If 2019 witnessed the heating up of the direct-to-consumer market, with brands like Glossier, Rent the Runway and Casper attaining unicorn status via their valuations of over $1 billion, then 2020 may kick off a year of change for DTC darlings. There’s no denying recent headlines spelling out a few signs of struggle—Brandless shut down, Birchbox laid off 25 percent of its global workforce and Casper’s value plummeted after filing for an IPO in January and going public earlier this month. Yet overall, the DTC space is predicted to continue expanding as companies focus on top strategies for attaining success. Here are a few.
Foster Direct Customer Relationships
The importance of consumer connections can’t be overstated. Some DTC brands build notable followings before ever hitting markets. Women-founded handbag maker Senreve relied on a data-driven approach, conducting focus-group interviews and in-depth surveys with hundreds of potential buyers to tweak their prototype designs prior to launch. A strong social media presence that combined influencer posts plus product sightings on celebs like Lady Gaga led to the creation of a dedicated fan base. Other brands, like natural deodorant producers Each & Every, amass awareness via effective trade-in programs. Each & Every invited consumers to mail in their current antiperspirant for a natural, aluminum-free stick in the scent of their choice. CBD brand Charlotte’s Web followed a similar free-swap approach with a winning high-profile campaign that garnered over 20 million earned media impressions in its first five days.
Place Value in Brand Power
A postmortem into the sad decline of Brandless, the once-shining DTC seller of affordable groceries and household items, reveals a critical truth: branding remains essential. By neglecting to build a distinctive brand around its generic products, the company failed to achieve market differentiation or make an indelible impression on notoriously non-monogamous consumers. Many of today’s top companies—both DTC and B2B—are building strong brands by focusing on sustainability, which ranks as crucial for millennials and Gen Z shoppers. Clothing retailer Everlane is working on a new line made of recycled plastic, in addition to its vow to ban virgin plastics by 2021. And Adidas kicked up its own sustainability campaign by committing to using only eco-friendly items by 2024, including next year’s launch of a 100 percent recyclable shoe. Of course, an important component of branding includes media plays—from traditional methods like billboards and direct mail to social saturation reliant on Pinterest as a specific DTC marketing channel. Today’s smart DTC brands are focusing efforts on their omnichannel presence, rather than staying married to a single online strategy, and often putting video at the center. It’s hard to beat the power of site, sound and motion for telling a brand story and connecting with audiences, especially when a marketer can find that audience on whichever screen their customers frequent the most.
Customers crave community—that’s no secret. They vibe to personalization both in the form of online ads and pleasant in-store shopping experiences. A 2018 survey by research company Qualtrics revealed that 42 percent of US consumers were turned off from return store visits by the behavior of rude employees. Peloton, Glossier and Lululemon are winning examples of DTC brands embodying a thriving community spirit, which is made easier through the establishment of physical store locations. And these modern retail outlets are future-facing, containing novel items or encounters that can’t be duplicated in the virtual space. With Gen Z consumers currently commanding a spending power of $140 billion while clamoring for more brand interaction, shops are becoming both experiential and aesthetically post-worthy. Case in point: Lululemon lives out its global mindfulness message by offering meditation studios, while select Casper locations boast mini “houses” where shoppers can test a mattress by taking a nap. Machine learning and automation will likewise continue playing big roles for brick-and-mortars. As DTC brands continue to refine their marketing strategies, we’ll keep an eye on what proves to be most impactful for their growth.