MGMT-6129-(02)-23W

SELF-DIRECTED SEMINAR ASSIGNMENT

SUBMITTED TO – Prof. STEPHANE BRIAND

SUBMITTED BY-
Group-16
Name Student #
Akila Baiju 1085304
Ashok Kumar Mishrilal Devasi 1082283
Gururagavendra Thiyagarajan 1122667
Kishore Kumar Raja 1070344
Lekshmi Radhakrishnan Krishna 1073874
Pranav Alappatt Pradeep
 DIRECT TO CONSUMER

Direct-to-consumer (D2C) refers to a business strategy where a company offers its goods or services
directly to customers without the assistance of any intermediaries, such as wholesalers, retailers, or
distributors. Under this approach, the business is in charge of every aspect of the sales process,
including production, marketing, sales, and delivery.

Why it is Important?

It is a business strategy where goods or services are sold directly to clients instead of going via
customary middlemen like wholesalers and merchants. In recent years, this strategy has gained
popularity, especially in sectors like e-commerce, healthcare, and cosmetics.

One of the DTC model's main advantages is the opportunity to develop direct interaction with clients.
Businesses may gather useful data, deliver individualized experiences, and better understand the
wants and interests of their consumers by communicating with them directly. Customer loyalty and
brand recognition may both be increased in this way. The DTC approach can also offer more control
over pricing and distribution. By eliminating middlemen, companies can control their own pricing and
guarantee that their products are being distributed as desired. In addition to ensuring a uniform
consumer experience across all channels, this can assist enhance profit margins. Developing and
iterating fast is another benefit of the DTC approach. Because the fact that companies are selling
directly to customers, they are better able to get feedback rapidly and alter their goods or services in
response to it. By doing so, they will be able to outperform the competition and better serve their
clients.

Why it is Important in the Supply Chain Management discipline as a whole?

First of all, DTC gives businesses more control over their supply chain. They may control the entire
process from manufacturing to distribution by getting rid of intermediaries, which can increase
efficiency and save costs. Also, this control enables more open lines of contact with clients, which
may enhance product development and boost client experience.

In addition, DTC can lessen trash and the negative effects it has on the environment. Companies may
lower their carbon footprint and develop a more sustainable supply chain by doing away with the need
for superfluous inventory and transportation. Direct to Consumer business model may give businesses
useful information and insights.

Direct access to customer data enables businesses to better understand consumer preferences and
behavior, which in turn helps with product development and marketing plans. Also, this information
can aid in better forecasting and inventory control.
Last but not least, DTC may give businesses a competitive edge. Businesses may set themselves apart
from their rivals and foster greater brand loyalty by directly providing customers with distinctive
goods and experiences.

In conclusion, the supply chain discipline is significantly impacted by the DTC model. DTC may
assist businesses in increasing productivity, sustainability, and customer happiness by giving them
more control, minimizing waste, offering data and insights, and generating a competitive edge.

The major issues that happen in the D2C model

Warehousing and inventory management
Maintaining warehouse and inventory is very important in the direct-to-customer way of selling and
shipping method because the goods will be directly shipped to the customer from a distributor or a
warehouse. While businesses may have production facilities or main warehouses in a few strategic
sites, goods still need to be distributed to a range of areas, both urban and rural. Nowadays same-day
and two-day deliveries were common. The companies are pushed to keep stocks in the warehouses to
meet the requirements and demand and also to fulfil the promise of same-day delivery. Because of
this, the companies have to partner with many retail stores and distributors to meet this requirement.
Packaging and shipping material
Traditionally, consumer goods manufacturers relied on B2B distribution to deliver completed goods
to wholesalers in large quantities. As a result, operations for packaging and shipping between
enterprises are simplified. By doing business directly with customers, the shipping industry as a whole
shifted from B2B to B2C or D2C, necessitating more organized packaging and delivery procedures.
Brands must also decide what type of packing material to use for each client transaction, the size and
form of the boxes that must be purchased, and whether or not to cushion items with bubble wrap or
mark them with a warning. When shipping certain sorts of commodities, such as food, there are
additional procedures and laws to follow. Firms must also adjust to transporting numerous smaller
items rather than a few large ones.
Fleet Utilization Charges
Depending on how demand changes, businesses may use their own captive fleet or leased fleet to
satisfy customer expectations for doorstep delivery. Even though utilizing too many delivery vehicles
may raise operational costs, mid-sized businesses could find it challenging to invest totally in a
captive fleet. To carry out delivery operations affordably and ensure optimal vehicle capacity
utilization, businesses must identify the right mix of owned and outsourced fleets.
Delays in last-mile deliveries
Companies selling consumer goods and retail items that are transitioning to direct-to-consumer sales
require a reliable last-mile delivery system. Many organizations may be unprepared for the last-mile
dynamics and obstacles, which include, among other things, customer address verification, rider
distribution, traffic and route constraints. Direct-to-consumer retailers, particularly during COVID-19,
have substantial challenges in competing with e-commerce behemoths and providing effective last-
mile fulfilment.

