DTC / D2C
Term #66
Selling directly to consumers without intermediaries. Control over price, experience, and customer data. Higher margin.
In practice
DTC provides: higher margin, direct customer data, and full control over brand messaging.
Common misconception
'DTC means no need for distributors.' DTC and wholesale can coexist.
How to fix it
DTC not growing? (1) check CAC vs. LTV, (2) a compelling brand story, (3) social proof and UGC.
Example
A shampoo brand: supermarket margin was 18%. DTC margin was 52% plus a monthly subscription. The combined margin and LTV boost tripled profitability (2.8x).
Priority
DTC plus wholesale is the ideal mix. Pilot DTC before major investment.
Related terms
Keep learning. Metrics that touch the same area:
- SKU – Stock Keeping UnitOperationsA unique identifier for each product variation. The basis for precise inventory management.
- Inventory ManagementOperationsTracking, ordering, and maintaining inventory. Too much means cash tied up. Too little means stockouts.
- StockoutOperationsA product unavailable for shipping. Immediate lost sales plus damaged trust.
- DropshippingOperationsSelling without holding inventory — a supplier ships directly to the customer. Low margin (5-20%), no quality control.
- FulfillmentOperationsThe entire process from receiving an order to delivery: pick, pack, label, ship.
- Lead TimeOperationsThe time from ordering with a supplier to receiving inventory. Critical for calculating the reorder point.
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