It’s no secret that B2Bs have lagged behind B2Cs in embracing eCommerce. Fortunately, this is changing. According to a 2023 study, 65% of B2Bs now offer eCommerce capabilities, as these firms have discovered digital is a vital purchasing channel that can drive growth. This, in turn, is influencing a rise in B2Bs exploring and expanding into D2C (direct-to-consumer) sales. B2B leaders see the D2C business model as an opportunity to boost revenue while building direct relationships with their end customers, which delivers additional benefits.
So, how can you tap into the power of D2C? Here, we explain the benefits of adopting a D2C strategy, how commercetools can help you get started and share three case studies from B2B customers that have successfully launched D2C businesses.
What is D2C? How can it benefit my business?
D2C, or direct-to-consumer, is a sales approach where B2B manufacturers manage the entire supply chain process — from production to marketing, distribution and selling. Instead of strictly working with “middlemen,” i.e., distributors or wholesalers to get their products into physical and online stores, B2Bs that implement a D2C model sell directly to consumers.
The main reason manufacturers opt to expand into D2C sales is to gain more control over their brand. In the past, the cost of opening and operating brick-and-mortar store locations was a major deterrent to this strategy. However, the rise of eCommerce has made it an incredibly attractive option for B2Bs — not only does the D2C model allow them to present their products and brand however they want, but it also helps lower overhead costs and provides more access to customer data.
Leverage customer data better: Selling directly to your customers gives you immediate access to their data, which you can use to gain customer insights, so you can leverage to improve your products and messaging.
Boost innovation: Tap into your customer base to test drive new products, inspire product development and enhance your ability to meet customer needs. For example, you can experiment with new revenue streams such as subscriptions.
Improve margins: No longer do you have to price your products according to traditional sales commissions or retailer markups. While your marketing, customer acquisition and operations costs increase, you get more control over how you price and promote your products.
Increase product discovery: You gain the power to upsell and cross-sell from your inventory. Use product recommendations to feature items from your product lines and create campaigns that spotlight the products you want to promote.
Go global: Instead of having to find and secure partners to expand your international footprint, you can strategically select and enter new markets based on potential. You can also easily enable cross-border selling to get your products in front of the right customer segment in the right market.
The growth of eCommerce is leading top brands including Levi Strauss & Co. to increase their focus on D2C sales. While the brand has operated stand-alone stores since its inception, it has traditionally focused on selling through wholesalers. At Shoptalk 2024 in Las Vegas, Jason Gowans, SVP & Chief Digital Officer of the company, shared that it has shifted to a brand-led, D2C-first strategy. “Our business is already more than 40% direct-to-consumer including stores and online and we see that being as much as 55% of the business.”
Jason made it clear that accomplishing this goal will require the brand to grow their eCommerce business — and that this is one of the key reasons the company is transitioning to more composable architecture.
Composable commerce is grounded in our strategy. If you want to be the best denim lifestyle retailer in the world, you’ve got to be excellent every single day. So, if you are an inspiring brand that’s aspiring to be D2C-first, it's not okay to be just okay every day. You have to be very good. We believe that one way to do that is to take the best of what's out there and put it in front of the customers.
SVP & CHIEF DIGITAL OFFICER, LEVI STRAUSS & CO
Why commercetools is the perfect fit for D2C
commercetools Composable Commerce is designed to allow companies to run all of their commerce sites, regardless of business model, on a single backend platform. While we’ve developed business-model-specific APIs to support the unique needs of B2B and B2C customers, everything is compatible and extensible. This means you can embrace multiple business models and/or multiple brands, unifying business operations on the backend while still delivering brand differentiation on the frontend. This is important because while many other commerce solution vendors struggle to provide one system that fits all business models, commercetools is one of the few in the market that truly works with all use cases.
So most commerce solutions that are popular are basically purpose-built for B2C. Most just kind of slap on some B2B functionality and say, ‘Oh, we can do both.’ But, these distinctions really matter, so seek commerce SaaS with a flexible data model.
RESEARCH DIRECTOR, IDC
In addition, the MACH® technology that serves as the foundation for commercetools composable solutions ensures you have the flexibility, performance and scalability to support multiple frontends seamlessly while continuing to drive growth. It gives you the freedom to continually experiment with new features and embrace new trends without risk along the infinite scalability to consistently provide customers with outstanding shopping experiences.
