Direct-to-consumer (D2C or DTC) brands are shaking up the retail world. In 2020, U.S. D2C e-commerce sales reached over $111.5 billion. In 2021, D2C online sales are projected to top $129 billion.1 With so many dollars in play, it’s no wonder that traditional brands such as Nike, L’Oreal and PepsiCo are all entering the D2C game.
Operating under a D2C business model typically means a company maintains total control over its sales process. By cutting out the middle man, D2C brands are better able to engage with consumers, build loyalty and, in some cases, save money. However, going D2C is easier said than done. This business model requires deep knowledge of consumer habits and preferences – both when it comes to shaping the product and marketing it.
In this article, we will delve into 5 examples of successful D2C brands and what you can learn from them.
No one likes buying mattresses. From lying down on mattresses in front of strangers at a store, to scheduling a delivery or hauling a heavy mattress up multiple flights of stairs, many people find the mattress buying process a hassle. In 2014, a D2C start-up called Casper entered the scene to make the mattress purchasing process more convenient. With Caspar, customers order a mattress that gets delivered in a box, making it easy to maneuver. Caspar also offers free returns and mattress pick-up after 100 days if customers don’t enjoy the mattress.
The takeaway: Find out what the biggest challenges your customers are facing are and make sure your product or business model solves it. This sounds like a given – but it’s an oft overlooked step. Gathering data on your consumers’ needs is important. Demographic data, psychographic and purchasing data can help you understand what problems your audience is trying to solve and how you can help them solve it. Consumer surveys and market research are also important tactics to deploy to ensure you stay on track.
Dollar Shave Club is a subscription-based razor retailer, but it positions itself as a men’s lifestyle club.2 The product might be cost-effective shaving kits, but Dollar Shave Club is also selling men on the idea of a smarter, more successful way of living. Dollar Shave Club set itself apart from the pack when it launched in 2012, with a commercial that set the tone of its tongue-in-cheek approach to connecting with consumers.
The commercial invited the consumer to be in on the joke – creating the feeling that if the consumer did buy from the brand they would be joining the ranks of the “cool guy.”3 The strategy paid off, and in 2016 the company was bought by Unilever for a cool $1 billion.4
The takeaway: In order to learn how to speak the language of your target audience, you need to know what tone and approach will resonate with them. Creating personas is a good way to tackle this. Personas give marketers a base to build from that will ultimately provide value to their customers. Marketers are able to use the personas to craft messages that are personalized and will resonate with the intended segment. [Learn more about how to build personas.]
Membership models are hot. In 2015, membership-based subscription boxes generated $2.6 billion. Today, the market is worth around $15 billion.5 D2C underwear brand MeUndies knows its target audience enjoys this model. People who are more likely to maintain memberships to brands generally fall between 25 to 44 years old, and skew male.6 MeUndies has a robust podcast and influencer-heavy advertising strategy to attract this audience.
While the membership model is a great offering, it’s not for everyone. Unlike other membership-based companies, such as Savage X Fenty or Fabletics, MeUndies also serves up an online store for consumers who aren’t ready to commit to a subscription. If they buy something from the online store and enjoy it, MeUndies might earn themselves a new member.
The takeaway: While it’s harder for large and mid-sized companies to stay nimble, it pays off to listen to market trends. The more data you have to work with, the better insights you can glean to make smart decisions and keep up with changing consumer demands.
You can’t have a list of D2C strategies without mentioning eyewear company Warby Parker. Warby Parker was founded in 2010 and is estimated to be worth $3 billion in 2021. The company uses advanced, data-driven personalization techniques throughout the customer journey to help customers pick the pair of glasses that will work best for them. Warby Parker uses AI algorithms that personalize their website to where their customer is in their buying journey.
The eyewear brand also offers a virtual-reality “try-on” of their products that allows the customer to see if a particular pair of glasses would suit them before they purchase. Shoppers are also welcome to order 5 pairs of glasses to try on, in the convenience of their own home. The brand makes it easy for consumers to pick a pair and ship the rest back – no in-store experience required. This type of personalization and convenience has pushed Warby Parker to become one of the top names in D2C.
The takeaway: Use data to personalize communications with your audience. While you don’t need to go as far as providing a VR experience, the more you use data to customize and automate the consumer journey, the more it will pay off. [Learn more about personalization.]
Traditional B2C brands such as L’Oreal, PepsiCo and Nike are all exploring the D2C space. Beauty and cosmetics company L’Oreal wanted to engage consumers through digital channels as the COVID-19 pandemic forced shoppers online. The company decided the best way to do so would be to take the approach of a D2C company, namely, by using data to create a digital omnichannel strategy that would push consumers down the funnel.
L’Oreal knows the value of data. Shree Seshan, Director of IT Digital Data Management and Strategy, says, “Data is an organization’s most valuable asset, but it is frequently underutilized. Any business transformation must be built on a strong data foundation. That starts with accurate, accessible, complete and connected data.” She continues, “With the right data in place, organizations can make business decisions based on insights by applying analytics, artificial intelligence (AI) and machine learning (ML).”7
The takeaway: Even if you aren’t working at a traditional D2C company, now’s the time to get started thinking (and marketing) like a D2C company. Building a data-centric culture is the key to succeeding in this exciting space.
As Content Marketing Manager, Natasia is responsible for helping strategize, produce and execute Data Axle's content. With a passion for writing and an enthusiasm for data management and technology, Natasia creates content that is designed to deliver nuggets of wisdom to help brands and individuals elevate their data governance policies. A native New Yorker, when Natasia is not at work she can be found enjoying New York’s food scene, at one of NYC’s many museums, or at one of the city’s many parks with her two teacup yorkies.