The Direct To Consumer (DTC) business model has been stealing customers and disrupting business practices in a host of different industries in the past few years, and it’s poised for even greater success over the coming months. The DTC model is built on companies designing, manufacturing, marketing, and shipping their products to consumers without relying on stores, eCommerce platforms, or other traditional middlemen. They generally sell their products more cheaply than established brands and maintain end-to-end control over all aspects of production, sales, and distribution. Brands like Casper Mattresses, The Dollar Shave Club, and The Honest Company have experimented with new ways of marketing and selling products, and have carved out lucrative market-share under the noses of the traditional titans of their industries. Let’s take a look at how successful DTC brands have gotten ahead of the pack.
Long Tails And The Allure of Simplicity
Online retailers initially found success by focusing on the long tail. While traditional stores were limited in what they could stock by the physical size of their facilities, Amazon, eBay, and their ilk could stock an endless array of products. So while a traditional bookseller focused on stocking titles which flew off the shelves, Amazon could offer a mind-boggling selection and profit from various niche markets. Now, most of the world’s dominant retailers are online and following the long tail playbook, but DTC start-ups have successfully challenged the paradigm.
Casper, Harry’s, and Bonobos all launched with just one product. Offering a single item for sale offered a unique appeal which captivated consumers: this thing is optimally designed, and we believe in it so strongly that it is our business. It also allows the company to quickly respond and adapt to customer feedback and changes in the marketplace, tailoring and tweaking to ensure very high levels of consumer satisfaction.
Casper showed many observers the allure of simplicity. People hated buying mattresses. They found the salespeople pushy, they didn’t understand the differences between an endless array of designs, and they worried they were being ripped off. Casper eliminated all of those headaches, offering the public a “perfect” mattress, with no variations in style, features, or price. They took all of the stress and homework out of the path to purchase and were rewarded with over $100 million in sales in their first two years of operation.
Harry’s was another start-up that identified a needlessly complicated, nonsensical sales process and streamlined it. Founder Andy Katz-Mayfield was inspired by a trip to a supermarket where he had to wander the store to find the locked razor case, find an employee to open it for him, select the right product from an array or Machs, Turbos, Quattros, and Fusions, and then spend $20 on four blades. Katz-Mayfield realized that having endless options was more of a headache than anything else, and built a business based on the premise of having one quality razor with cheap blades that were delivered to the customer’s door. Within two years his company was valued at $750 million.
Most DTC companies are challenging rich and powerful brands with established customer bases and massive marketing budgets. In order to get customers, they’d need to hit the ground running, and find a way into the minds of consumers with limited advertising budgets. For Casper, the answer was focusing on establishing cultural cachet in New York and Los Angeles. They flooded subway stations with ads, leveraged Hollywood connections, and bet big on social media influencers. A 2015 Instagram post by Kylie Jenner put them over the top, generating over 800,000 likes and immediately doubling net sales.
Harry’s used an appearance on Tim Feriss’ popular podcast, and a host of incentives to generate a 100,000 long waiting list before they even launched. They offered free products to anyone who signed up 5 or more friends, and a year’s supply of blades free to anyone who signed up 50 people. A brand new company with an email list of 100,000 curious potential customers is an impressive feat, and allowed them to thrive right out of the gate. Glossier, a beauty products brand which grew out of a popular blog employed a similar strategy to generate enthusiasm for their launch.
Barkbox, a pet product subscription service that leverages the Millennial desire to pamper “furbabies”, noticed that some users were posting unboxing and pet reaction videos online. Sensing an opportunity, they began to offer discounts and promotions to customers who tagged their videos and posted on Facebook, Instagram, and Youtube. Barkbox now has millions of fans and followers across various social media platforms. “If you took out social media, Bark and Co. wouldn’t be a company,” according to Stacie Grissom, head of content at BarkBox. “We’ve really invested in entertaining people and engaging with people in deep ways by talking about their dogs and showing them other people’s dogs.”
What Can You Learn
The main lessons we can take from the growth of DTC upstarts are the value of streamlining purchase experiences, making sure to leverage social media in your marketing, and focusing on delivering a high-quality product with a simple, straightforward message. Most successful DTC companies have built their brands by identifying stressful purchase experiences, complicated and confusing product offerings, and overpriced items. They cut out the noise, and offered consumers alternatives they could clearly understand and appreciate: an excellent cheaper razor that arrives when I need it, or a pair of pants that fits just right. They leveraged social media networks to recruit their customers into spreading their messages and watched the sales pile up.
For established brands, the success of the DTC model is both a cautionary tale and a chance to improve your customer relationships. Eliminating friction from the path to purchase is absolutely essential, and if you aren’t striving to make it easier to buy what you’re selling with shoppable packaging, innovative apps, same-day delivery, subscription services, and anything else you can think of, you’re doing it wrong! If you’d like to work with a marketing company that is built on the principle of creating frictionless purchase experiences across multiple platforms, don’t hesitate to get in touch with Adimo today!