Supply Chain Visibility

When purchasing from a brand, customers want total openness from providers. Customers are
interested in knowing when and where their order will be delivered, as well as who will be in charge
of it. Without an efficient delivery monitoring system, a D2C business may be unable to attain this
degree of consumer transparency.
Due to a lack of supply chain visibility, logistics managers find it difficult to monitor on-the-ground
operations and take remedial action when delivery dates do not match expectations.\
Big Solution – Digitization
D2C commerce is being digitized with the help of technologies such as optimization of routes, fleet
management tools, and last-mile visibility tools, big brands can fine-tune the delivery networks and
reduce costs of logistics, improvise transparency in the supply chain, and automate the small manual
processes such as dispatch planning and rider allocation. Whether a company wants to increase retail
sales by entering the D2C market or enhance their current D2C operations, it should consider
incorporating smart logistics technology into its D2C supply chain to gain a competitive advantage
while effectively meeting client expectations. (Sharma, 2020).

The major issues that happen in the D2C model

1. Managing inventories and warehousing to meet needs and expectations, products

must be supplied to numerous locations, both urban and rural, which creates an issue
for maintaining warehouse and inventory. Companies must collaborate with numerous
distributors and retail outlets to execute the same-day delivery promise.
2. Materials for shipping and packaging: Direct-to-consumer sales necessitate more
organized packing and delivery procedures than B2B distribution. Brands also need to
decide on the type of packaging material to employ for each client transaction, the
size and form of the boxes that need to be ordered, and whether to bubble wrap items
or tell clients about them. Fleet Utilization Fees: To meet customers' expectations for
doorstep delivery, businesses might use either their captive fleet or leased fleet.
Businesses must choose the ideal blend of owned and outsourced fleets to carry out
delivery operations affordably and guarantee effective vehicle capacity utilization.
3. Third-Mile Delivery Bottlenecks: Consumer product and retail businesses making the
switch to direct-to-consumer sales need a dependable last-mile delivery system. The
 characteristics and challenges of the last mile may be unanticipated by many
enterprises.
4. Supply Chain Visibility: A D2C organization might not be able to achieve complete
provider openness without a strong delivery monitoring system. Consumers are eager
to know who will oversee their order, as well as when and where it will be delivered.
(IBM, n.d.)

Addressing challenges in Direct-to-consumer Model

Solutions and recommendations

Although the direct-to-consumer (D2C) model has its own set of difficulties, there are
strategies and advice that companies may use to get beyond these obstacles. One of these
problems is warehousing and inventory management, which can be solved by utilizing
inventory management, which can be solved by using inventory management software, and
which can be solved by employing third-party logistics (3PL) services for distribution. The
issue of packaging and shipping materials can be addressed with the help of sustainable
packaging solutions and improved packaging and shipping procedures, and fleet utilization
costs can be reduced by combining owned and outsourced fleets. By utilizing technology like
GPS monitoring and collaborating with specialist logistics companies, last-mile delivery
bottlenecks can be eliminated. Data analytics and supply chain management software, which
can track inventory levels, and delivery schedules, and optimize supply chain operations, can
help increase supply chain visibility. Businesses can increase productivity, save costs, and
raise customer happiness in the D2C model by putting these suggestions and solutions into
practice. (McKinsey&Company, 2021)

