Direct to consumer brands have taken the retail world by storm.
These young market disruptors have won the hearts of consumers by preaching straight-talk, authenticity, and perhaps most crucially, by offering quality goods at a lower price. Some successful DTC startups have already come of age, getting acquired by massive global retailers like Unilever and Walmart. Even entrenched brands like Nike have developed a DTC strategy to compete with the model’s upsurge in popularity.
So what’s driving the direct to consumer trend? These brands share a unique business model that enables them to fully leverage all the tools of the digital age.
Direct to consumer brands that cracked the digital marketing code
DTC brands have infiltrated nearly every retail vertical in existence, including CPG, fashion, pet supplies, and more. Some frontrunners that we’ll talk about include:
They’re all known for taking a creative approach to digital marketing, telling unique stories that draw attention and engage consumers. Here are a few of the secret weapons that are helping these brands shake up the retail world.
1. Warby Parker
Secret weapon: A disruptive brand story (in 100 words)
Direct to consumer brand Warby Parker turned the eyeglasses industry upside down with its wide selection of affordable frames and home try-on options. How did the brand do it? It built a digital marketing empire around a disruptive story. Every new pair of glasses is accompanied by a polishing wipe emblazoned with the story of “Warby Parker in 100 Words.” This quirky no-nonsense narrative describes a young man who sought a simple solution to an age-old problem — the high price of prescription glasses.
Fashionable frames and affordability aren’t Warby Parker’s only selling point, however. Its philanthropic mission sets it apart: The brand partners with groups worldwide to support their “buy a pair, give a pair” program, which distributes glasses to communities in need. So far they’ve given away more than 5 million pairs and talked up their efforts across every marketing channel, including email and social. On the company blog, Warby Parker customers can also catch up on the latest updates around the brand’s Pupil Project — an initiative which donates glasses to young students in need.
Last year, Warby Parker raised $75 million in Series E funding, bringing its total to nearly $300 million. The company is currently valued at $1.75 billion.
2. Dollar Shave Club
Secret weapon: Viral video engagement
Direct to consumer brand Dollar Shave Club burst onto the DTC scene with a viral video that has garnered more than 26 million views since the brand’s launch. The video features the founder of Dollar Shave Club, Mike Dubin, explaining the company’s value proposition. The pitch is simple — for a dollar a month, they send high quality razors right to your door. And, according to Mike, their blades are “f****ing great.” In its first 48 hours, nearly 12,000 people signed up for the service. By the following year, that number rose to 330,000. In addition to its killer price-point, the brand’s charming smugness and irreverence immediately set it apart from industry incumbents, such as Gillete.
The tone of Dollar Shave Club’s video marketing has matured over the years, it still injects humor at every opportunity. This follow-up video, which promotes One Wipe Charlies, shows consumers that Dollar Shave means more than razors, but its off-the-wall comedy is here to stay.
Dollar Shave Club’s subscription-based price model and digital marketing efforts immediately marked it as a major player in men’s grooming. Apparently, CPG giant Unilever agrees — in 2016, it acquired the five-year-old startup for $1 billion.
Secret weapon: Social media presence
Direct to consumer brand Casper broke the $29 billion mattress industry with the radical suggestion that one size really could fit all. The company, which specializes in memory foam mattresses, delivers comfort right to their customers’ doors in an impossibly small box. The online retailer has been so successful that a number of DTC competitors have sprung up in its wake, including Leesa and Tuft & Needle. However, Casper’s digital marketing strategy continues to set them apart from the pack.
Casper is particularly effective on social media, where the brand regularly engages consumers with sleep-related content and replies to mentions. For example, customers who ask Casper for help after oversleeping on their comfortable new mattress may receive a custom excuse note for their boss, explaining their tardiness. The brand also uses social channels as a platform for sharing charming sleep-related videos, such as this one which showcases sleepy turtles.
Although DTC competitors are making headway in the new digital mattress retail sector, Casper remains the clear frontrunner. The company recently secured $100 million in Series D funding, bringing its total valuation up to $1.1 billion.
Why they are killing it: Cult content
Direct to consumer brand Glossier began as a simple beauty blog called Into the Gloss, run by founder Emily Weiss. A thriving community sprung up around the blog, thanks to the value its content generated. When the beauty brand launched, it soon amassed a cult following. It now has a notable hype, with product waitlists occasionally exceeding 10,000 people. Throughout this startup’s three-year journey, content-based marketing has been the cornerstone of its digital strategy. In fact, in 2018 Glossier was named to the “Top 50 Best Content Marketing Brands” by NewsCred. The company has maintained its popular blog and added new video content to its expanding library, to take advantage of the surge in video streaming popularity. In the future, Glossie plans to personalize the buyer journey with content by leveraging its wealth of data.
Glossier’s devoted community remains critical to its success The company invited about 100 of its top customers to be a part of a Slack discussion around products, and they exchange over 1,100 messages a week. User-generated content (UGC) is also key to its marketing strategy.
This year Glossier entered the unicorn club among startups, securing $100 million in Series D funding. This round effectively tripled the company’s 2018 valuation, brining it up to $1.2 billion.
Understanding the direct to consumer brand business model
Examined holistically, all of these successful brands have a few things in common. Traditionally, retail has been run by distributors, but the advent of the internet unlocked myriad opportunities for direct consumer engagement. It’s always been possible for retailers to skip distribution channels by selling to consumers directly via catalog or mail-order, but in the digital age, the DTC approach yields a number of major benefits:
- No middlemen. DTC brands own the distribution channels, so they can cut out a lot of the costs associated with the traditional and wholesale retail models. They can then afford to pass those savings along to their customers.
- More control. DTC brands have complete control over the purchase journey, which enables them to add personalized value at every step. Because they manage the entire relationship, these brands can also maximize their use of user-generated content (UGC).
- Digital agility. There’s a reason why digitally-native startups dominate the DTC playing field. These challengers are fully agile, digital and mobile, meeting consumers right where they are at any given moment.
- More data. Owning the entire sales pipeline gives DTC brands 360-degree insights into every customer interaction. This is arguably the biggest benefit of the DTC model, as it makes every aspect of the business more effective (notably, its marketing).
Are direct to consumer brands the future of retail?
In 2019, direct to consumer brands have already transformed retail and radically shifted consumer expectations. The model has come a long way from the mail-order catalogs of the 20th century, but the evolution of DTC is just beginning. In the future, they will undoubtedly adopt new digital marketing strategies and learn to leverage data even more effectively. A key shift on the horizon is the move from desktop to mobile. Already, consumers spend over three and a half hours per day on mobile devices, which surpasses the metrics for desktop. Because apps account for 90% of internet time on smartphones, the in-app environment is poised to become the next great marketing frontier for DTC brands.
For more digital marketing insights, including how DTC brands can drive maximum ROI from their mobile strategy, contact Tapjoy’s mobile advertising experts today.