How Direct-To-Consumer brands are changing the face of marketing
One of the most exciting trends in recent times has been the rise and rise of Direct-To-Consumer brands like Glossier, Everlane, Casper, Allbirds, Dollar Shaving Club, Bonobos, Blue Apron, Away and so many more that by-pass the middlemen in distribution and market directly to customers, mostly through online channels. Some have an offline presence but distribution is always through their own stores. D2C brands own the entire customer value chain taking full responsibility for research, development, design, manufacturing, marketing and distribution. They have greater flexibility in shaping their offering, lower costs and all the perks of having direct access to customers, including the opportunity to personalize their brand and make it more relevant to customers. The fact that many of these brands have been created by young, eminently PR-able, dare I say the word, ‘Millennial’ entrepreneurs and have over a relatively short period of time made millions of dollars in revenue and valuation only makes them more lip-smack-worthy. How lip-smack-worthy? For the best-in-class that’s $1Billion, the amount Unilever paid to buy Dollar Shaving Club. Away made $12 million revenue in their first year of operations in 2016 and received $50 million Series C funding this year. Glossier’s revenue just 4 years after launch in 2018 is $34million.
The success of D2C brands has made even legacy lifestyle brands like Nike sit up and take notice. Nike recently announced a streamlining of operations to become a data-driven, D2C brand. They took a very visible step in this direction recently when they unveiled their new concept store in LA called Nike by Melrose. Everything from the location to the products stocked in the store was based off data about how people interacted with Nike in the area.
The million dollar question(s) for all brands owners: Is there a secret sauce, a common blueprint that these brands are following? What can we as brand owners incorporate into our marketing strategies to have fanatical followers, create products that sell out in record time or get real human beings to put their name on product waiting lists? (Just imagine your life, how crazy it is and then imagine taking out the time to add your name to a product waiting list. Everlane’s ballet-inspired heels sold out in 3 days, 15,000 people added their name to a waiting list. Glossier had a 10,000 strong waiting list for two of their products.)
7 THINGS THAT EVERY BRAND CAN LEARN FROM DIRECT-T0- CONSUMER BRANDS:
We believe there are 7 underlying commonalities to the most successful D2C brands. These are by no means all-inclusive but they do serve as a checklist to take your brand to the next level.
1. BORN TO DISRUPT
At the heart of all D2C brands is a bold, often audacious, category disruptive idea. Everlane is evergreen, sustainable, ‘radically transparent’ fashion in an industry that is ‘fast’ and anything but sustainable or transparent. Their focus is on providing high quality basics at affordable prices. Everything they create is made sustainably and communicated in a way that lets customers know exactly how it is made and for how much. Glossier is a beauty brand that passionately democratizes beauty by designing their entire ecosystem around co-creation. They call it a people-powered ecosystem that seeks to take power back from traditional, legacy beauty brands and give it back to real women. Experts, who tell women what is good or right for them have been replaced by real women who are given a voice in determining what their skin needs. Glossier acts like a facilitator that gives women a platform to actively participate, create and shape a beauty brand that is by them, for them.
This disruption revolution is not just for high involvement categories. Mattress buying was an annoying, unimaginative, and expensive process before Casper came along. Casper changed the rules of the game with their convenient online shopping experience, their unique ‘mattress in a box’ delivery system that didn’t need to be assembled at home (unlike other mattresses), their exceptional customer service, cute as button name, distinctive brand identity and affordable pricing. A mundane, low-involvement, boring category was transformed into an exciting, even share-worthy one. Warby Parker changed eyewear; Away disrupted the luggage category, Dollar Shaving Club the men’s shaving and grooming category; the list is endless but the lesson is simple: Each one of these brands carefully studied what real people in the real world care about and created an offering that made it easier to access what they were really looking for, even if the entire category worked in exactly the opposite way. In hindsight, the solutions these brands provide to everyday (real) dilemmas faced by people seem so blatantly obvious. However, till they showed the way the status quo ruled, almost like an unsurmountable challenge.
