During the pandemic, in-person shopping has become a lot less appealing. This has greatly increased the demand for digital shopping and delivery. We thought this would be a good time for us to look at the lessons from Direct-To-Consumer (DTC) companies. Whether you’re a big company or a small one, there are many marketing lessons to learn from them.
DTC companies take a consumer product directly to the consumer without a middleman. By selling directly, the company can drive down costs because they don’t have to pay a middleman. Also, by developing a closer relationship with customers, they can better target and market to them.
Today, with e-commerce giants like Amazon selling everything from groceries to cars, DTC companies need to push the marketing envelope to do something really different. We are seeing companies like Warby Parker (glasses), Harry’s (razors), and Casper (mattresses) changing the game and selling products that weren’t traditionally sold online. Let’s see what we can learn.
- Develop a Solid Brand. DTC companies work best when they have a strong and recognizable brand. Warby Parker, Harry’s, and Casper have made their names ubiquitous through ubiquitous, simple advertising on podcasts, subway cars, and digital ads. One of the early DTC brands, Dollar Shave Club, may have done it best. They use videos to show how buying great blades, at a low price, from an awesomely fun and irreverent company. Take a look at their wonderfully funny Fathers’ Day ads.
- Design for Convenience. Many of the most successful DTC companies help customers buy things that are annoying to purchase. Razor blades are stored behind plastic guards at the drug store so Harry’s and Dollar Shave Club will make it easy. Casper will ship you a mattress because you want it delivered anyway. And MeUndies knows that no one really enjoys shopping for underwear, especially in public.
- Target Big Boring Industries. While the first impulse is to look for the fastest-growing, attractive new markets, the most successful DTC companies look at big, boring industries. Warby Parker started by seeing the massive consolidation of the eyeglass market, with just a few large vendors owning the vast majority of sales. This allowed them to innovate with at home trials, sending you five pairs to try on for five days, and virtual try on sessions to see how you’d look in your new frames online.
- Build a Moat. If a market is worth entering, you won’t be the only one there. In order to make a profit, companies need to be able to differentiate themselves. For example, Harry’s wanted to sell a better razor blades at a cheaper price, razors that competed with Gilette. So they bought one of the top razor blade factories in the world that has been making doubled bladed razoers since 1920. Finding the factory wasn’t easy. It’s located in a small German village Eisfeld which only has 5600 people.
- Use Platforms Wisely. The whole point of DTC is to remove the middlemen; however, there’s a new middleman that’s arisen in platforms. Using Google Ads or Facebook allows you to get your company out there and spread your message to the masses, but these platforms are a different type of middleman, separating the business from their customers. These platforms are extremely powerful and effective but realize that you will lose some transparency and connection.
- Make Sure You Have a Profitable Value Proposition. When you don’t have a moat, things can get difficult. Look at the failed company Brandless. The company was founded on the premise of “better for you” essential products at lower-than-name-brand prices. For a while, the company was impressive. They sold everything for $3. Softbank invested $240M. But they were competing in a market dominated by Amazon and Walmart. After 2.5 years, the company shut down because they couldn’t manage to turn a profit.
DTC companies highlight some key lessons for brands big and small. They show how marketing and advertising these days requires lots of trial and error and the ability to nimbly position your advertising placement. Midas can partner with you to chart a new path forward. Working with Midas can help you find new and innovative ideas and provide incremental value through creative investment approaches.