During the Corona pandemic, online shopping for consumers has become even more important. Companies were forced to close their stores. Especially smaller companies that benefited from sales through larger companies’ retail outlets, such as Karstadt-Galeria, had to quickly develop new concepts to remain competitive.
An increasingly popular sales model is “direct to consumer”, or DTC. Here, the goods are delivered directly from the manufacturer to the end consumer, without the involvement of intermediaries or middlemen. What advantages does this sales model bring, and above all: does it also hold up in the “post-corona” era?
Below, we would like to provide you with an overview of the legal specifics and advantages of this business model:
I.What should be taken into account?
The DTC model is based on contracts between a business and a consumer. This means that all consumer protection laws apply in full. Do you already sell goods to consumers under the so-called B2C (“business to consumer”) model? Then the DTC model does not entail any legal changes for you. However, if you want to change your business model to a direct exchange with the consumer, some important consumer protection rules apply:
- Consumer protection
Direct sales to consumers entail numerous consumer protection requirements. In particular, the consumer has a right of withdrawal. It is important to note that the consumer must always be informed about their right of withdrawal and that you must comply with information and notification obligations. Furthermore, special rules apply to warranty rights; for example, excluding warranty rights vis-à-vis a consumer is not permissible.
Your general terms and conditions must also be adapted to the specific requirements of consumer protection law.
- Competition law
In particular, if you plan to contact consumers directly, whether by approaching them on the street or through door-to-door solicitation, competition law rules apply. For example, your advertising must not be harassing. Otherwise, you will be in violation of competition law and, in the worst case, may be sued for injunctive relief.
- Data protection
A significant advantage of the DTC model is that entrepreneurs receive sensitive data about their customers. However, this also entails significant responsibility regarding the handling of the data. In particular, the provisions of the GDPR must be adhered to; for example, storing data for the processing of orders is permissible, but any storage beyond that requires the consent of the consumer and is subject to extensive information obligations.
II.Why could DTC still be attractive for you?
So why can it still make sense to switch your sales channel to direct exchange with customers, despite the high legal hurdles? With direct sales to the consumer, no contract negotiations with intermediaries or middlemen are necessary. In particular, as an entrepreneur, you are then more flexible in managing your pricing and independent of the retail sector. This very independence was of considerable advantage during the Corona pandemic.
Furthermore, through direct contact with the customer, you obtain valuable information regarding purchasing behavior. This enables the customization of marketing and product design and ultimately promotes the sales of the goods.
III.Conclusion
Due to the increasingly popular e-commerce, not least also due to the closure of retail stores during the Corona pandemic, and the convenience of customers or the significantly reduced time required for online shopping, the DTC model is becoming increasingly popular. This sales channel brings several advantages, especially because you as a business owner retain full control over prices and customers yourself. Therefore, it cannot be said that this is a relic of Corona.
However, you should seek professional and legal advice when changing your sales channel, as consumer sales involve significant legal requirements.