With the Direct-to-Consumer (D2C) model, businesses sell their products or services directly
to consumers without the help of middlemen. Due to its advantages, which include direct
engagement with customers, control over price and distribution, and quicker development
and iteration, this strategy has become increasingly popular in industries including e-
commerce, healthcare, and cosmetics. D2C in supply chain management improves customer
experience, product development, and sustainability while giving businesses more control
over their supply chains. The D2C model does, however, come with its share of difficulties,
including managing warehousing and inventory, selecting packaging and shipping supplies,
paying for fleet use, experiencing bottlenecks in last-mile delivery, and ensuring supply chain
visibility. (shoutem, 2022)
The D2C approach promotes sustainability, improves product development and consumer
experience, and increases control over the supply chain. This viewpoint focuses on the
advantages of the direct-to-consumer model, such as increased supply chain management,
enhanced customer satisfaction, and sustainability. Companies may manage the entire process
from manufacturing to distribution by getting rid of intermediaries, which increases
efficiency and lowers costs. Also, direct client interaction helps with product development
and marketing strategies. The D2C concept also encourages sustainability by minimizing
waste and harmful environmental effects.

The D2C model presents difficulties with last-mile delivery constraints, fleet use fees,
packaging and shipping commodities, and supply chain visibility. This viewpoint
acknowledges the drawbacks of the direct-to-consumer (D2C) business model, such as the
need to collaborate with numerous retailers and distributors to meet the demand for same-day
and two-day deliveries, the costs associated with using the fleet and the bottlenecks in last-
mile delivery. Also, a lack of supply chain visibility might make it difficult to keep tabs on
local operations, which could cause delivery delays and misaligned expectations. (Harvard
Business Review , 2020)

The D2C paradigm in supply chain management offers advantages as well as difficulties.
While it gives businesses better customer service, greater control over the supply chain, and
sustainability, it also presents difficulties with warehousing and inventory management,
packaging and shipping requirements, fleet utilization fees, bottlenecks in last-mile
deliveries, and supply chain visibility. Hence, businesses should evaluate the advantages and
disadvantages of the direct-to-consumer model before selecting the strategy that best suits
their needs.

The D2C model is a well-known business strategy with both advantages and disadvantages
for the supply chain management. Businesses must weigh the benefits of many viewpoints
and select the strategy that best supports their strategic goals and objectives. In the end, the
D2C supply chain model has the potential to improve effectiveness, customer satisfaction,
and sustainability. (RECUR, 2020)

References
6 Key benefits of going direct to consumer (D2C). (n.d.). https://www.contentserv.com/blog/six-key-
benefits-of-direct-to-consumer-d2c-strategy
 https://www.forbes.com/sites/garydrenik/2023/03/14/the-impact-on-supply-chains-by-direct-
to-consumer-brands/?sh=11e2b10a4839

Allen, S. (2020, August 20). 5 advantages of moving to a direct-to-consumer model. SFG.

https://www.sfgnetwork.com/blog/ecommerce/5-advantages-of-moving-to-a-direct-to-
consumer-model/

Harvard Business Review . (2020, 03 31). Retrieved from Reinventing the Direct-to-Consumer
Business Model: https://hbr.org/2020/03/reinventing-the-direct-to-consumer-business-model

IBM. (n.d.). Retrieved from Build smarter supply chains with AI and blockchain:
https://www.ibm.com/supply-chain?
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McKinsey&Company. (2021, 12 24). Retrieved from www.mckinsey.com:

https://www.mckinsey.com/capabilities/growth-marketing-and-sales/our-insights/the-six-
must-haves-to-achieve-breakthrough-growth-in-e-commerce-d2c

RECUR. (2020, 08 14). Retrieved from What is Direct to Consumer (DTC) & Why It’s the Better
Retail Business Model: https://www.profitwell.com/recur/all/direct-to-consumer/guide

Sharma, S. (2020, November 26). How to Overcome the Supply Chain Challenges in Direct-to-
Consumer Selling. Retrieved from Locus: https://blog.locus.sh/direct-to-consumer-selling-
supply-chain-challenges/
shoutem. (2022, 04 15). Retrieved from shoutem.com: https://shoutem.com/blog/direct-to-consumer/

The future of commerce. (n.d.). Retrieved from www.the-future-of-commerce.com: https://www.the-

future-of-commerce.com/2021/10/14/d2c-business-model-guide/

What is D2C? It is the Direct-to-Consumer Supply Chain. (2021, January 11). Consumer-Driven
Digital Supply Chain Management. https://www.onenetwork.com/supply-chain-management-
resources/supply-chain-glossary/what-is-d2c/#:~:text=D2C%20means%20Direct%2Dto
%2DConsumer,mortar%20storefronts%20or%20other%20intermediaries.