In a consumer world that has become increasingly digitally-focused, direct-to-consumer brands are leading the pack. Brands like Chewy, Casper, and Hello Fresh are great case studies in what it means to reach those who want to purchase from you directly. So what can we learn from D2C brands? Turns out a lot.
What does D2C mean?
D2C is shorthand for direct-to-consumer. When a brand is D2C, its model is a “direct transaction between manufacturer and buyer, often enabled through mobile or digital channels.” This cuts out the middleman and allows brands to reach audiences from the comfort of their phones and homes. The D2C model is also relatively new to the retail scene, making its debut in the mid-2010s. But it’s grown exponentially. By 2021, 14% of total retail sales in the U.S. are predicted to come from e-commerce channels.
If you’re marketing for a D2C brand, you’re probably “mission-driven” versus solely product-driven. D2C brands tend to focus their time and efforts on winning over a particular audience, like Gen-Zers. Versus legacy brands that can widen the scope of their reach somewhat. And, as most of these brands rely on monthly subscriptions, brand loyalty is everything.
As for current trends, there are a few notable moves in the category for 2020 and beyond.
- Subscription products: As we mentioned, many D2C brands rely on monthly subscriptions. With most of us at home for March and April, the consumer demand for these types of services only increased. Even brands that did not historically offer a subscription-based product began to, either as their primary business model or as an extra offering.
- Traditional retail making the move: Traditional retailers are starting to see the benefits of D2C (hint, hint if you’re in this category). These brands are now beginning to offer their in-house versions of D2C products, such as Target’s Good & Gather line. Another power move trend? Legacy retailers are acquiring smaller direct-to-consumer companies.
- Creating new categories: Those already in the D2C market keep things fresh by moving into new categories that might be previously untapped. An example of this being the brand Away which rebranded itself from a luggage brand to a travel brand to allow for product and market growth. This “product diversification” allows direct-to-consumer brands to reach new niche markets.
To become a successful D2C brand and break through the noise takes a bit of work. Following current trends (and staying one step ahead) might be a good place for your brand to start. Besides that, D2C brands should:
When you’re constantly trend-surfing, you have an inherent nimbleness. Nimble brands, as a rule, are innovative, take risks, and are flexible. Whereas legacy brands don’t have agility in their supply chains or even their marketing reach, D2C brands can pivot when they need to. After all, “they need to test new media formats, messaging and audience targeting quickly so they can pivot toward what is working.”
Create a strong brand identity
We mentioned how D2C brands are mission-driven before. That means they have time (and the motivation) to secure their audience’s loyalty and work on their brand identity. Many of the most popular D2C brands have unique brand identities, quirky voices, and loyal consumers. To do this, focus on your brand story, engage your audience authentically, and become a recognizable piece of mainstream culture.
Direct-to-consumer brands rely on digital outlets to reach their audiences and get their message across. Unlike legacy brands that often have a brick and mortar, D2C brands are typically online-only. As such, they take advantage of their website, app, and social channels to recruit new customers. This direct relationship with consumers means “fans often become emotionally invested in brands that listen to their feedback and create personalized experiences for them.” If that wasn’t enough, 60% of consumers make purchases via social media. So more time on mobile has some big paybacks.
Focus on consumer relationships
Your customer is everything in D2C. When you “build your business on the relationship with the customer,” you are genuinely taking their wants and needs into account. In this brand model, nobody stands between you and your customer, so you have the opportunity to grow meaningful and lasting relationships. Keep in mind the customer journey––from the first click on your site or app to great customer service to a personalized message in each purchased box. Keep them coming back for more.
Case study: Chewy
Pet brands like Chewy offer an interesting look into the direct-to-consumer world. Recent statistics show that pet e-commerce grew by $3.4 billion versus the 317 million for legacy retail in the same category. With Baby Boomers humanizing their pets and millennials opting for fur babies, this industry is one that will likely continue to grow. Which leaves an opportunity for D2C brands like Chewy.
Chewy takes advantage of two demographics: new parents who need the convenience of ordering their pet food, medicine, and toys directly to their door. And the growing category of younger generations who truly treat their pets as members of the family. They also set themselves apart early on with their unboxing ads and their unparalleled customer service team whose quick and thoughtful responses (like condolence cards when a pet passes) make them a trusted brand.
“By creating memorable experiences for its customers,” Chewy established itself as not only a convenient brand but one that consumers admire and do not want to give up.
We’ve said it before, but it’s worth mentioning again. D2C will be at the top of consumer’s minds in the post-COVID world. With the anxiety of leaving the house and being around others not likely to fade quickly, many will opt into more D2C brands that can deliver some assurance of safety.
Although there is some debate whether these newer direct-to-consumer companies can weather the storm, there is something to be said of their advantages—namely the lack of brick and mortar locations and increased ad spending. And certain categories that are more “essential” (like food and pet supplies) will continue to thrive. So those in other categories will have to step up their marketing approach to become essential to their audiences.
Other brand examples
Besides pet brands like Chewy, it’s worth mentioning other popular direct-to-consumer brands that have made a name for themselves via their product and marketing.
The D2C mattress company launched itself into popularity by disrupting the industry. Casper paid attention to trends, but also to what was missing in the market. They found an “analysis paralysis” from the overwhelming consumer options and simplified the customer experience. By not only delivering mattresses to their customer’s doors (because who likes to go to a mattress store?), they “focused on making the mattress that would be most comfortable for everyone.”
For those of us who needed a semblance of normalcy during the pandemic, Hello Fresh was a lifesaver. The D2C home meal delivery brand grew because they understood their audience, engaged with them to submit new recipes, and created a valuable and convenient product. From the convenience of an app, users can choose meals to feed themselves or their families for the week and then rate the recipes for future options. With this control, Hello Fresh took home meal delivery to the next level.
Dollar Shave Club
The Dollar Shave Club is an example of a D2C brand that a legacy brand acquired. In this case, it was Unilever. The shaving brand became valuable with its simple approach: provide quality and affordable shaving products directly to consumers with customizable shipment plans. In recent years, the company has expanded further into oral care with new brand Superba!, but continues to focus on consumer trends.
Direct-to-consumer brands are here to stay, especially in what will hopefully soon be a post-COVID world. Even if you do not have a D2C brand, there are things you can learn from them like a focus on your brand identity, mastering digital channels, and remaining nimble. And at Savy, we know all brands from D2C to legacy could use those skills in the coming months.