Before we start, what is DTC?
DTC means direct to consumer. If you’ve seen adverts on the tube or Instagram for Casper mattresses, Harry’s, Allbirds, or Away travel – these are all well-known DTC companies. They tend to specialise in one extremely well branded – niche product. By cutting out the middleman they can sell high quality products at a lower price. That said, whilst they are generally not the most expensive products on the market, they also tend to be slightly aspirational. (a.k.a. not cheap).
As the sector is exploding, you may be considering setting up a DTC business yourself. To help you on your journey, we wanted to share 6 secrets of successful direct to consumer business.
1 – Understand exactly who your product is for
Marketing has gone tribal. Ok, that sounds like something I read in a self-help book, but hear me out…there is some truth to it.
Back in the day, if you opened a luggage store in your local town, you would need to serve people who just wanted a cheap suitcase because they’re going on holiday tomorrow. (I’m looking at you TK Maxx) But the internet removes the geographic constraint, which means sellers can target their products toward a much more specific audience.
The lesson: Ask yourself – Who will love us the most? And create your products for them.
2 – Understand The Power of Storytelling
Away made a relatively boring necessity into an enviable statement piece at an affordable price.
– Conde Nast Traveller
In other words, Away made a suitcase for people who love to travel. Why does that matter?
For some, travel is a part of their identity. People who love to travel won’t put up with a suitcase with one broken wheel. They will buy the beautiful lightweight suitcase and add the luggage cube inserts which hold shoes and dirty clothes. They will buy the suit carrier that fits perfectly inside and the carry-on bag with the built in power bank – because tech savvy people can’t risk their phone running out of battery on a long-haul flight, especially when the boarding pass is in the Airline app. And when you’re investing £500+ on travel gear, you want to personalise it – so £35 for a personalised luggage tag feels like a good deal. (Not a bad upsell considering that’s how much some people spend on a suitcase).
The bottom line: Telling a compelling story allowed Away to create a truly thoughtful product which their customers love. As of 2021 the company is valued at $1.4 Billion.
Remember – Your story is not your life story. It’s the story of how your products will improve your customers lives.
The Lesson: Understand the power of the story.
3 – Get your visual identity right
Most DTC products are extremely well branded. That doesn’t mean they have the most intricate logos, but they always offer a complete brand experience.
For example, Harry’s centred their brand around sanity. Until they called it out, it felt like we never spoke about how ridiculous men’s shaving products had become. Does anyone really need a disposable razor with 7 blades that vibrates and dispenses gel at the same time?
The Harry’s razor is attractive yet uncomplicated and the branding matches that ethos.
In the slightly mad world of men’s grooming, simplicity actually made them stand out.
On the other end of the spectrum, Beavertown Brewery (who make my favourite Beer – Gamma Ray) have a visual identity that’s bordering on total insanity (In a good way). But hey, when your beer tastes that good and your founder’s dad was the lead singer of Led Zeppelin, it would be rude to have it any other way.
The Bottom Line: Harry’s make a relatively simple product in a slightly non-sensical market so their simple visual identity worked best. Beavertown make a relatively simple product in a very crowded market, for them an insane visual identity worked well.
The Lesson: Visual identity is extremely important for every DTC brand.
4 – Convenience is king
For direct to consumer companies, logistics are now so important they have become an integral part of the brand.
Amazon came to dominate eCommerce because they figured out the recipe for success. Namely – a good product selection, a fast, easy to use website, a quick, one click checkout process and speedy delivery. Zappos one upped them by offering all that, plus a 365 day returns policy. They figured out that free, simple returns also encouraged people to buy with confidence knowing that they wouldn’t face a world of pain if a shoe didn’t fit or didn’t look good once you tried it on. Amazon bought them for $1.2 billion in 2009 because when it came to logistics – they had “out-Amazoned” Amazon Direct to consumer companies have built their success on this fact.
For example Casper realised one thing that would hold customers back from ordering a mattress online was the hassle of getting rid of your old one. So, they offer to collect your old mattress for a tenner. Nice.
For smaller companies, fast delivery can be a challenge, because working with a good delivery company can be expensive and the larger players get generous discounts. One way to combat this is to improve your average order value (perhaps by offering free shipping over a certain basket value) which can offset the cost of shipping.
The Lesson: Customers care about convenience, so get your logistics sorted.
5 – Unboxing is an experience
When you buy a product from the Apple store, the specialist will ask you to cut through the cling film. As one explained to me, some customers would get upset if they didn’t get to unbox the item themselves.
As DTC customers don’t get to provide the in-store experience, this makes the unboxing experience all the more important.
DTC companies who get this right generate extra exposure as customers will share photos on social media and if the experience is good enough, influencers may even create unboxing videos which will help a product to reach a large audience.
Remember: With a general push toward sustainability, attractive but plastic free packaging will delight customers even more – especially a younger audience.
The Lesson: Without a physical store, unboxing is a key part of the brand experience, so invest in packaging.
6 – Keep customers talking
Acquiring new customers is expensive. So the secret to a successful direct relationship with your customers is to keep in contact. One of the best ways to do this is through a regular newsletter. According to campaign monitor this should be done no more than twice a week but more than once a month.
The good thing about a newsletter is that you own the media. Instagram is great but when Facebook decide to change the algorithm, you can find yourself in a situation where you have to pay to reach your fans. You don’t get that issue with newsletters.
Of course you need to invest time and effort into sending something that your users will want to receive, so fresh product drops, giveaways or special offers are a good way to keep people from unsubscribing.
Another way direct to consumer companies keep customers in contact is by offering a subscription model. With subscription businesses growing 437% in 9 years, if you want to increase customer lifetime value, it’s worth giving a subscription model some thought.
We have an article in the pipeline about our experience with the various subscription apps for Shopify so watch this space.
The Lesson: Acquiring new customers is expensive. Use newsletters, Social and subscriptions to increase customer lifetime value.
In Conclusion:
The direct to consumer trend is not going away. With high streets struggling and retail changing, more brands will be going in this direction. Having a direct to consumer model is great if you can make it successful, but as the sector becomes more crowded it will become a lot more challenging to cut through the noise.