Source: Fortune, 2014
2. ZAG ALL THE WAY:
Defining a core idea on which the brand rests is the easy part. The challenging part as we all know, lies in execution. The devil is truly in the details. D2C brands don’t just promise a disruptive idea; they go disruptive all the way. They bring their core promise to life, across the customer journey with the same bold, disruptive spirit. Expect a creative, hitherto unknown take on different aspects of marketing from these brands including in difficult to disrupt elements of the mix like pricing, delivery or the returns policy. Take Everlane. Most brands wouldn’t dream of sharing their cost structure or mark-up with their customers and yet, that’s exactly what Everlane does . In an industry that is notorious for upselling and high premiums based on branding alone, Everlane shares its pricing structure for every product, clearly outlining the mark-up they charge vs. other designers. The brand made an equally radical move when the cost of raw materials for their most popular product, the cashmere sweater reduced: they dropped prices from $125 to $100. In the fashion category, every brand uses sales to offload overstocked items. Everlane, chose a disruptive strategy to sales as well with a ‘Choose what you pay’ idea. Michael Preysman, Everlane’s CEO came up with this innovative idea of letting customers decide how much they wanted to pay for select merchandise. He was inspired by music band Radiohead, who let listeners pay whatever they wanted for their 2007 album In Rainbows, and the Metropolitan Museum of Art which only asks for a ‘recommended’ donation for admission. Here’s how it works: Customers are given a few different price options with a clear explanation of where their money goes for every choice they make. For example, customers can buy an overstocked cashmere sweater (original price $100) at $70, $80 or $90. If they pay the lowest price, Everlane gets 10% of profits which covers development and shipping to warehouse costs, if customers choose to spend a higher amount, Everlane gets to cover overheads of the team and invest in product development. Surprisingly, 12% shoppers out to pay more. Perhaps, a reward for the transparency offered by the brand.
Time after time, D2C brands exhibit a leaning towards challenging the way things have been done across different aspects of marketing. Unlike legacy brands that stick to tried and tested methods, often using plug and play models year after year, these brands are flexible and agile, forging completely new paths that have not been explored before.
Source: Everlane website
3. HUMAN FIRST
Perhaps the most appealing and distinctive characteristic of D2C brands is that they are the anti-thesis of the giant, faceless, big corporation brand. It’s not about their size because as shared earlier, many of these brands have reached revenues that legacy brands have taken decades to reach. The story lies in the way D2C brands behave: more like your friendly neighborhood grocer who’s sharing his best bread with you or your friend who’s just created something fantastic and wants to get your opinion about it. There is a genuine attempt to stop treating people as ‘consumers’ who exist only to buy the product the company wants to sell. Instead, these brands are trying a refreshing new equation: Treating people as human beings with real lives, real needs and a real buying process that the brand has to make an effort to fit into. Blue Apron designs and accommodates for the real lives of customers by giving them easy subscription cancellation options in case they have to postpone a delivery unexpectedly or go on vacation. The ‘make a gourmet meal at home’ brand even created refrigerated shipping boxes to keep orders fresh for up to 24 hours after delivery to cater to a demographic that often has two working partners.
Source: Dollar Shaving Club CEO, Michel Dublin in viral video hit.
Most D2C brands use storytelling in a big way to reduce distance between the brand and its customer. A key component of the brand story is the founder’s very human story that lies behind the origin of the brand. The founder is cast as the hero, often an ordinary person with an extraordinary, inspiring idea; someone who is overcoming setbacks and triumphing over the inevitable obstacles that come in the way of bringing the idea to market. This connection with the founder is kept alive through constant updates that mix the brand and the founder’s life quite seamlessly. Over time, this humanization makes it difficult to separate the brand from the founder. The faceless corporation now has a face and a voice, a very inspiring one at that! It is a strategy that has been deployed by the likes of Elon Musk as well (founders of non-D2C brands) but with D2C brands this strategy is the norm not the exception. Storytelling is also used to communicate different aspects of their business. From how they source ingredients to their preparation for their next launch to the reasons behind their choice of a particular collaborator, everything is used to add another layer to the brand’s master story.
