tools (such as creating a brand store) to increase brand awareness on Amazon without compromising your brand style. You don’t need special knowledge to create your web page - the good thing about it is that anyone can easily create one.
- Advertising - Sponsored Product Ads, a function that makes it easier to find products sold by your company from a large number of products, can be operated easily, even by beginners. Also, you can use it to generate reports on sales and performance of ad eligible products and targets, etc. These analyses are useful for identifying strategies and optimizing campaigns.
¹JETRO Global Trade and Investment Report 2022
13.26 million unique visitors (on desktop) ¹, 43.06 million unique visitors (on mobile) ² per month in Japan
This ability to attract customers will enable you to appeal to a wide range of customers, and acquire new customers. First, let's take a look at how selling works.
Here's how it works
Here's how it works
You sell it,
we ship it
Fulfillment by Amazon (FBA) is a service that helps businesses grow by providing access to Amazon's logistics network.
Get details
Get details
Help increase awareness and sales with Amazon ads
Generating ads can help you to increase product awareness, reach more customers, and improve sales.
Get details
Get details
¹ March 2019 Nielsen Digital Content Measurement: Brand Level - Home and Workplace Access
² March 2019 Ranking by Nielsen Mobile NetView Brand
² March 2019 Ranking by Nielsen Mobile NetView Brand
The points above represent the main advantages, but you can probably tell that many of the disadvantages of D2C can be eliminated by selling on Amazon, even with just the points outlined above.
4,900 JPY a month (excluding tax) + selling fees
POINT:
Amazon Brand Registry
Amazon Brand Registry is a program for brand owners that sellers with valid registered trademarks can enroll in. Once you’re enrolled in the Amazon Brand Registry, you can use tools to protect intellectual property, as well as various brand building programs to raise brand awareness.
How to get started with D2C in 3 steps
When starting a D2C business, you need to clearly define your business goals and brand concept in order to make it successful. Keep the following three steps in mind:
Step 1. Create a business plan
Clarify your business concept, such as what issues you want to solve through your D2C business and what demographic you’ll be targeting. When starting a business, you will also need key performance indicators (KPIs) to clearly and fairly evaluate the effectiveness. In addition to general attributes such as sales targets, it can also be effective to incorporate perspectives unique to D2C, such as increase in repeat purchases and customer satisfaction, when setting indicator attributes.
Step 2: Develop your product
Before developing a product, clarify the brand concept and target demographic, such as “who will use” the product and “why they will use it.” Even if you already have D2C brand products, make sure to double-check that there are no discrepancies between your brand concept and target demographic.
For more information about the product development process and the flow to sales, click here.
The 5W1H framework is useful when coming up with ideas for product development.
For more information about the product development process and the flow to sales, click here.
The 5W1H framework is useful when coming up with ideas for product development.
• Who: Who will use the product
• When: When will the product be used
• Where: Where will the product be used
• What specifically will be offered
• Why: Why use the product
• How: How the product will be used
• When: When will the product be used
• Where: Where will the product be used
• What specifically will be offered
• Why: Why use the product
• How: How the product will be used
Step 3. Choose your sales channels
There are many options for selling D2C brands. You can choose to sell offline (face-to-face), online, or both. If you are uneasy about starting D2C sales, we recommend starting with online sales, where initial costs and labor are relatively low. A comparison of online sales channels is presented in “How to turn D2C disadvantages into advantages.”
POINT:
New Seller Incentives
We’re offering an Incentive program to promote sales for Professional sellers who’ve started selling on Amazon. Here are just a few of the benefits.
• Get 10% back from your initial 7.5 million JPY in brand sales, and then 5% back until sales reach 150 million JPY
• 15,000 JPY discount
on inbound FBA shipping when using the Amazon Partnered Carrier program • 7,500 JPY credit for Sponsored Product ads
• Get 10% back from your initial 7.5 million JPY in brand sales, and then 5% back until sales reach 150 million JPY
• 15,000 JPY discount
on inbound FBA shipping when using the Amazon Partnered Carrier program • 7,500 JPY credit for Sponsored Product ads
Tips for successful D2C
Here are some tips for successfully selling D2C brands online.
Point 1. Analyze sales performance and reviews
With D2C, since you can directly communicate with customers, it tends to be easier to obtain the customers’ opinions and impressions. Analyzing reviews of such products and providing products that better meet customer needs will lead to acquiring repeat customers.
