The Direct to Consumer Craze
Written by: Stefanie Beach, Founder & CEO
The direct-to-consumer (DTC) model isn’t entirely new, but I feel like lately we’ve seen an increasing number of companies like Glossier, Casper, Dollar Shave Club and Everlane that skip the intermediate step of retail to deliver their products literally on their customers' doorsteps. While these brand names are widely recognizable they are still relatively small, with most making under $1 billion in annual sales, according to the IAB's study on consumer economy growth shifting to 'Direct Brand.' In 2017, DTC sales increased by 34% and represented 13% of all e-commerce sales according to NPD.com.
What's the secret to success, you ask? All of the DTC brands mentioned above (and most DTC brands in general) make data-driven customer experiences their core offering. They utilize their biggest asset….DATA! They learn what their customers want, make it the best and deliver.
In traditional retail, wholesale manufacturers sell through retail distributors with very little control over how the product is sold. They have no insight or say as to where exactly the product will be placed in the store, how sales associates describe it and whether the overall shopping experience is gratifying to the buyer. The brand experience gets lost with the retail experience and unrelated circumstancing can lead to a loss of sale.
However, the DTC model allows the brand to control every moment of engagement. It allows for the brand to learn about customers motivation and behavior at each step of the shopping journey. All of those moments are valuable, they are stored and aggregated so the brand can accurately gather customer experience data to guide changes that create a perfect "personalized" experience.
A Forbes article offered this example: Casper has made a name for itself in the saturated mattress industry by offering only one mattress that they claim will satisfy every customer. That one mattress is a direct response to massive amounts of research data that examine people’s actual sleep patterns and experiences shopping for new mattresses. They studied -- instead of guessed -- what kind of mattress experience was best, from ordering to shipping to sleeping, and then branded that data-driven simplicity as innovative luxury.
Don't get me wrong, from a customer perspective, DTC products are very risky. You aren't able to touch, see, try or test the product before committing to it. In some cases you don't even know what the products is in advance. Trust can only come from honest research and hard data that proves to customers that a brand knows their preferences, enforces quality and offers the best price with the highest convenience. And when a company delivers on that expectation, customers reward them with brand loyalty, word-of-mouth praise and incredible retention. In other words, brand knows best!
Stefanie is the founder and CEO of SMB Media Consulting. Being in digital advertising since 2006 and working on the buy and sell side of the business has given her a unique approach to clients business. She lives in the Bronx with her wonderful husband Nick and 6 year old daughter Audrey.