Another key element used to make D2C brands more accessible and human is their brand voice. D2C brands are designed to be more personal, friendly inviting, sometimes even cheeky and humorous but always ‘de-jargonized’. The usual gobbledegook jargon of the category is replaced with a simpler, direct voice. Away does this in a category like luggage, famous for sharing size charts and wheel dimensions (!); Glossier in beauty, a category that has claims, RTBs and counter claims as the norm for marketing. Check out Dollar Shaving Club’s brand voice and contrast it with competitive brand communication in the shaving category that portrays a shaving unit as nothing short of a NASA satellite.
4. SERVICE AS CULTURE
Most brands worth their salt have customer service in some form but there are some brands like Amazon and Zappos that pioneered the idea of customer service being central to their culture. Most D2C brands, born as online brands follow the mold set by these pioneers. Service is not the sole responsibility of a department but instead, something the founders embed in the design and culture of the organization.
Casper in its early days, had a ‘Chat with the founder’ button. Representatives are regularly encouraged to send gifts to customers who mention they are expecting a baby or pay for shipping products overnight, if an order gets lost in mail. Dollar Shaving Club’s founder personally answered grooming questions that his customers asked online. He calls himself the first ‘ClubPro’, a bunch of company representatives who answer customer grooming questions online. These are all clear signals to employees about the importance of heightened, personalized customer service.
D2C make listening to people an on-going part of their company’s processes. This continuous listening is used to stay agile and responsive - creating, amending, streamlining or discarding products and processes to improve different aspects of the brand experience. Glossier prides itself on its strong customer feedback-loop system. They use several ways to have regular conversations with their customers, including a Slack channel that connects their Top 100 customers. Customers share their pain points, wish lists, product feedback and process issues; Glossier’s dedicated teams compile weekly customer reports, turning all this information into actionable insights including website changes, product and process changes.
Most brands think of customer service as something that begins after the customer is in the bag. D2C brands have found a way to redefine the term to include the trial period, that twilight zone when the customer is not even a customer yet by creating irresistible, nothing-to-lose, everything-to-gain trial options. Casper lets you try (and use) a mattress for 100 days. Customers are free to return the mattress if they are not satisfied for any reason, no questions asked. Away has a similar trial period for their products.
Each of these brands show the value of making service an intrinsic part of the culture of the organization. Truly listening, building responsiveness into the system, engaging with people in a human way, treating them right, making an attempt to give them options that help the brand fit into their lifestyle. These are all great practices that any brand, no matter which category it is in can learn and follow.
5. MADE FOR SHARING
Sharing is an operating principle for D2C brands. It is not an isolated function, managed by a social media manager or just a metric for marketing Everything the brand does is designed for sharing.
D2C brands seem to be acutely aware that people no longer believe brands that want to ‘sell’ to them. People believe other people who’ve had personal experiences with the brand, who’ve experienced the product, navigated sticky refund issues or sometimes had such a great experience that they feel happy sharing it with everyone they know.
Direct access to the customer, having data about their preferences and behavior enables D2C brands to design more relevant, shareable experiences. In most cases, these experiences are based off behavior that occurs quite naturally among customers. The brand becomes a platform to encourage and endorse the behavior. Warby Parker for instance, knew that customers were sending their pics and videos to friends to ask them for advice when they tried on new glasses so they created a #warbyhometry with a reward for posting: access to their own personal, online stylist. Over 22,000 people use the hashtag on Instagram; there are countless Youtube videos where potential customers try on their glasses. Blue Apron leverages the natural desire to showoff one’s cooking prowess and kitchen creations online by creating excitement about a new recipe way before it’s launched. Fun and interesting content about the dish, it’s origin, traditions associated with the dish, techniques used for cooking are shared with the purpose of giving subscribers more knowledge about the dish. When they finally cook the dish, it becomes almost natural for them to show off their creation through videos and pics on the brand’s social media page.