Also, analyzing sales performance on a regular basis is critical to successfully selling D2C. Analytics is also where you can evaluate account performance by tracking orders, assessing customer service and returns, running promotions and advertising, and beyond.
Also, analyzing sales performance on a regular basis is critical to successfully selling D2C. Analytics is also where you can evaluate account performance by tracking orders, assessing customer service and returns, running promotions and advertising, and beyond.
If you are a registered brand owner selling on the Amazon store, you can access advanced reports like the following with Brand Analytics.
- Products winning the most clicks on strategic search terms
- Products or brands that customers are reordering (repeat behavior)
- Top products most commonly purchased alongside a product
Point 2. Analyze brand image
Analyze what kind of image customers have of your product or brand. Examples include taking surveys on the web. Figure out whether your customers have the image you want them to have of your brand. If there’s a gap, you’d need to change the content and media that you’re sharing through.
Establishing a brand image is very important for ensuring brand originality and differentiating from other companies' products. Try to be as specific as possible about the type of people you’d like to reach and the kind of value you’re hoping to convey to them. We recommend trying the “persona” method.
Establishing a brand image is very important for ensuring brand originality and differentiating from other companies' products. Try to be as specific as possible about the type of people you’d like to reach and the kind of value you’re hoping to convey to them. We recommend trying the “persona” method.
Specific example of a persona
•Name: Hanako Amazon
•Gender: Female
•Age: 32 years old
•Residence: Living with husband and daughter - three people total - in a rural area
•Occupation: Housewife
•Hobbies: None
Daily life: Dealing with challenges of childcare/looking for a hobby for a change of pace
•Name: Hanako Amazon
•Gender: Female
•Age: 32 years old
•Residence: Living with husband and daughter - three people total - in a rural area
•Occupation: Housewife
•Hobbies: None
Daily life: Dealing with challenges of childcare/looking for a hobby for a change of pace
Point 3. Implement marketing and product promotions
When selling D2C, marketing is vital to helping you start and grow your business. Implementing marketing and promotions will help you reach more customers no matter which online selling channel you use.
- Social media marketing: Since the majority of customers frequently use social media (or social networking services) every day, you can use them to raise brand and product awareness.
- Advertising: Advertising campaigns boost the visibility of your store and products.
- Product promotions: Regularly distributing coupons and offering discounts, etc., and having more customers try out products will lead to increased brand awareness and acquisition of repeat customers.
Once you start selling on Amazon, you can promote sales at great prices by utilizing the benefits of free shipping fees when sending products to Amazon's Fulfillment Centers (logistics bases), and free credits that can be used for advertising. There are many other benefits , so you can execute an effective marketing strategy.
Amazon Advertising
Show off your products
Quickly create sponsored product ads that appear in relevant product search results and product detail pages to make it easier for buyers to find seller products. Pay only for the clicks your ads receive. Run deals or offer coupons to help increase conversion.
D2C success stories
ULRUB
> See the ULRUB product list: Amazon Store | Churacos
ULRUB is a natural cosmetics brand that uses Okinawan “Blue Sea” salt. The brand’s unique strength is that it uses ingredients that make use of natural resources from Okinawa and develops products with formulas that are gentle on the skin.
The disadvantages of D2C include the costs involved in building your own ecommerce site and setting up a distribution system, as well as the expense and effort involved in marketing to attract customers. The brand started selling its products on its own website and on existing ecommerce sites almost simultaneously. By doing so, they were able to make up for the comparatively time- and resource-intensive effort required to launch sales and attract customers on their own website with the customer-drawing power of existing ecommerce sites and rapid sales promotion, enabling them to successfully launch D2C sales.
The following factors are likely behind ULRUB’s success as a D2C brand:
The disadvantages of D2C include the costs involved in building your own ecommerce site and setting up a distribution system, as well as the expense and effort involved in marketing to attract customers. The brand started selling its products on its own website and on existing ecommerce sites almost simultaneously. By doing so, they were able to make up for the comparatively time- and resource-intensive effort required to launch sales and attract customers on their own website with the customer-drawing power of existing ecommerce sites and rapid sales promotion, enabling them to successfully launch D2C sales.
The following factors are likely behind ULRUB’s success as a D2C brand:
- Establishing a brand image: It has established its image and uniqueness as a brand that focuses on ingredients that make use of Okinawan natural resources, such as Okinawan salt, Okinawan coral, and Okinawa marine clay (kucha). It is difficult to maintain a brand concept without wavering, but the fact that the brand has continuously maintained a consistent brand concept has led to the brand’s success.
