D2C vs B2B manufacturing

Most manufacturers are built for B2B. You make products, sell them to retailers, and they handle everything else — the showroom, the branding, the customer service. Direct-to-consumer (D2C) flips that model. Instead of supplying businesses, you sell straight to the end customer. On paper it looks like bigger margins; in reality, it’s a completely different business with new costs, risks, and responsibilities.

Imagine you’re scrolling through a retailer’s website and spot a sofa listed for £3,000. You do the mental maths: “That’s about £500 in materials, £150 of labour. I could make that for £650. If I sell it direct for £3,000, that’s £2,350 profit.” It’s a tempting thought. After all, why give the retailer the lion’s share when you’re making the product?

But here’s the catch: that £2,350 margin is an illusion. In reality, the costs of selling direct-to-consumer pile up fast. What looks like easy money quickly becomes a complex new business model, with hidden expenses eating into every pound.

D2C vs B2B manufacturing Margins

On the surface, the calculation seems simple. You know what it costs to make the product and it’s hard not to imagine that as potential profit if you cut out the middleman.

But retail doesn’t work like that. The £2,350 isn’t lying untouched on the table, waiting for you to pick it up. In the retail price, that money is already spoken for.

Think about what that retailer is actually covering with their margin:

• Marketing & customer acquisition
• Delivery & fulfilment
• Customer service & aftercare
• Returns & guarantees
• Infrastructure: websites, payments, compliance, photography, packaging.

That “margin” isn’t a free prize. It’s the budget for an entire retail operation. The illusion is assuming you can pocket the difference without taking on those responsibilities. In reality, moving into D2C isn’t just about capturing higher margins, it’s about building a whole new business alongside manufacturing.

D2C vs B2B Hidden Costs

Branding

When you sell to the trade, your reputation rests on reliability, quality, and price. The retailer takes care of the brand, the showroom, and the glossy experience the end customer buys into. In D2C, all of that becomes your job.

Branding is the reason a customer chooses your £3,000 sofa over the dozens of others they could find online. Without it, you’re simply “another maker,” and the only lever left to pull is discounting.

This is where the “Amazon effect” bites hard. Consumers have been trained to expect next-day delivery, instant communication, and slick packaging. If you can’t provide that, you need a brand that explains why. For example:

• Our pieces are made-to-order, hand-finished in our own workshop.
• We’re a family business: if we miss your call, we’ll always call you back.

These aren’t excuses, they’re part of a story that positions your company in the customer’s mind. Without that story, the consumer expectation defaults to Amazon speed and John Lewis service, which is a very expensive standard to meet.

You need to build a brand that turns your operational reality into part of the value you deliver. This is where many manufacturers underestimate the investment required, in design, messaging and consistency — to create a consumer-facing identity that people trust and pay a premium for.

Website & Infrastructure: The Cost of Competing

When you sell B2B, your website can be little more than a catalogue or brochure. In D2C, it becomes the backbone of your business. It has to do a lot more than look good – it must handle payments securely, manage customer accounts, meet compliance requirements, and deliver an experience consumers trust.

If you want to compete head-to-head with John Lewis or another national retailer, the bar is high. You’re looking at an investment north of £100,000 just to build a site that matches the polish, reliability, and integrations people take for granted.

That doesn’t mean you have to spend six figures though. If your brand positions itself as a boutique specialist, selling handcrafted, made-to-order, or niche — you can taper the expectations back. A solid, well-designed site that conveys your story and handles transactions smoothly can be built for £10,000–£15,000. The key is aligning your website with the promises your brand makes.

But whatever route you take, websites are not a one-off cost. They require constant updates, security patches, new features, and ongoing optimisation. Treat it like maintaining machinery on your shop floor, without upkeep, things break down, and downtime costs money.

Customer Service: From Procedural to Emotional

In B2B, customer service is largely procedural. Transactions are grounded in utility and compliance: does the product meet the agreed specification? The relationship is governed by contracts, service levels, and technical requirements. If something goes wrong, supply a replacement, issue a credit, or fix the fault.

There’s no emotional weight to the interaction. Your customer is a business. They may be frustrated, but it’s not personal.

D2C is very different. The service is experiential, anticipatory, and emotional. The customer begins enjoying the product before the product has even arrived — imagining how it will look in their home, or the compliments they’ll get from friends. This anticipation builds what the Christmas Eve effect: where the waiting is itself part of the experience.

But it also creates fragile expectations. If the product feels cheaper than they imagined, or the delivery driver is careless, the disappointment is sharper because it punctures the fantasy. Unlike B2B, where a corrective action solves the problem, here it can feel like an emotional betrayal. A refund or replacement doesn’t erase the lost dream.

The biggest takeaway here is that D2C service isn’t just about answering phones or emails. It’s about managing anticipation, setting realistic expectations, reinforcing the positive story around your brand, and ensuring that delivery — both in the literal and emotional sense — lives up to the promise.

