Some of the most notable business stories — with some of the most memorable advertising campaigns — were from companies that communicated and did business directly with the customer. Dollar Shave Club had massive success with their subscription-based shaving kit, and viral “Our Blades Are F***ing Great” ad. Warby Parker became the go-to place for purchasing glasses online, just like Casper did for mattresses.
“These are direct-to-consumer brands, brands that, at least in one stage of their journey, offered their products directly to the consumer,” explains Graham Byers, an entrepreneur currently working with DTC businesses in the health and wellness field.
Direct-to-consumer is a particular business-to-consumer model when the business is also the manufacturer. So instead of creating a product and selling it wholesale to retailers, the manufacturers address their customers and market to them directly.
Modern direct-to-consumer businesses rely heavily on digital channels of communication and sales. The most successful brand rode on the wave of expansion of e-commerce that saw online global sales swell to close to $4.29 trillion in 2020, according to Digital Commerce 360. In 2022, the United States alone accounted for more than $1 trillion in e-commerce.
“With more people going online, it’s easier to market even to some demographics that were previously hard to reach,” says Graham Byers. “The third largest age group on social media in the US are those between 50 and 64, and reaching them on Facebook isn’t that hard.”
The ability to reach audiences is just one of the many great things the direct-to-consumer model can offer the brands that decide to use it. In addition, DTC brands can get more direct customer feedback thanks to more immediate communication with the audience.
DTC brands also have complete control over the product cycle, from creating, advertising, and eventually shipping it to the customer. They are not at the mercy of fulfillment centers, third-party advertisers, or retailers who may or may not give their products the prominent placement they deserve.
“Direct-to-consumer brands are also responsible and accountable if anything goes wrong in that chain between the manufacturing and the fulfillment,” says Graham Byers. “For some people, leaving those business parts to others is easier. They might not want to be so involved. Or responsible.”
For all its benefits, direct-to-consumer is a risky business model because all of the risks of a potentially complex supply chain fall on one business.
But then, for one reason or another, many of the original DTC brands were either bought out by retailers. Some partnered with retailers for presence in their brick-and-mortar stores, while others opened their shops. Adding physical stores as a sales channel for a DTC brand of a certain age seems the way to go.
There are multiple reasons why DTC business might create a hybrid model and do some physical retail. People still like to see and touch what they buy, so we’re far from seeing in-person shopping dying away anytime soon. One of the popular opinions is that the venture capital that underpinned the DTC space is simply no longer there.
“With all things equal, it’s important to remember that, with the model’s popularity, more businesses were trying it,” explains Graham Byers. “Some would say the space became more crowded. Others would say it just became more competitive. Either way, getting your foot in was easy, but growing the business became tough.”
Still, there’s plenty of room for businesses to use this model with great success. Of course, it’s not as free-for-all as it used to be, but DTC is still a viable model needing some change.
DTC businesses can consider incorporating some physical retail into an omnichannel strategy. Whether they build their own stores or work with some specialty retailers for a presence at their spot, it doesn’t matter. It’s essential to go back to catch the customer wherever they are.
Everything from laser-focusing on user experience to rethinking advertising might help in the digital world. Plenty of digital celebrities out there would be more than willing to work with your brand, so consider working with a social media influencer.
Finally, brands should consider taking the necessary steps to create a community. If people can connect over your brand, all the better! For example, getting them involved with the product via a giveaway or asking them for product reviews is always good.
“Some DTC brands have indeed been faltering, but that’s not indicative of the whole field,” says Graham Byers. “The underpinning model might need an overhaul for this competitive market, but it’s still better than the alternatives in some ways. And for me, that’s plenty.”
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