- Sales strategies tailored to the channel: Since each sales channel has different characteristics and customer demographics, it is necessary to develop a flexible sales strategy to match each one.
ULRUB focuses on the following when selling on Amazon.co.jp:
- Eye-catching images and page layout
- Regular promotions with coupons and sales
- Selection of keywords and catchy slogans that are easy to search for - Multifaceted marketing: The company increased brand awareness through multifaceted marketing activities, including posts on its official Instagram and in collaboration with influencers on multiple social media platforms.
*The above is merely an example and does not guarantee the same results.
Through this article, we hope you’ve gotten a better idea of the advantages and disadvantages of selling D2C, and the reasons for selling D2C brands on Amazon. Why not start selling D2C on Amazon to raise awareness of your D2C brands and further grow your business?
Frequently Asked Questions (FAQ)
Are there any other ways for a D2C brand to sell online other than through its own website?
Yes. One option is to open a store on an existing ecommerce site like Amazon.
With your own website, you need to create product pages and payment processes from scratch, and attract customers through social media and advertising, so this tends to involve a heavy burden in terms of personnel and costs. Therefore, it may be difficult for beginners.
On the other hand, if you sell on an existing ecommerce site, the burden of starting to sell can be relatively low because product page templates and sales promotion programs are available.
Select the most suitable sales channel based on the characteristics of each ecommerce site, targeting strategy, and brand attributes.
Below is a comparison between an in-house website and an existing ecommerce site.
With your own website, you need to create product pages and payment processes from scratch, and attract customers through social media and advertising, so this tends to involve a heavy burden in terms of personnel and costs. Therefore, it may be difficult for beginners.
On the other hand, if you sell on an existing ecommerce site, the burden of starting to sell can be relatively low because product page templates and sales promotion programs are available.
Select the most suitable sales channel based on the characteristics of each ecommerce site, targeting strategy, and brand attributes.
Below is a comparison between an in-house website and an existing ecommerce site.
Amazon
(existing ecommerce website)
Own website
What's the difference between traditional sales models and D2C?
The traditional business model is called B2C (Business to Consumer), in which multiple intermediaries such as wholesalers, retailers, and distributors lie between the manufacturing of the product and it reaching its users.
Meanwhile, in the D2C business model, the manufacturer that makes the product sells it directly to the user.
Meanwhile, in the D2C business model, the manufacturer that makes the product sells it directly to the user.
• B2C (Business to Consumer): A wholesaler or sales agent (company) acts as a middleman between the manufacturer and the customer
• D2C (Direct to Consumer): The manufacturer makes direct transactions with the customer
• D2C (Direct to Consumer): The manufacturer makes direct transactions with the customer
What are the benefits of selling D2C brands on Amazon?
The benefits of starting D2C sales on Amazon include:
- Ability to attract customers: The number of monthly users in Japan has exceeded 60 million people1, allowing you to reach many users.
- Sales promotion support: Use Amazon’s tools for processing payments, managing reviews, running promotions, etc. Also, we are offering an Incentive program to promote sales for Professional sellers who have started selling on Amazon.
- Community: You can learn how to successfully sell online for free at Amazon Seller University. You can also ask questions and view other sellers' posts on Seller Discussion Forums, which is an online forum for Amazon sellers. These resources are valuable sources of information for online sales support and troubleshooting on Amazon.
- Brand building/protection: With Amazon Brand Registry, you can use brand building programs such as store pages and Vine, which gathers reviews, to improve brand awareness.
Amazon is also focusing on protecting brands so that brand owners can sell with peace of mind. Through continuous monitoring and prevention measures, over 99%2 of malicious listings are stopped before brand owners discover and report them.
By taking advantage of New Seller Incentives for professional sellers, you can try out various sales promotion programs at a reasonable price.
The following is an example of the benefits.
The following is an example of the benefits.
- Get a 7,500 JPY credit for coupon fees
- Get a 7,500 JPY credit for using Sponsored Product ads
- Take 15,000 JPY off inbound FBA shipping using the Amazon Partnered Carrier program
- When you enroll in Amazon Brand Registry, you’ll get 10% back on your first 7.5 million JPY in branded sales, then 5% back until sales reach 150 million yen