Operations & Systems: From Tribal Knowledge to Centralised Data

In B2B, operations often rely on what you might call tribal knowledge. Everyone in the workshop knows that ACME Corp’s orders have a particular feature, or that a long-term customer always expects a certain tweak. Information lives in people’s heads, and because the relationships are stable and the volumes are predictable, that’s manageable.

In D2C, that approach doesn’t work. Every order has to be captured accurately and stored centrally, because the person answering the phone tomorrow may know nothing about the order placed yesterday. A missed detail risks a frustrated customer, a bad review or even a full refund.

That means building systems to track:

• Orders – status, payment, fulfilment.
• Customers – names, addresses, order history.
• Interactions – calls, emails, chat logs.
• Refunds & returns – what came back, why, and how it was resolved.

And it’s not just about keeping the wheels turning, the data itself becomes part of the strategy. With data on returns, complaints, and damages allows you can spot patterns: a fabric that wears too quickly, a delivery partner prone to breakages, or packaging that isn’t robust enough. In B2B, these issues are often absorbed quietly between partners; in D2C, they surface immediately in the form of consumer complaints and bad reviews.

Returns & Refunds: The Costly Legal Reality

Returns in B2B are rare and governed by contracts. If goods don’t meet spec, you agree on a credit or replacement. Simple.

In D2C, the law is very different. Under UK consumer law, customers can return almost any online order for any reason within 14–28 days. There’s no way around this. Even if the product is in perfect condition, the customer has the right to change their mind.

The only exemption is “made-to-order” goods — but this isn’t as broad as you might think. If you have a sofa for example that is available in 200 fabrics, 4 sizes, 4 leg options and 4 finishes, that’s 12,800 possible combinations. From your perspective it’s made to order. From a legal perspective, it’s a standard product, because you’ve advertised all those options on your site. Which means a customer can return it, and you’re left with an expensive, unsellable item.

And it doesn’t stop there:

• Missed deliveries: If a customer takes time off work and you miss the delivery, they can legally claim compensation. Some will try for a day’s wages, but courts typically benchmark this against the daily rate for Jury Duty.
• Cost of returns: Free delivery is a powerful selling point, but it comes with a hidden sting: free returns. If you’re covering outbound shipping, you’re also on the hook for inbound.
• Special terms don’t stick: Many businesses try to protect themselves with watertight T&Cs. In reality, you’ll struggle to enforce clauses that limit consumer rights. Courts almost always side with the customer if you’re seen to be restricting their statutory protections.

In D2C you need to plan for returns and refunds upfront, if you don’t they’ll erode margins quickly.

Delivery & Logistics: The Responsibility You Can’t Outsource

When you sell B2B, delivery is straightforward. Pallets arrive at a warehouse, they’re checked off, and any issues are handled through a credit note or replacement. Everyone on both sides treats it as a process.

D2C is very different — and far more unforgiving.

Delivery companies are fundamentally B2B operations. They don’t invest heavily in customer-facing service: phone numbers are buried, bots give scripted answers, and complaints often disappear into the void. Drivers themselves are often paid poorly.

The harsh reality is that no matter who you contract, delivery is your responsibility in the eyes of the consumer and the law. If a product is damaged, delayed, or their property is scratched, you are the one accountable. The delivery company may see it as a procedural issue — fill in a form, wait six weeks for a claim, compensation calculated by weight. Your customer, meanwhile, sees it as a disaster that you need to address promptly.

The lesson here is that delivery isn’t a service you can simply outsource and forget about. It’s a fundamental to the customer experience, and any failures — no matter whose fault they are need to be accounted for in your margins.

Customer Acquisition Costs: Paying to Be Found

In B2B, finding customers often relies on relationships, or even cold calls and emails. You know who your potential buyers are, and you can go to them directly.

In D2C, it’s the opposite. The customer has to find you — and that won’t happen by accident. You need to put yourself in front of them, and that means spending money on advertising.

Paid ads are the engine that drives most D2C sales. The question is not whether you’ll spend on them, but how much. For big-ticket items like furniture, you may only see a 1:4 ratio — spending £1 to generate £4 in revenue. In less competitive niches, it can stretch to 1:8, but that’s rare.

Either way, ads will take a significant share of your budget. And running them isn’t something to tackle casually. Without specialist expertise or an agency, you’ll waste money fast. That said, once you’ve acquired customers, you can squeeze more value out of them by targeting them with promotions, bundles, and loyalty offers. Retention is always cheaper than acquisition.

Long-term stability, though, comes from reducing dependency on paid ads. That means investing in organic strategies like SEO, content marketing, and social media presence. These take longer to pay off, but over time they can balance your acquisition costs and protect margins.

