Direct to consumer distribution will not work for all companies, but for those it does it means they do not need to add the cost of intermediaries like wholesalers and retailers. Therefore, either they can pass the savings to the consumer making them price competitive and/or able to retain extra profits.
A good historic example of such disintermediation is Dell Computers. At a time when most PCs were sold through dealers and retailers, they manufactured and sold direct to the consumer. Therefore, they could offer a low price than the competition.
As the internet grew in the late 90s, disintermediation was meant to mean the quick end of wholesalers and retailers. Things have moved slowly, but retailers come under increasing threat from online. Ironically the internet has seen a whole new type of intermediaries arise, Amazon being a notable example and the price aggregation sites like confused.com.
Therefore, a pivot to direct to consumer has advantages, but remember it also means you have to market your goods/services direct to them and cannot rely on ready made market places like Amazon or eBay. You also have to provide the infrastructure for direct delivery, returns and customer service.
This blog was inspired by our response to a Quora question.
