In the last two decades, there’s been a big trend towards direct to consumer - a business model in which companies sell directly to their customers, bypassing third-party distributors. Think Nike selling sneakers directly to you on Nike.com instead of through Asos or Netaporter. To help them go direct to consumer, some companies use a direct to consumer platform, which gives them all the infrastructure, tooling, and expertise they’d need to successfully cut out the middleman.
The rise of the D2C platform
The direct to consumer model goes all the way back to before the internet - with mail order catalogs and door to door sales, largely pioneered by Avon, Mary Kay, and Tupperware.
That set the stage for modern direct to consumer, which started to get more popular with the rise of the internet. In the 2010s, companies like Dollar Shave Club and Warby Parker led the way by selling merchandise directly through their own ecommerce websites, often at discounted prices. These companies relied heavily on branding, marketing, and storytelling to grow - creating stronger brand loyalty by directly engaging and communicating with their customers. (Who doesn’t know the famous Dollar Shave Club ad from 2012: “For a dollar a month, we send high quality razors right to your door”).
Soon, more and more brands began to understand the benefits of going direct to consumer - from major franchises to one man teams. By 2020, statistics show that the D2C market in the US alone grew to $14.28B.
That was largely made possible by the rise of direct to consumer platforms like Shopify, Facebook, and Instagram - which helped brands that didn’t have the in-house expertise or bandwidth to build best-in-class web experiences, manage payment operations, or build loyalty programs. Today, Shopify supports over 2M merchants across 4.61M live websites - processing $235.91B in ecommerce sales in 2023 alone. Meanwhile, Instagram has over 200M businesses utilizing its ecommerce features like Instagram Shopping and Facebook Shops has 90M.
Use case: DTC platform and gaming
Direct to consumer is hugely prevalent across a variety of verticals: fashion, beauty, real money and casino, airlines, and even gaming.
Like ecommerce, there’s always been middlemen between gamers and game developers, but that’s started to change recently thanks to industry legislation.
- 1990s: Publishers like Activision, Blizzard, and EA were the first middlemen
- 2000s: Platforms became the new middlemen - like Steam for PC, Xbox and Sony for console, and Apple and Google for mobile
- 2010s: Riot and Epic led a movement on PC with direct to consumer game launchers and first-party ID systems that sat outside of Steam. Meanwhile Playtika led a movement on mobile with D2C loyalty programs
- 2020s: D2C expanded with more launchers on the PC side and web shops on the mobile side. Instead of selling micro transactions in-game and giving Apple and Google a 30% cut, developers have begun setting up web shops to sell in-app purchases on websites they own
What are the benefits of a D2C platform?
There’s a reason (or three) why DTC platforms grew so much - and they hold true for both retail and gaming:
1. Increase profit
In retail, third-party platforms like Amazon, eBay, and Netaporter take significant commission rates from retailers - ranging from 10% to 30%. Similarly, Apple, Google, and Steam take 30% cuts from each microtransaction in a game.
By using a D2C platform, companies avoid these fees and keep more money in their pockets, which immediately lifts profit margins. In fact, from 2019 to 2022 Playtika saw third-party revenue drop by 2% and direct to consumer grow by 88% - increasing overall revenue by 10% across the board. (If you’re a game developer exploring D2C, you can use our interactive calculator to see just how much profit you can earn).
Bonus: by keeping more margin, you can pass lower prices to your consumers.
2. Obtain user-level data
In addition to taking massive fees, third-parties also often restrict what brands can’t and can’t do on their platform - and accessing user-data is one of them. In gaming, for example, Apple, Google, and Steam don’t share players’ email addresses or any sort of tracker for you to keep communications open, like the IDFA. That heavily restricts marketing and growth capabilities. (Read more about the impact on gaming user acquisition here).
However, a DTC platform wouldn’t get in the way. Instead, you own that relationship directly, as well as users’ first-party contact data - which you can use in retargeting campaigns, email nurturing campaigns, and more.
Specifically, you’d get access to marketing sources and sales attribution data, richer engagement data from the DTC platform to gameplay, and direct first party player identity data. These custom analytics would enable you to attribute sales to marketing spend or influencer campaigns, better understand the player journey and funnel, and create direct first-party connections with players across games and platforms (like through email or social).
3. Build an unbreakable bond with users
Like we mentioned, by selling directly to consumers, you own the relationship with them - and no one else. That means you get all the brand loyalty that comes with purchasing right from your company.
But even more than simply receiving brand recognition, a direct to consumer platform can actually increase loyalty. That’s because you have an opportunity to build custom experiences tailored to your consumers’ specific motivations - in a way that a larger aggregate platform can’t.
Think about VIP loyalty programs from hotels and airlines. They want you to buy directly from their site or app instead of the third-parties, so they create all sorts of points programs to get you to do that, at no cost to them. Airlines don’t lose money by giving away upgrades and free seats, because the plane has to fly either way; similarly, games don’t lose money by giving away free virtual rewards. But in both scenarios, the value to the consumer is huge - and sure to drive brand loyalty. As a game developer, that trickles down into increased retention and engagement.
It’s also the reason why many brands build massive content hubs into their DTC platform. The idea is to deepen consumers’ connection with the brand.
- Nike has its Nike Training Club and Nike Run Club apps, which includes workout programs, training tips, and community challenges - adding value beyond their products, fostering brand loyalty and keeping users engaged
- Peloton has built an entire media arm around fitness content, keeping users engaged long after their initial purchase
- Red Bull creates extreme sports and adventure content, like Red Bull TV and Red Bull Media House, engaging users without directly pushing products
- World of Tanks, a tank shooter game by Wargaming, built out its Tankopdia to harness their players’ enthusiasm for tanks
Build a direct to consumer platform for your game
In the last few years, antitrust regulations like the Digital Markets Act in the EU and Apple vs Epic and Google vs Epic have been focused on forcing third party platforms to open up - making it easier than ever for game studios to leverage a direct to consumer platform.
In fact, 72% of the 20 highest-grossing mobile games now have web shops.
Exploring what a D2C platform can do for your game? Reach out to us at Stash. We custom build direct to consumer solutions for game studios.
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