Guarantees & Repairs: The Hidden Service Obligation

Under UK law, if there’s a problem with an item, you don’t have to replace it outright. You’re entitled to offer a repair first. But repairs aren’t straightforward when you’re selling big-ticket items like sofas or beds. You’ll need to contract third-party repair services who can travel to customers’ homes, assess the problem, and attempt a fix. These services are professional, but they’re not cheap — and their costs come straight off your margin.

What makes this harder is that many “faults” aren’t really faults at all. A sofa cushion that feels firmer than expected, a bed that creaks slightly on a wooden floor, a minor mark in the fabric — to you, these are tolerances or non-issues. To the customer, they can feel like dealbreakers. Yet you can’t dismiss them out of hand. You’ll need to pay someone to visit, investigate, and report back, even if nothing is actually wrong.

Claims and queries carry a cost — sometimes a full replacement, sometimes a repair, and sometimes simply the expense of proving there’s no fault. In all cases, you shoulder the burden.

Photography & Reviews: The Overlooked Essentials

When you’re selling to trade, product photography is functional. A line drawing or a single product shot is enough for a buyer who already understands what they’re getting. In D2C, it’s the opposite: photography is your showroom. It’s the first chance a customer has to judge whether your product is worth the money.

Smartphone pictures won’t cut it. You’ll need multiple high-quality, professional photos showing the product from different angles and in context. Customers want to picture how it will look in their own home — so staging, lighting, and styling matter as much as accuracy.

Colour adds another layer of complexity. Every screen shows colours differently: compare the same photo on your office laptop and your iPhone, and the difference can be striking. Digital colour-swapping in Photoshop for product variants introduces even more risk, as what looks fine on your monitor may disappoint the customer in reality. Samples are often the safest workaround — easy enough with furniture fabrics, but harder for other categories.

Then there are reviews. Online shoppers read them, believe them, and often treat them as more reliable than your product description. Reviews are your digital word of mouth, and they directly affect conversion rates. A handful of bad reviews left unanswered can undo thousands of pounds of ad spend. That means you need a process for monitoring and responding — quickly, courteously, and constructively — to protect your reputation.

Together, photography and reviews might feel like afterthoughts compared to manufacturing or logistics, but in D2C they are the front line of trust. Get them wrong, and the rest of your investment never gets a chance to pay off.

B2B vs D2C: The Culture Shock

For manufacturers, the biggest challenge in going direct isn’t the technology or the logistics — it’s the mindset shift. B2B and D2C operate under completely different rules of engagement.

Here’s the contrast:

In B2B, a delivery is just another transaction. Goods arrive on a pallet, are checked against the spec, and signed off. In D2C, the delivery is the moment of truth. A sofa arriving late doesn’t just inconvenience a customer — it can mean they’re literally sitting on the floor because they’ve already disposed of the old one.

B2B relationships are also more forgiving. If something goes wrong with a long-standing account, you can fix it with a credit, replacement, or future discount. In D2C, one poor experience can translate instantly into a scathing online review, visible to every future customer.

Even the operational side looks different. A B2B delivery run might involve sending ten pallets to a single warehouse. A D2C week could mean one sofa to London, one to Scotland, and one to Ipswich — three drivers, three routes, three sets of headaches. The economics don’t scale in the same way, especially in the early stages.

The real culture difference is that B2B is built on process and contracts, while D2C is built on emotion and perception. To succeed, you have to adapt to a world where the product is only half the story — the experience is the other half.

The Real Opportunity

It’s true direct-to-consumer margins can be higher. You keep more of the retail price instead of handing it to middlemen. You also get paid quickly — money lands in your account within days, not months. And, perhaps most importantly, you control your brand. You decide how your products are presented, how your story is told, and what experience customers associate with your name.

But D2C isn’t something you can simply bolt onto your existing operation. It’s not just selling the same products to a different audience. It’s a completely different business model with its own systems, costs, and risks.

The manufacturers who succeed don’t treat D2C as a side hustle. They approach it as building a second business alongside their factory — with its own demands for marketing, customer service, logistics, and brand-building. They understand that the prize isn’t just margin; it’s independence, resilience, and the ability to grow on their own terms.

That’s the real opportunity. Not chasing a profit number, but making a conscious decision to step into retail — eyes open, prepared, and ready to play a different game.

Takeaway

The £3,000 sofa minus £650 of materials and labour looks like easy profit — but that margin is an illusion. Once you account for branding, customer service, delivery, advertising, refunds, and all the other hidden costs, the number shrinks quickly.

That doesn’t mean D2C isn’t worth it. For manufacturers who approach it with eyes open, realistic budgets, and patience, it can still be more rewarding than trade sales. You get faster payment, direct customer relationships, and the chance to shape your own brand story rather than letting retailers define it for you.

The difference lies in mindset. Treat D2C not as a shortcut to higher margins, but as building a second business alongside your factory — one that demands new skills, systems, and investment.

It’s not about chasing easy money — it’s about deciding if you’re ready to build a consumer brand alongside your manufacturing business.