The Rise Of Direct-To-Consumer Brands

Your customers are looking for connection. They want to:

• Buy from brands who get them
• Feel their purchase is appreciated
• Support causes
• Have positive experiences
• Feel recognized

Direct-to-consumer brands can offer this (and much more) to their customers.

In this article we are going to explore what direct-to-consumer brands are, show two great examples of them in action, and explain what their rise means for the 2020s.

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What Are Direct-To-Consumer Brands?

Direct-to-consumer brands sell products through owned channels without the need for third-parties and middlemen.

These brands typically:

• Have a digital-first mentality
• Control product distribution
• Sell directly to the end-user
• Market using rich- and written-content
• Are built to maximize value to the customer
• Operate outside traditional sales channels

You will also find the most successful examples put a strong emphasis on brand messaging and seek to inspire brand loyalty.

For example:

Fabletics have built their brand around high-quality, body-positive, and affordable activewear. Specifically, they are well known for their range of stylish female leggings.

Credit: fabletics.com

Fabletics products are only available through their website and customers must be a part of their monthly membership program to place an order.

By maintaining control of these elements they can:

• Inspire brand loyalty through exclusivity
• Align prices with their target audience

A driving force behind the growing popularity of direct-to-consumer brands is the removal of anonymity from the buying process.

68% of customers switch brands because they feel the brand does not value their business; this is common in department stores, where the brand is removed from the purchasing process.

But, when a brand can directly connect with customers, they can:

• Control the customer experience
• Offer personalization
• Create smoother customer service processes

Direct-to-consumer brands are also often referred to as DNVBs — Digital Native Vertical Brands — because of their ability to scale vertically.

They can:

• Enter physical retail by opening stores and providing experiences
• Expand online retail through partnerships and collaborations

To better understand direct-to-consumer brands, and their ability to scale, let’s take a look at some in-depth examples.

How Direct-To-Consumer Brands Are Reshaping Retail

In this section, we are going to examine two footwear brands.

We will show you:

1. A digital-native brand that has successfully built a direct-to-consumer business
2. A traditional brand that has adopted direct-to-consumer principles

Hopefully, this will show you the versatility of this business model and how it is reshaping the world of retail.

Allbirds: Sustainable Shoes, Scalable Business

Allbirds are a sustainable footwear brand. They create comfortable merino wool sneakers that have a positive impact on the environment.

Credit: Allbirds.com

They are a pure direct-to-consumer brand. We can see this in everything they do, from their inception through to their current business model.

Allbirds:

• Launched on Kickstarter
• Used the funds to create their own website
• Maintain control of their product’s creation, distribution, marketing, and sales

Until recently, you could only purchase Allbirds’ shoes directly from their website:

Credit: Allbirds.com

As their brand has grown they have scaled their business into physical retail without needing to use third-party stores.

Customers can now enter a physical Allbirds store in locations like:

• Los Angeles
• New York
• London
• Beijing

They are still a digital native brand. The majority of purchases come through their website. But vertical scaling lets them increase their customer base without adopting a new business model.

It also means they can maintain (and control) their:

• Product quality
• Customer experience
• Pricing structure

As you will see later in this article, this blend of direct-to-consumer principles and brick-and-mortar retail can contribute dramatically to a brand’s success.

But what about already established brands who want to expand into this model?

Nike: Old School Brand, New School Approach

Nike is the world’s most valuable sportswear and apparel brand. And, they are determined to maintain that title:

Credit: Business Insider

One way they have achieved this title is by offering direct-to-consumer options; they took control of distribution by offering customers options such as:

• Online stores
• Nike ID
• Factory outlets
• Branded stores

But in the last few years, we have seen Nike take this to a much higher level.

The most noticeable shift has been in their approach to content marketing. They have invested a lot of time and money into creating end-to-end content for their customers.

For example:

The second shift is in their approach to products and services.

For example:

Nike recently launched their Adventure Club.

It is an online subscription service that provides parents with periodical deliveries of new children’s shoes.

Credit: Nike Adventure Club

They have solved the age-old problem of buying new footwear for your child every few months, with a new-age solution.

This forward-thinking approach helps Nike to remain competitive, and reconstruct their business model to provide the highest level of value to their customers.

But all of this begs an important question:

Why are direct-to-consumer brands on the rise, and what does it mean for the future of your business?

The Rise Of Direct-To-Consumer Brands: Why They Are On The Up (And What It Means For The 2020s)

The 2010s have built a strong platform for e-commerce and direct-to-consumer brands.

Thanks to platforms like Shopify, the direct-to-consumer model has become the go-to for anyone looking to enter the retail marketplace.

This comes at a time where brand switching is on the rise, and customers are actively looking for brands that “get them”:

• 33% of customers say they are actively searching for new brands (source: Nielsen)
• 61% of customers say they have switched brands once in the last 12 months

Customers are finding their new alternatives online. Why?

Because direct-to-consumer brands are able to craft and deliver a message with their target audience through mediums like:

• Social media ads
• Content marketing
• Native advertising

If Allbirds wants to reach a new potential customer, they are only a Facebook ad away:

This allows them to circumnavigate the traditional “gatekeeper” systems — from advertising executives to department store buyers — to make the customer a direct offer.

But we do need to mention that direct-to-consumer is not a retail Holy Grail.

There are potentially thousands of direct-to-consumer brands that fail each year. And, this business model does not fit all types of business.

For example:

Dollar Shave Club is a branding success story — and an inspiration for many of us — as they were able to craft a message that attracted men in their millions. But they are yet to turn a healthy profit for Unilever.

It is also hard to justify a digital-first model for household amenities like:

• Toilet paper
• Bath products
• Washing powder
• Condiments 

These lend themselves much better to an in-store experience.

The perfect marriage of this, it seems, is to have an online-first presence with tangible physical experiences. Once a brand hits its stride online, it should look to expand into the real world.

We can see real evidence of this in the success of pop-up stores and experiences. Giving customers a place to interact with the brand can breed a deeper connection.

In the 2020s, then, we will see a definite rise in direct-to-consumer businesses.

More traditional brands will adopt this type of model, and give themselves the ability to scale vertically. While online brands will look to create more tangible real-world experiences.

Direct To Consumer Brands In A Nutshell

Direct to consumer brands work with customers instead of third-parties.

They control distribution, marketing, customer service, and sales.

They focus on maximizing the value to the customer, and curating a brand identity that speaks directly to their sub-section of the market.

They have the ability to scale vertically: they can either expand in their online realm, or enter the world of bricks-and-mortar retail.

In fact, combining direct-to-consumer principles with real-world retail practices can be of great benefit to traditional and digital native brands.