Direct to consumer strategies are taking the business world by storm. This month’s Admap explores the implications of this structure and uncovers the lessons and success stories that you need to know.
Admap, WARC’s monthly flagship report, kick-starts 2019 with the spotlight on one of the most relevant and important topics in modern marketing: the evolution of direct-to-consumer brands.
Direct-to-consumer (DTC), the business model that sells products or a service direct to consumers, cutting out the need for the retailer as middleman, has been hugely disruptive to traditional CPG companies. It is shaking up retail and disrupting legacy companies in a vast array of categories such as skincare, eyewear, fashion, grooming, vitamins, food and pet care. While DTC brands have caused much disruption they have also undoubtedly raised the game in terms of customer-centricity and customer experience.
Admap presents seven articles from thought leaders in the UK and the US who share their knowledge and advice on this fascinating topic.
In our anchor piece, David Carr, strategy director, Digitas, explains how DTC brands discover niches of unmet-consumer needs and use digital technology to own the consumer relationship and rethink the product, marketing and sales models. He explores “the brutal dynamics of the DTC market” and in particular, puts the lens on DTC “mattress wars”.
Carr points out DTC has stratified into Products, Brands and Personalities, with significant implications for both ‘Big Traditional Brands’ and the nature of DTC itself. Built with an “anti-marketing aura” many DTC brands now adopt traditional marketing strategies such as building a O2O (offline-to-online) strategy and investing their ad budgets in traditional channels like TV. As Carr puts it, “New models age and old lessons become new”.
Lead strategist in building the DTC grooming brand Harry’s globally, Nazia Du Bois, founder, RICEBOWL STRATEGY, provides five essential tips and key recommendations on how to build a strong DTC brand. “The fact of the matter is DTC brand-building is still fundamentally brand-building, which means the standard principles all still apply - core values, coherent architecture, a cultural point of view, social responsibility, a distinctive tone of voice, great design, multivariate messaging”.
Danyl Bosomworth, director of marketing innovation at The Home Agency, discusses how DTC brands create brand salience through a persistent and purposeful brand experience, rather than pure ad-driven front of mind brand recollection. He looks at the common success factors of DTC brands, how to build a DTC buyer audience and explores how to build salience through superior value propositions, with examples from several brands.
Co-founder of Friction Free Shaving (FFS), Briar Keen, shares her own experience on how to build a successful DTC subscription business. Keen shares some of the most important lessons FFS have learned since it started its business three years ago. The company now has over 30,000 members and unlike many start-ups, is already profitable.
Greg Paull and Shufen Goh firm R3, a global consulting form, share insights from their research with leading global CMOs. The authors discuss the e-commerce digital growth matrix as well as the solutions and best practices required to enable traditional CPG companies to compete with more agile, direct-to-consumer competitors. It includes a case study on how Mattel, the toymaker, partnered with Alibaba for growth in China.
“DTC brands have had tremendous success in capturing consumer attention – and custom – across multiple categories” notes Nick Geoghegan, strategy director at eatbigfish. Based on interviews conducted with several DTC challenger brands such as Warby Parker and American Giant, Geoghegan outlines five things marketers can learn from direct-to-consumer challenger brands.
Last, but no means least, Rachel Tipograph and Carolann McKay of MikMak look at the rise of DTC brands and how legacy brands can adapt and compete in this challenging landscape.
The recent announcement that upmarket DTC slipper company Mahabis had called in the administrators will stir debate around whether the DTC business model is sustainable. What’s clear, though, is that DTC brands are starting to embrace traditional marketing strategies. And as e-commerce titan Amazon builds its own-label empire, across vast categories, it’s clear the disruptors now face disruption too.
It’s going to be an interesting year!
WARC subscribers can access a deck which summarises the expertise and advice from all our authors. And look out for a webinar later this month with Nick Geoghegan of eatbigfish.