D2C brands view their customer base as fans and their entire potential customer base as ‘fans waiting to happen’. Fans need news & excitement. They need participation, something that makes them feel they are part of a tribe, united by a common love. Unlike legacy brands, D2C brands start building fan tribes right from Day1. Using principles of sharing and leveraging social media channels they create experiences that recruit and manage these tribes, giving them what they need to stay close and hyper-connected with each other and with the brand.
A healthy respect for the community they serve is a key characteristic of D2C brands. Most display a consciousness of the role their business plays within their industry and society in general. Business is not considered a separate, discrete activity that focuses only on selling but also as a means to improve standards within their industry or society at large.
The most exemplary example of this is Everlane. Unlike competitors like Zara & H&M, Everlane uses its website and social media channels to offer customers a glimpse of its factories around the world, gives voice to workers making its garments and shares a price breakdown of every product it sells. ‘Sustainable fashion’ is a hard promise to deliver on but Everlane stays true to its vision launch after launch. Warby Parker has its ‘Buy a pair, give a pair’ program that empowers people to administer basic eye care exams, sell ultra- affordable pair of glasses and give glasses to school children through partnerships with non-profit or government organizations around the world. Blue Apron, makes good on its promise of fresh ingredients by cutting out middle men and sourcing directly from a network of 150 farmers.
Almost all D2C brands display social consciousness, taking on the role of heroes or avengers in their category, doing their bit to clean up the system. It is a role that makes them more endearing to a new generation that patronizes brands that care about social issues.
7. ALWAYS ON-BRAND:
A common misconception of brands that use only online channels for marketing is that brand building needs to be done at some ‘later stage’ or that it’s a waste of resources: a largely theoretical exercise relegated to positioning documents that are implemented only to the extent of branding elements.
A powerful lesson D2C brands teach is that putting thought and resources behind building a brand can never be a ‘tag on’ function. In a complex world, people are using shortcuts to make choices. They are gathering impressions constantly, deciding whether they want to completely ignore you or become die-hard fans. Everything does connect to everything else. The user experience across devices, the content that’s created and shared, the tone in which it is shared, how customer complaints are handled, everything is noticed, evaluated, stacked away mentally to be reviewed harshly later or ecstatically shared with a few hundred people, at the very least. As Emily Weiss, CEO of Glossier once said, “Brand is really, really important. It’s kind of everything”.
D2C brands seem to be well aware of this, using it to their advantage. They have a clear sense of who they are, why they exist and the value they add to the world around them. They have a clear brand story and they tell it with consistency and coherence across all channels. They create a rich, multi-layered brand experience revealing different aspects of their brand, through different channels. Most use content to continue building on all the values that the brand holds dear. Dollar Shaving Club created MEL, an online men’s magazine on grooming, style, health and other topics of interest to men; it even comes with a humorous pamphlet called ‘Bathroom Minutes’! Away, recently started a digital and print travel magazine, Here. Contributors from around the world share their travel stories, experiences and pictures. There are other useful titbits that add value to travelers, helping the brand become top-of-mind in the wider and more lucrative Travel segment.
Source: Glossier website
Last but not the least, D2C brands create distinctive brand assets, in quite an old style manner! There are many examples of this focus on finding distinctive visual assets like Casper and Glossier’s distinctive packaging but perhaps the one that stands out the most is the washed out, unique shade of pink that Glossier now owns #glossierpink. Who would have thought that a color that spells ‘girly’ could become so iconic that fans use the hashtag when they see the color elsewhere!
These are tumultuous times for brand owners. Every day there is a new fad that is sold as THE next revolution in marketing and absolutely the only thing worth investing marketing dollars in. In times like these, Direct-To- Consumer brands teach us that the secret sauce lies above all in embracing some old-fashioned ideas like respect, transparency, giving, connecting, community building and merging them with all the shiny, new technology that makes it easier to execute these genuine intentions. They teach us the value of using a simple ‘human’ filter, not a faceless corporate one to create responsive brand ecosystems that inspire and enable people to find and enjoy what they value.