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PMG Digital Made for Humans

Direct-To-Consumer Disrupts-The-Competition

7 MINUTE READ | April 12, 2019

Direct-To-Consumer Disrupts-The-Competition

To say that direct-to-consumer brands are the next big thing is, to some, like saying iPhones are the next big thing — the first (hypothetical, exaggerated, and made up for the purpose of this blog) response is: “Duh. I’ve been using my Quip toothbrush since 2014 and I took a Ritual vitamin this morning just like every other morning, right before I put on my Allbirds shoes.” To others, the term is foreign, the brands are foreign, and the concept of buying underwear from anywhere other than Wal-Mart or a department store seems odd — and buying vitamins or beer? Forget about it!

But here’s the thing: the second group is shrinkingfast.

From October 2017 to October 2018 the amount of time spent browsing on popular direct-to-consumer retail sites nearly doubled, and it wasn’t from two to four. The number grew from 46 million minutes to 82 million minutes in just one year, and this is just on twenty-five direct-to-consumer retail sites. Amplify that stat by the article that I happened upon just a few minutes ago, “Skubana’s Top 133 Coolest Direct-to-Consumer Brands,” then amplify that by all the other guys out there that, sadly, missed this fun list. It’s no wonder that there seems to be a new brand popping up every time I scroll through my Instagram feed — the potential traffic grab is enormous and ripe for the picking.

If there’s one thing that successful direct-to-consumer brands are good at, it’s disruption — namely, disrupting existing product categories. They do this in a number of ways, usually taking an existing product and improving it in a unique way or creating an entirely new sub-category of products and creating demand where there once was none. Companies like Blue Apron and Freshly are a prominent example of how you can disrupt a (seemingly) boring, mundane, and unchanging part of someone’s traditional routine — in this instance, shopping and cooking.

By ‘solving a problem’ that many people may or may not have even realized they had, these companies have managed to disrupt both grocery shopping (delivery is so much easier) as well as the restaurant industry, by making cooking at home “cool again.” By presenting themselves as an easier alternative to grocery shopping/traditional cooking, a healthier alternative to fast food, and a more personal/fun alternative to your typical ‘eating out’ experience, the company was able to grab revenue from multiple areas and create an entirely new category of business.

Simplicity


As a lover of good design, researching this topic has been so enjoyable simply because of the amazing and unique design that each website offers. The luxury and simplicity of each site is a welcome break for the standard avid online consumer that is used to the often-chaotic Amazon webpages, in addition to being a clear winner in terms of user experience when compared to ‘mainstream’ competitors’ websites.

The user-friendly Quip homepage shines next to the Sonicare homepage, which looks something like your average mid-size dentist office webpage.

Simplicity as an effective and attractive feature goes beyond the design of the website and advertising presence, but also (typically) extends to the product offering itself. Want a Quip toothbrush? Step 1: Pick a plastic or metal handle in the color you want (they’re very clear that the price difference between plastic and metal is for the difference in the handle material only, everything else is the same). Step 2: Check the refill plan box if you want to add some more convenience to the toothbrushing process. Step 3: Check out. Now, you want a Sonicare toothbrush? Step 1: Try and sort your way through all 275 of their ‘supported products’ and a cluttered interface. Step 2: Battle off the multiple pop-ups asking you to subscribe to an email list or rate your website experience (1 out of 10, thank you very much). Step 3: Leave the site because you know that you deserve a better experience than this.

Beyond The Internet


Between the determination of these scrappy direct-to-consumer brands and the desire from large corporations to capitalize on the traffic that is flocking to these sites, several opportunities have been born. At the forefront of these deals is Target’s. The company is reportedly seeking out million-dollar deals with multiple direct-to-consumer brands (it’s already selling Quip, Casper, Harry’s, Barkbox, and Native products).

Large companies like Target are typically offering cash infusions to help grow the business along with shelf space for the products in-store. The clear trade-off here is a certain degree of sales cannibalization, but brands seem to be happy to meet consumers wherever they shop in the hopes of spreading more awareness and gaining new customers at a higher rate than that at which they cannibalize sales of opportunity made to already-aware, internet-savvy purchasers. The case for brick-and-mortar retail offerings is also helped by the fact that a large number of these brands offer subscription services that will pay off in far greater amounts than the initial offering purchase over the long-term.

Advertising


As Amazon, traditional retailers, and a shmorgishborg of other direct-to-consumer start-ups fight for prominence amongst themselves, how and where these brands message themselves to the public is paramount to their success – and they’ve gotten pretty good at it.

Podcasts are a clearly popular advertising space for these DTC companies (as an avid Crime Junkie listener who owns a Quip toothbrush, I can attest to this first-hand). The logic is clean-cut here, podcasts are a relatively new, popular internet medium mostly used by younger adult audiences who are more likely to be online-savvy but still have some amount of purchasing power. The podcast landscape has another advantage/similarity to these brands — specificity.

Trying to sell a home alarm system? Companies can advertise to My Favorite Murder or Crime Junkie listeners who have just listened to the grisly details of a true crime tale and are feeling motivated to add some extra security to their home. Selling some personalized vitamins or health supplements? Try putting the word out to the fitness fans listening over on the Mind Pump podcast.

The smooth, simplistic aesthetics of these brands carry over almost seamlessly from the beautifully designed websites to the visually-centered world of social media apps like Instagram, allowing for these brands to further capitalize on their investment into great design. Unique targeting tools offered by these social media platforms are also incredibly useful to ensure that messaging from these niche companies is delivered to the proper audience based on their self-offered interests as represented on their Instagram, Facebook, etc. profiles.

Working With Agencies


Direct-to-consumer brands have brought about some interesting changes to their agreements with their agencies. Certain facets of their agreements with large retailers have made their way into agency agreements, such as having the agency invest or take a degree of ownership in the business or defining strict and specific KPI goals for a certain campaign effort or length of time. These types of agreements go beyond standard deals to ensure that the interests of the brands and the agency are 100% aligned — a factor that is particularly important to lock down when direct-to-consumer brands are in their start-up infancy, and when the confidence in this aligned interest is lacking, DTC brands are often quick to go in-house.

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They’ve changed the way we brush our teeth, the way we order groceries, the way we pick out our outfits, and are even changing up the bicycle-purchasing game. The bottom line — direct-to-consumer brands are here to stay…and innovate, and disrupt, and are more than likely coming to a product category near you.


Posted by Blake Lucas