Direct-to-consumer, or DTC, is a model in which a brand sells products directly to end customers through channels it controls, such as its ecommerce store. Retailers or distributors may still be used, but they are not required for every sale.
What changes in a DTC model
The brand takes responsibility for the customer offer, order capture, payment acceptance, inventory, fulfilment, returns and support. That control can improve access to customer information, while also moving operating work and inventory risk onto the brand.
| Area | What to establish |
|---|---|
| Demand | Forecast by product, channel and promotion |
| Inventory | Set reorder points and available-to-sell rules |
| Order | Capture payment, tax and delivery information |
| After sale | Handle tracking, returns, refunds and customer support |
The sourcing implication
A DTC product needs packaging and unit economics that work at individual-order level. Buyers should model product cost, inbound freight, duties, storage, pick-and-pack charges, payment fees, returns and customer delivery before setting the selling price.
Related terms
ecommerce sourcing, inventory planning, ecommerce fulfilment, total landed cost.
