A major study from the Interactive Advertising Bureau (IAB) has revealed the 250 direct-to-consumer brands – or DTCs – it says are the most disruptive in the retail marketplace.
The study, IAB 250 Direct Brands to Watch, highlights those DTC brands that are said to be “driving positive change in the US consumer economy”.
Companies listed include names that will already be familiar to many, such as Glossier and Warby Parker, but also newcomers, like Brandless, and Oars & Alps. What all these brands have in common, say the authors, is that they are “redefining relationships between brands and customers”.
“We are in the midst of a seismic change in business practices, enabled by the growth of digital media and driven by a new generation of digitally native entrepreneurs” said Randall Rothenberg, CEO of IAB.
“Collectively, the IAB 250 are models of the best practices and trends that are overturning and revolutionizing consumer markets in the US,” he added.
“They are setting the competitive standards by which the world’s largest incumbent brands are beginning to base their strategies and investments.”
The IAB’s study found disruptor brands across all sectors, and it identified seven characteristics of DTC brands that remain similar, no matter what category they compete in:
- Direct brands are centred around individual consumer relationships and the data they provide
- They are web-native
- They are socially closer to the consumer
- Direct brands are “maniacally focused” on consumer experience
- They use content as a differentiator
- They define content more broadly than incumbent brands and partners
- Their mission is central to their story
Nor are such brands confined to the online space, as many are extending into offline retail. “They are a bright spot in the dim outlook for retail,” the study noted.
“Creating physical experiences are a natural extension of these community-driven brands and are propelling new store growth with over 850 physical locations projected to be opened in the next 5 years.”
Other factors distinguishing the new breed of DTC brands are that nearly a quarter are led by women and almost 40% originate outside the traditional centres of digital disruption.
Sourced from IAB; additional content by WARC staff