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Direct-to-Consumer (D2C) brands have really grown in the last few years. If you’re thinking about starting your own brand, consider going the D2C route. What can you learn from the leaders and modern pioneers of this business model? Today’s blog will look at what those brands have done to disrupt their respective industries and what you should keep in mind if you want your D2C business to succeed.
Direct-to-consumer (D2C) companies sell their products directly to customers rather than through third-party retailers. The main idea is that by removing middlemen (i.e. the retailers), these brands can offer customers better prices on their products and enjoy more of the profits as well.
There are plenty of other benefits from a brand perspective, which we'll talk about below.
Besides the simple fact that the internet makes online shopping possible, the new digital age of shopping has created a lot of new opportunities for new brands to disrupt the "old-world" (offline) way of doing things.
Of course, some of these changes are obvious (e.g. being able to open a business without needing a physical store). However, with the development of the internet, elements of business that were previously unquestionable are now ready to be changed forever.
These changes included remodeling supply chains, using new marketing methods to reach new audiences, and rethinking the customer experience.
It is a trend that is not likely to be going away. Looking at these projections from Statista, experts are predicting growth in D2C sales in the UK for many industries:
There are a few pioneers for this new business model in regards to the e-commerce world. Let's have a look at some of them below:
Warby Parker is an eye-glasses company. The company’s origins are a classic startup story: after losing a pair of glasses as a student and not being able to afford a new pair, the founders realised that there was a huge opportunity to disrupt the industry.
The founders quickly realised that the eye-glasses industry was completely dominated by one company and that they were keeping prices artificially high. One thing became abundantly clear: it was time for a change - and thus, Warby Parker was born.
Surely, there were some mistakes made in the process, but overall, the founders made a lot of great decisions. Warby Parker saved money by designing glasses in-house and selling them directly to consumers.
Based on some "skeptical" feedback from friends and family, they came up with the idea of sending shoppers up to five pairs of glasses to try on at home- without a commitment to buy any of them! Since then, many copy-cat companies have followed this strategy, especially in the eye-glasses industry.
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Another selling-point that appealed to younger demographics (i.e. Generation Z and millennials) was Warby Parker’s desire to be a socially conscious company. The company made it known that for every pair of glasses purchased from them, they would donate a pair of glasses to a person in need.
Companies embracing environmentally-friendly and socially conscious business practices (like Warby Parker and Reformation) are benefiting immensely from the brand image they’ve created for themselves. Another example of a brand famous for their ethics is TOMS:
TOMS is famous for their one-for-one programs of giving to the needy
(click on the image to enlarge).
So, what about D2C marketing?
Another major factor allowing D2C companies to thrive is the success of digital marketing. Brand’s selling simple products can now make a huge impression on their audiences with creative (and relatively inexpensive) marketing efforts.
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Look at the Dollar Shave Club as an example. They are a subscription-based company that sends new, high-quality razors directly to their customers every month per mail (for a dollar). Thanks to an “edgy” (and funny) viral video, they were able to get a lot of visibility and disrupt the razor blade industry by carving themselves a little niche.
This video from Dollar Shave Club is informative and humorous. It has been watched
over 27 million times!
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So, examples from the recent past show us how other businesses were able to become successful using the D2C business model. It's clear how staying with the times can benefit a new business (i.e. solving an old problem with new technologies, being socially conscious, and acing your digital marketing strategies).
Should you really consider the D2C model for your business? Are there other benefits? What else do you need to keep in mind for your D2C business?
One major benefit when it comes to D2C sales is that the brand can control the customer experience much more.
The entire customer journey can now be calculated, observed, and managed by the brand itself rather than relying on (hopefully accurate) data from the retailers. Whether that means the presentation of the product, the pricing, the checkout process, returns, or customer service, quality control is now in the brand’s hands.
Not only does a company control those elements, but they will have a much better understanding of customer frustrations and general feedback when it comes to all those factors.
We touched a bit on digital marketing in terms of targeting the right shoppers. However, social media also allows brands to build relationships with their audience. Whether it is sharing content on Facebook or showing off cool images on Instagram, social media helps customers interact with your brand.
Not only does this strengthen emotional connections with a brand, but it also allows brands to get direct feedback from their customers.
Branding is another element that will now be completely in the company’s control. Of course this can be outsourced, but many companies do this in-house these days.
How do you want to position yourself in the market? If you’ve read some of the stories above, reaching a younger audience means showing that you’re not too traditionalist.
Sending glasses to someone’s house without the pressure to buy instils trust in the company because the company is showing trust in the customer. Such a business model can also inspire potential customer to "just give it a shot". Having no pressure to buy while also having the comfort of trying on a "new face" at home gives the customer a "nothing-to-lose" perspective.
How else can you show that your business is "with the times"?
Storytelling is an important element to your branding. If your company’s history is unique, see if there is a way to incorporate this story into the brand’s website.
If your D2C brand is really disrupting an industry, market yourself as a disruptor! Tell the story of your frustrations and show your audience why you want to do things differently. Younger audiences tend to appreciate that.
Does your business use sustainable materials? Do you work together with charities? If you have answers to those questions, make sure to highlight that on your site or in your marketing campaigns! Consumer-behaviour has definitely shifted towards being more eco-conscious.
If you start your business with a single product, this might not be a negative thing. You can highlight the fact that you are focussed on making this item perfect before expanding your product line.
Casper beds is one more example to consider. They have one type of mattress. Through clever story-telling, they’ve completely disrupted the mattress industry.
Social media can help you target customers, build relationships, improve your brand image, and also give customers unique product insights.
You may even want to consider creating an unboxing video, for example, to give potential customers a peek at what your brand experience is like. A well-planned influencer marketing campaign can also bring your D2C brand some positive exposure.
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Although the idea of a D2C business generally involves selling products directly to your customers without a middleman, it may be helpful to sell on popular marketplaces like Amazon or eBay. This can be a great way to gain exposure in your early stages.
However, as you might already know, selling on places like Amazon will eat into your profits and it may not be the best long-term strategy, but if you are your own brand with your own packaging, it’s a bit easier to increase brand awareness in those marketplaces compared to if you were selling someone else’s products there.
A challenge for any new business is gaining shoppers' trust. Not every brand can get GQ magazine to write a feature on them like Warby Parker did.
On the flip side, if your products are sold by many retailers, your reputation is essentially out there and out of your control. Of course, if you have a great product, then you shouldn't have anything to fear, right?
Unfortunately, a retailer's customer service sometimes gets incorporated into a product review. Although it's not fair that a product rating might suffer from a shop's poor service, it is a reality. Therefore, being the exclusive seller of your products does give you a bit more "control" of your brand image.
Collecting and displaying product reviews (or customer reviews in general) on your site can be the social proof you need to to win over new customers so this point is really something you shouldn't underestimate. Keep in mind that you may need to manage your online reputation proactively, especially when it comes to customer reviews!
Addressing negative reviews in the right way can also make a huge difference in terms of the perception of your customer support.
Additionally, third-party quality seals and certifications (like the Trusted Shops Trustmark, which offers a 30-day money-back guarantee) can give your shop instant credibility.
In the digital age, small businesses can grow into big brands with the right products, strategies, and, of course, people. By utilising the strengths of digital marketing and combining them with positive customer experiences, strong branding, reputation management, and some creativity, your shop can also achieve great success as a D2C brand.