The Rise of Direct to Consumer Brands
Dog treats, mattresses, shaving blades, socks and shorts
If you’ve been in the market for any of the above over the last few years, you would most certainly have come across brands such as Barkbox, Casper and Dollar Shave Club
These brands are all on course to individually achieve over $100m revenue in 2019 and it’s no coincidence that this rapid rise in revenue has been timed perfectly with the mammoth growth in internet usage and e-commerce sales.
These brands are categorised as Direct To Consumer (DTC) brands. They cut out the retailers and speak directly with their customers. They pride themselves on key pillars such as clear messaging, listening to customer feedback and providing a more efficient service to meet the needs of this new always-on consumer mindset.
Below we will look at three similarities all successful DTC brands have factored in to their strategy:
Create noise on social and listen
At the heart of the success of DTC brands is how they have utilised social to not only reach mass audiences but also drive meaningful engagement and conversations with their customers.
During the early years of Casper, they partnered with Kylie Jenner for a simple Instagram post of Kylie announcing she had received her new Casper mattress and this post drove over 800k likes and doubled sales. This might not have been a cheap approach, but they realised early on the potential of investing in a small group of major influencers and using their power to drive brand association and sales.
In contrast to the above strategy, subscription dog treats service, Barkbox, had smaller budgets to work with, but still have to thank the power of social for driving growth of the brand. Early insight reports on social for Barkbox found high engagement on content of dog owners opening their boxes with their beloved dogs on YouTube. This inspired Barkbox to start working with YouTube influencers who had built engaged audiences of dog lovers. They incentivised these influencers to include promo links in their videos for revenue splits and encouraged every customer to upload content using a hashtag in return for discount codes. This is a great example of using simple social insights and collaborations to create a buzz around monthly box openings. Ultimately Barkbox succeeded in creating an appointment of view feeling for dog lovers to see their favourite animals react to their latest round of monthly treats.
Be the expert
The mammoth businesses listed at the beginning of this article all had one thing in common from inception, they focused on a specific audience, catered for a specific need and spoke confidently about their expertise. The majority of these brands have now gone on to broaden their product range but the foundations was built on a very clear proposition and value add.
When Bombas launched as a premium sock company they had the authority to demand higher prices for such a simple item in our wardrobe which up and till then wasn’t given much thought. They were the experts who made you think about the comfort of your socks, just as much the comfort of the shoes you wore. Retailing at $10 per pair, co-founder Randy Goldberg compared the pricing to a cup of coffee in Starbucks, just as they could charge x4 higher compared to a local deli due to the quality of the coffee beans and the well mastered roasting process all the way to your cup. Bombas prided itself on a similar process and focused on material selection and engineering to cater for maximum comfort.
Regular check-ups to the opticians for glasses, trips to the orthodontist for your braces and trying on different shades of make ups in your local department store. These are all experiences which may no longer exist if the below businesses continue with their rapid growth.
Warby parker: at home eye exams via an app, followed up with a selection of 5 glasses for you to trial at home.
Smile direct club: clear aligners sent directly to your home.
Glossier: digital skin tone matcher with suggested personalised products.
The above brands have combined tech innovation with customer experience to cater for specific needs, all in the comfort of your home. Through this approach they are able to have a direct consistent line of communication with their customers. This bring ease for the customer and adds a service layer to brands which traditionally would have had to rely on middlemen. For example visiting an optician would result in a customer being suggested several different brands of glasses, whereas now Warby parker has cut out the opticians, provides the eye test and delivers only their products directly to your home.
Over the next few years we will see DTC brands continue to grow and have an impact on our purchasing decisions. A recent US e-marketer survey found that 40% of US internet users expect DTC brands to account for at least 40% of their purchases within the next five years.