How Growing Direct to Consumer Brands is not Just About ROI- It's About the Experience

Every person receiving Instagram and Facebook ads related to trendy denim, aesthetic home décor or coolest apparel are familiar with direct-to-consumer (DTC) brands. Throughout the decade, we’ve witnessed the evolving shopping pattern which moved towards prioritizing convenience for consumer rather than the retailers.

The idea of delivering products directly to the customers was initiated by startups like Casper, The Honest Company, Bonbons and Glossier. This first pivot was a huge motivation for several tech savvy brands and the growth of ecommerce just made it better for direct brand economy.

Do you know what DTC brands do?

Brands sold their products to consumers via retailers in the past. However, DTC brands focus on owning the control of user experience by eliminating the middleman viz. retailers and wholesalers from the equation. The DTC model has helped consumer brands in setting up their own sales channels to directly communicate with the consumers, launch products the way they want and use the customer data better.

Fig 1: Traditional Retail Vs DTC in a Nutshell

So, the customers who had to walk to a retail store to get their Nike Air Jordans in the past can now just visit the Nike online store, place their order and Netflix & Chill till their product arrives.

Today, 55% of consumers prefer to buy directly from brands rather than multi-brand retailers.

Happy Brands! Happier Customers!

Often DTC brand success is related to the ROI produced. However, there is much more that makes a DTC company successful. Let's check it out!

What brings better ROI for DTC business and brands?

Fig 2: 5 important steps to produce ROI for DTC brands

1. Care for your customers- In the world of commerce, maintaining relationships help businesses grow. The only way to keep your customers coming back is by living up to their expectations and providing a smooth shopping experience. DTC gives brands the freedom to directly connect with the consumers by offering them intriguing content and deals that suits them the best. By controlling aspects of consumer interactions without the middleman (retailers), it gets convenient to focus on customer loyalty and satisfaction.

2. Focusing on product launches- Brands speaking directly with customers about their products can make a major impact. Brands know better about their products than the retailers and they can make the most of multiple communication channels and the power of social media to launch their products with a big bang! It is necessary for brands to control their messaging and reach out to potential customers with ample information. Growing direct to customer brands can make it happen.

3. Understanding customer demographics- It becomes easier for brands to understand and analyze the customer and their purchase pattern. Depending on the analysis, segmentation of customers for personalized marketing becomes a cakewalk. A better way for connecting with the customers is emphasizing on the data related to demographics and purchase trends. As the retailer is out of equation, all this hard work is essential and fruitful when it comes to connecting with the customers and boost direct brand economy.

4. Better personalization- Today, personalization is the ultimate key to acquiring and retaining modern-day customers. DTC brands don’t treat their customers as any other buyer but an opportunity for growth. Utilizing customer data and historic purchase patters has helped in increase in ROI of DTC brands as they can offer specific products, discounts, recommendations and much more in several ways. Products and personalization on the go for happier customers!

5. Omnichannel Commerce- How well would retailers take an opportunity to market a specific brand? Maybe to a certain extent or maybe not. According to Harvard Business Review, 73% of all customers use multiple channels during their purchase journey. With the growth of ecommerce, better data analytics tools and online marketing, brands are moving towards omnichannel commerce. From omnichannel retail and analytics till omnichannel marketing, brands prioritize being visible to the customers on every digital channel to create everlasting impressions. This has tremendously helped in better sales and customer retention for DTC brands.
Check out the top Omnichannel ecommerce trends

The Covid Effect: As the traditional brick-and-mortar stores were shut for more than a year, most of the consumers started shopping online. Almost 150 million people were the ones who had never shopped virtually. This resulted in a whopping 10 years of ecommerce growth in simply 90 days during one of the world’s most remarkable disasters-the pandemic.

Fig 3: 10 years of ecommerce growth in 90 days at the height of the pandemic

Preparing for DTC in the post Covid world? Here’s an ebook for you.

Benefits of adapting DTC for brand growth and better ROI

1. You’re the boss-DTC brands have the full control of their brand image. You can develop and nurture your relationships over time and also experiment several ways and tools to do so.

2. Higher Customer Lifetime Value- Good management and branding leads to good profits and good profits lead to more investment in creating a better customer experience. Having the financial and creative bandwidth to focus more on customer experience keeps them coming back to shop again.

3. Faster time-to-market- Eliminating the middleman and taking charge tremendously reduces the time-to-market as brands manage the inventory, selling and warehouse themselves. It comes with a benefit of faster and free shipping that works as a major customer attraction.

4. Better margins, better profit- Cutting out the retailers or supply chain process helps in more savings that can be invested for better marketing. No retailers, wholesalers or marketplace results in no distributed cuts on the profit margins.

Success Story: Molson Coors Beverage Company got disrupted during the pandemic and affected the traditional distribution channels. It went DTC via its online store and grew sales by 188% month over month.

How to get innovative and boost sales with DTC?

Subscription Models: Did you know one in five US consumers bought a subscription box during first few months of the pandemic. Subscription models have been popular as a convenient option as consumers just need to “Subscribe it and forget it” rather than buy frequently. Shoppers signing up for subscription are reliable as they are committing to be your customer for a long period of time.

Social Commerce: Social Media is the new middleman in town. Consumers love shopping directly with brands and they also love to spend time on social media. With social networks and live shopping growing as the new trend these days, more and more brands are inclined towards it. A 2020 study says that 18% of online sales in 2020 were made on Facebook, Instagram and WhatsApp. Social media is full of popular influencers or media streams who believe in the ‘Paid Partnership’ trend and help brands reach niche audiences in a 30-60 second video. Less time, more engagement, major investment!

Fig 4: 8 ways to keep your DTC game strong

Some famous examples:

Casper: The first to start selling mattresses online in 2014, Casper has more than 200 rivals today. Their first step towards going DTC became largely successful as they gave customers up to 90 days to return their purchase if not satisfied. Customers loved the idea of trying mattresses in their homes and not the store. In just 2 years, Casper managed to pull a $100 million in sales. How did they do so? By focusing on customer pain points and using them as assets.

BarkBox: An exciting subscription box for dogs and their paw parents! Yes, this is how Bark Box created their DTC brand success story with relying on word-of-mouth marketing. How? Barkbox’s adopters happily posted the ‘Unboxing’ videos of the monthly subscription boxes curated with toys, treats and other products. For millennials treat their pets as kids, BarkBox successfully shipped more than 10 million boxes so far.

Bombas: Shark Tank fans would be aware of this name as Bombas is a DTC brand socks company with 97% of its business online. Featured on Shark Tank, this startup sold socks that were available in traditional retail stores. Migrating over a new ecommerce platform, Bombas generated $17.2 million in sales with 300% year-over-growth. Now they are expanding into new product lines such as shirts and slippers.

What does a DTC brand success story look like?

ROI is an essential factor but not the only factor for growth. Customer experience is the priority and as we’ve seen throughout the article, businesses who prioritized customer satisfaction are the real champions in their business.

Do you wish to grow your DTC brand beyond ROI?

We at Altudo are happy to help you create a success story that would help you win customers for life. Our team of experts work hard in delivering customer experience that creates loyal customers with the best set of tools and technology. Drop a Hi! at marketing@altudo.co and we’d love to help you out.