How DTC brands are ripping up the rule book
In a landscape dominated by a handful of seemingly invincible ecommerce giants, the meteoric success of a handful of direct-to-consumer (DTC) brands could have come as something of a surprise. DTC companies such as Casper, Glossier, Warby Parker and Dollar Shave Club has not only managed to carve out a niche for themselves, they’ve done it in a way that has generated intense interest - and even envy - within the business community.
In bypassing traditional sales models, DTC brands have introduced a whole new approach to marketing, one that more traditional retailers are sitting up and paying attention to: By shipping directly to the consumer and limiting partnerships with third-party retailers, brands are able to offer lower prices while maintaining complete control over their distribution and marketing - and that’s where the magic happens.
With legacy giants such as Nike starting to implement marketing practices inspired by DTC, the general feeling is that these digital-first brands must be doing something right.
They keep things simple
How can a fledgeling e-commerce start-up stand out from the crowd when a search for their key product returns hundreds of results from extremely well-established competitors? Rather than overwhelming potential buyers with twenty different versions of the product they’re looking for, DTC brands turn traditional retail on its head by offering just one or two models.
Most DTC brands are defined by just two factors: clarity of purpose (“we sell high-quality X, delivered straight to your door”) and simplicity of offer (“we only sell one model, because it’s the best”).
The choice to offer just one or two products not only says “prestige”, it also enables companies to go back to the drawing board and reiterate their product as many times as necessary, often thanks to buyer feedback. Not only are consumers offered a product presented as the very best in its category, they are given the opportunity to help it evolve into something even better:
In April 2014, the mattress company Casper launched one single mattress design, offered at an affordable price and delivered straight to the buyer’s house. The rest, as they say, is history - the company sold $1 million worth of products in its first 28 days and topped $400 million in annual revenue in 2018.
They do distribution their own way
DTC in itself is nothing new - the first known example of this particular sales model was actually a Venetian trade catalogue from the 15th century. Modern-day DTC brands owe their success to knowing how to tap into consumers’ needs and habits and offer them commercial models that fit into their day-to-day lives.
Audiences are increasingly habituated to subscription models for everyday products, which not only give consumers access to products at a lower price than in a brick-and-mortar store but also offer a service that appeals to buyers for convenience’s sake.
Some DTC brands that offer goods in replenishable categories, such as the beauty brand BirchBox and the tampon retailer Lola, use subscription models to ensure customer retention.
Similarly, pet accessories brand Barkbox taps into the dog-lover demographic with a monthly delivery that includes a selection of treats, toys and accessories. Pet owners not only benefit from a carefully curated selection of goods that saves them from having to wade through the wide range of products on offer in a currently booming market (an estimated $75.38 billion will be spent on pets in 2019) - they’re also saved a stressful Saturday afternoon trip to their local pet emporium.
They’re aware of the power of community
DTC brands don’t generally owe their success to a groundbreaking, never-seen-before product. Consumer goods such as mattresses and make-up rarely come with a high degree of “wow factor”. As a consequence, the markets they’re attempting to disrupt come with their fair share of well-entrenched competitors.
This is perhaps why DTC brands tend to appeal to younger, digital natives who are less receptive to traditional advertising methods and appreciate value-based brand messages and a sense of community.
So how do the likes of Harry’s and Glossier make waves in their respective markets without sinking millions into advertising budgets? For this we need to look to influencer marketing.
Influencer marketing is a tried-and-tested method for DTC brands - an Instagram post of Kylie Jenner’s new Casper mattress gained over 800,000 likes - but some are getting even more creative. Brands quickly grasped the fact that people like to show off their purchases on social media and turned this into a marketing opportunity, offering discount codes to buyers who posted unboxing videos with a specific hashtag (the aforementioned Barkbox) and including cute stickers enabling buyers to customise their purchases and show them off on social media (Glossier).
The baseline of Glossier’s success - the US beauty brand was recently valued at over $1 billion - was a solid online community. The brand started out in 2010 as the beauty blog Into The Gloss, which by the time Glossier was launched five years later was a well-respected publication that boasted 1.5 million monthly views.
With Into the Gloss still going strong, nowadays Glossier uses Instagram to maintain a thriving community. Consumers share artfully composed pictures of their latest purchases in the hope of being reposted to the brand’s 2 million+ followers, while a micro influencer-based ambassador programme reportedly drives 8% of the company’s sales.
They empower consumers to contribute to social good
Community is a DTC hallmark, as are sustainability and a sense of social consciousness. Research from Rakuten Marketing recently revealed that UK consumers are increasingly driven by sustainability (16%) and ethics (17%) when buying subscription-based services.
It’s no surprise, then, that many DTC brands make a donation for every purchase made, while others, such as TOMS footwear, donate one product to a person in need for every purchase made by a customer - a variation on the “pay it forward” model. Consumers are increasingly gravitating towards brands they feel share their interests and beliefs, a factor that companies need to embrace in the content they provide.
The most successful DTC brands aren’t just selling a product or service - they’re offering an experience and the chance to advocate for a set of values.
The ethical fashion brand Lucy & Yak launched in 2017 and quickly made a name for itself by selling clothing and accessories that are both stylish and eco-conscious. The company uses their social media accounts to share pictures of their products in beautiful natural settings, repost buyer “flatlay” photos and educate their followers on topics close to their brand values, such as sustainability and the environment. They also regularly showcase their team of tailors in India, to really drive home the message that this is a brand with an ethical, valued supply chain.
Brands such as Lucy & Yak and the Dutch chocolate company Tony’s Chocolonely (who vow to produce “slave-free chocolate” only and are now the fastest selling chocolate brand in Holland) offer inspiring origin stories that highlight the companies' values and portrays them as relevant, responsible and socially-conscious.
But it’s not all been plain sailing.
When the moment came to prove profitability, some DTC brands were criticised for not staying true to the values they once championed. The men’s clothing company Bonobos recently put fans’ backs up by selling to Walmart for $310 million, while a number of other DTC brands that secured significant amounts of venture capital back in the day now struggle to get to profitable growth.
By offering an authentic brand relationship that puts the consumer at the center, prioritising mission-driven storytelling that provides their audience with value and rethinking distribution models to fit in with modern day buyers’ requirements, companies can connect with their customers like never before.
Content by The Drum Network member:
