Direct-to-consumer (DTC) companies are changing the way the marketing world operates with serious effect and it all comes down to data!
All forms of business come with their own set of challenges and DTC is no different. However, some of the upsides to DTC worth mentioning are: the ability to manage your own supply chain, a competitive pricing environment, control over the communication around your business and the faculty to see exactly who is purchasing, where and how they are doing so. All of this potential to deep dive on stats ultimately means you have access to an abundance of additional science to put behind your marketing plans.
DTC businesses have always been prevalent because there have always been consumers, but the millennial generation who “have the most spending power of any generation” and the added hyperdrive advertising billboard that is social media, we’ve seen a huge increase in the number of DTC brands out there, in all sectors. Thanks to gigantic marketplace platforms like Amazon, and the ability to advertise a mattress, engagement ring or vitamins right into someone’s Instagram feed, manufacturers no longer need the help (or costs) of larger, established brands to connect with customers.
Take mega millennial makeup brand Glossier, for example. On just year five of the business being up and running, it is valued at a staggering $390m, and this was at a time when the company’s shop/’showroom’ “operated without the benefit of a street-level window,” but still “generated more sales revenue per square foot than the average Apple store.” Founder Emily Weiss puts this success down to allowing everyone’s voices to be heard, from your mum to your mate. During a live interview with Kara Swisher Weiss sa,id: “At Glossier, something we’ve always stayed very true to, since pre-launch, day one, is that every single person is an influencer,” and she’s stuck to her word. All customers, whether their social following is nano, micro or celebrity status should be allowed in the cult because they all have a valid opinion (arguably the most important of all) and by lobbying out the middleman, customers get to experience the Instagram-able product for less.
Weiss has also talked before about the unbeatable power of peer to peer marketing; by making sure each customer is respected as an influencer in their own right, and the power of DTC meaning everyone is able to experience the product, test it, and share it – they’re all creating unique, useable content which can then go on to be used across owned, earned and paid platforms, driving further reach, brand awareness and trust for the business. It’s a system that works without fault, and business model to copy.
Many brands (especially within the DTC space) are shifting away from the use of creative agencies to focus on real people all using their social platforms as digital portfolios to showcase their creative skills. This only means more content and creativity at a quicker turn over pace, as well as enabling you to target a more localized key market based on relevant platforms, faces and cultural hooks.
One of biggest bonuses for DTC companies working with influencers is the ability to garner and add in a performance metric to the model and from all IGC they’ll know what receives a kickback of X% of sales. Influencers keep promoting the product and you have direct access to additional consumer data from influencers as they generate visits, CRM sign-ups, sales etc. Additionally, some add-on sales platforms like Stripe and Shopify make this data collection even easier to do within the e-com space – literally everything is working in your favor if DTC is your market area.
Check out the following brands who – just like Glossier – have really wrapped their heads around the DTC model and how to max out when it comes to utilizing an influencer-first approach to marketing:
WHAT THEY SELL: mattress brand selling direct to consumers, advertising almost entirely via social media. Their USP is the ability to squash and roll up the mattress, making it easier to receive and then move/transport – perfect for the renting generation!
HOW THEY USE INFLUENCERS: mass gifting mattresses in return for content, as well as paid placements with direct track links.
HOW THEY BENEFIT FROM THE DTC MODEL: No mark up on the fee of the mattress, so the product can be supplied at a lower price point, meaning it’s competitive within the market.
WHAT THEY SELL: suitcases and travel accessories for the modern millennial: built perfectly, sized perfectly, complying with all TSA regulations and featuring built-in USB charging ports.
HOW THEY USE INFLUENCERS: mass gifting of luggage in return for content, invite-only travel trips with the Away team, as well as paid placements with direct track links.
HOW THEY BENEFIT FROM THE DTC MODEL: working DTC and with influencers means their customer experience, data and insights teams can work to ensure everyone is aware of the customers’ evolving needs
WHAT THEY SELL: monthly, through-your-letterbox, millennial-friendly multi-vitamin subscription box
HOW THEY USE INFLUENCERS: mass gifting of one-off samples (instead of a subscription), a team of influencer ambassadors, as well as paid placements with direct track links
HOW THEY BENEFIT FROM THE DTC MODEL: describes itself as a “habit company”, meaning they use emails, content and direct marketing via a team of influencer ambassadors to turn taking vitamins into a routine for its customers… this model also gives them the ability to be completely transparent about ingredients – going so far as to make its vitamins completely see-through!
Now that smaller brands have tested the waters and grown their empires from Instagram feeds up, larger brands have cottoned on and are starting to follow suit. Take Nike as an example: in 2017 they launched a new division of their brand, called ‘Nike Direct’ that seeks to unite Nike.com (DTC retail) and Nike+ digital services such as ‘SNKRS Stash’, giving users/trainer nerds access to exclusive Nike trainers based on location provided by mobile data. Since launching this new ‘division’ they have already seen a huge rise in IGC content, because it’s a big name brand people want to show off, and have an affinity with. On top of this mass content production, “the sportswear giant credited its new structure with helping to drive a 13% rise in revenue to $9.8bn during the fourth quarter of 2018.” By going down a DTC route, it’s allowed Nike to own more customer data that wouldn’t be accessible via ASOS, Footlocker etc and other third-party retailers they partner with, as well as cut the fees to these outlets, meaning online proposition is much, much stronger for them.
That all being said, it’s worth noting that in the long term the surge in brands using a DTC model could result in the removal of delivery fees for bigger brands like Nike, which we think might be a barrier for many shoppers wanting to buy from bigger multi-retail companies like Amazon and ASOS. So what’s the verdict? Well, many are describing this new surge in direct-to-consumer success as “a pot of gold at the end of the rainbow”, and in many ways that’s true – it’s just another example of how brilliantly influencer marketing can work better than any other form of marketing when it’s executed in the right way.