Customers that have gone D2C with commercetools
COVID-19 was the catalyst that woke up the B2B world to the relevance and power of digital commerce. Ever since, more and more B2B organizations are exploring the D2C model. Here, we offer snapshots of three brands that migrated to commercetools Composable Commerce to enable them to launch D2C sites and successfully grow their business.
From its inception in 2015 Emma — The Sleep Company, a mattress and bedding manufacturer positioned itself as a D2C company. They knew that establishing direct relationships with customers would be the best way to accomplish their mission of helping people get a better night’s sleep.
After enjoying a steep upward growth trajectory and needing to expand into multiple markets, Emma realized it was outgrowing its in-house eCommerce platform and decided it needed a more robust solution that could scale with the company. They choose commercetools.
With commercetools as the commerce backend, Emma has been able to continue its global expansion — it is now sold in over 30 countries. The commercetools platform supports both its D2C and B2B business models, helping the company grow its revenues to over $1 billion in 2023.
commercetools is the first eCommerce platform designed to be headless and cloud-native from the start and has excellent developer tooling at its disposal. We are pleased to have found the perfect partner for Emma's eCommerce platform of the future.
CTO, EMMA
In contrast, Danone, a global food and beverage company with a rich, 100+-year-old history launched in Barcelona, Spain, as a B2C business. As the company grew, relocating its base to Paris, France, it expanded into B2B sales. It launched eCommerce in 2009. In 2013, when the first baby formula shortage hit Europe the company adopted a D2C model to help customers gain access to products more quickly. Its D2C business came into the spotlight again during the COVID-19 pandemic. At this point, the company realized it needed a digital commerce solution that support B2C, B2B and D2C simultaneously and as friction-free as possible.
Danone was able to launch its D2C online shop across multiple markets in weeks on commercetools, enabling them to manage the shortage of consumer goods, and continually adapt to sudden supply chain changes and increased local consumer demand throughout the pandemic.
Since then the company has expanded its D2C strategy into local markets and is utilizing its direct access to customers to support product innovation. Where it used to take months to assess the success of a new product, real-time feedback and usable results can be obtained in days. This has spurred Danone to introduce some new products exclusively online to retrieve feedback quickly.
Danone’s success with commercetools has led the company to add additional eCommerce channels. For example, in the United Kingdom, the company’s healthcare division decided to deploy commerce functions to enable B2B customers to order medical samples directly from its website, instead of paper-based forms. These single, yet connected deployments show how far Danone has come in its digital transformation. They continue to explore new opportunities to connect consumers directly, manage shortages, streamline sales processes and more.
With a 90-year history as a manufacturer, Festool has historically depended on specialized retailers and dealers throughout Germany to distribute its comprehensive range of power tools to B2B companies, professional woodworkers and painters as well as ambitious DIY consumers. While this approach has proven successful, the company faced limitations in capturing and comprehending customer data. Specifically, insights were only accessible from customers who applied for a warranty certificate on the company website after purchasing a Festool power tool. This accounted for approximately 40% of its customer base.
In addition, Festool found that more and more customers were discovering its products online, often directly on the company website. To purchase from the Festool brand, a customer had to continue their journey by visiting a marketplace or specialized retailer website. After a survey revealed that a significant portion of these customers would prefer to buy directly from the manufacturer, the company devised an omnichannel sales strategy to align with customer expectations.
Establishing a D2C (direct-to-consumer) store has become a crucial asset for the company, serving two primary objectives. First, they can better leverage customer data. By collecting feedback from customers on its products and digital experience, Festool is fostering a deeper understanding of customer needs. Second, its gives customers access to its complete portfolio of products and accessories in a centralized location, accompanied by top-notch fulfillment and loyalty services that exceeds customer expectations.
For a step-by-step guide on how to launch your D2C eCommerce channel, download our white paper How to build a successful D2C eCommerce business.
Diya Bag is a Senior Content Writer at commercetools. Previously, she has worked as a Copywriter in advertising for a wide range of brands, as well as an Editorial Manager in publishing for magazines and both fiction and nonfiction books.
Anita J. Temple is the Corporate Journalist at commercetools. She was a fashion editor at Women’s Wear Daily (WWD) and W Magazine before launching a career as a freelance writer and creative producer. She has written content and worked on a wide range of marketing projects for companies including Dreamworks, Walmart, Coca-Cola, Verizon, and Adidas.