The Direct-to-Consumer (D2C) strategy is fast becoming a popular route for manufacturers and CPG (Consumer Packaged Goods) brands to enter the market directly — instead of through a middle-man entity.
The benefits of going direct to consumer are many, but to name a few, going D2C eliminates the barrier between the producer and the consumer, giving the producer greater control over its brand, reputation, marketing, and sales tactics. Plus, it helps the producer directly engage, and therefore learn from, their customers.
Big name brands such as luggage manufacturer Away and office supplies manufacturer Quill have already taken the leap with D2C marketing and D2C selling campaigns, and we’re anticipating that more manufacturers will do the same in 2019 and beyond.
While the barriers to enter the fray as a startup D2C brand are relatively low, you have to remember that you are competing against retail giants like Amazon and Walmart who have already established a massive customer following.
This is why it is crucial for you to have a strategy in place that will help you become a distinguished brand and disrupt the status quo.
D2C, or Direct to Customer, is a low barrier-to-entry eCommerce strategy that allows manufacturers and CPG brands to sell directly to the consumer. It bypasses the conventional method of negotiating with a retailer or reseller to get your product on the market. In D2C, brands sell directly to the consumer through an online medium.
Going D2C has many advantages, with competitive pricing being a major benefactor for consumers. Other advantages include having direct contact with consumers to get a better understanding of them, and being able to freely experiment with new product releases and test them with a segment of your consumer-based to gain their feedback.
But going D2C is not easy. It is imperative that you have a D2C-specific strategy in place to be heard and noticed by your target market.
(Traditional retailer vs direct-to-consumer)
To make a mark in your industry, you need to stand out right from the very moment you launch your D2C brand. Here are 21 ways to help you get started.
Before you even decide to create a D2C brand, have a reason on why you should enter the market in the first place. The reason why both Dollar Shave Club and Harry’s emerged was that the men’s cartridge razor market, which was dominated by Gillette, was far too expensive, averaging around $6 a blade.
The two D2C brands saw this as an opportunity to disrupt this market and offer a more affordable solution. Harry’s sell their cartridge blades at $1.87 a piece and customer have the option to either go for a standard $8 rubber handle or the $20 metal finish one.
In addition to affordability, focus your product and branding messages to resolve a common consumer pain points.
Bonobos, founded in 2007, is one of the oldest D2C brands. When they launched, they set out to achieve a very simple objective: to make better pants for men.
Prior to launching Bonobos, they discovered two things:
Further research led to findings that European manufactured pants were often too high-rise and were tight around the thigh area, and American manufactured pants were quite baggy.
Bonobos developed a pair of pants that fit in between the two extremes. When they initially promoted their item, the early adopters of the product shared extremely positive reviews, spurring the growth of the company. Bonobos would go on to expand their range to include formal wear, swimwear, shirts, and other accessories.
Many successful D2C brands like Dollar Shave Club, Honest Company, and Harry’s offer their customers a cancel-any-time subscription package.
The subscription model helps to save your consumers time, effort, and money. And it also helps you achieve a better customer retention rate.
On reviewing Dollar Shave Club’s retention number, we can see that after 12 months, approximately 50 percent of customers still use the service. And after 2 years, they had retained 25 percent of all signups.
The recurring revenue along with high customer retention led to rapid exponential growth.
When bed-in-a-box D2C brand Casper launched in 2014, they observed that the process of buying a mattress was an “awful consumer experience”. The prices were too high, sales staff were extremely pushy, and the different options that were available to them led to a lot of confusion.
Casper’s approach to the mattress industry was unique. They only offered one model of mattress, at an affordable price, and the product was delivered straight to your door.
By eliminating all the unnecessary choices, Casper went on to achieve $1 million in sales after the first month, and $100 million within the first two years.
During their research, Casper found the majority of customers preferred either a foam mattress or a latex mattress. When combined, Casper produced a solid all-round mattress. Although some of their consumers did prefer to have air or innerspring, losing out on those potential customers meant focusing their efforts on selling a single mattress which was preferred by the majority.
Emily Weiss started her blog Into the Gloss back in 2010 while she was interning at Vogue. She wanted to engage with celebrities and moguls to talk about their make up rituals. As the blog grew in popularity, hitting 15 million unique views every month, Weiss decided to take the leap and launch her own brand, Glossier, in 2014.
On launching Glossier, Weiss’s blog has proven to become an invaluable asset in helping Glossier grow its year-on-year revenue by 600 percent.
The blog also provided a platform to engage with Glossier’s target market to gain new product ideas and consumer insights. When Glossier posted “What’s your dream face wash?”, it garnered over 400+ comments, which was then categorized by ingredients and concepts.
Another example of the content-first approach is Tiege Hanley, created by Vlogger Aaron Marino, founder of the Alpha M Youtube channel. In promoting his product, he created a series of lifestyle and fashion videos to demonstrate (and promote) how the product can be utilized daily.
Adopted by brands like Casper and Bonobos, having a free returns policy provides consumers with reassurance and confidence to purchase from you. Many D2C brands operate and interact with their consumers online, and some consumers will hesitate to buy a product from a brand they are not familiar with — that’s why having this kind of policy helps.
Learn more about how to make your returns policy to the next level.
Actress Jessica Alba used her 11 million followers on Instagram to launch household brand The Honest Company back in 2011. In the space of a year of launching, the company hit $10 million in revenue, and by 2014, it reached $150 million.
While acknowledging the fact that not everyone is a celebrity entrepreneur — though it would help — you can certainly make use of celebrity influencers to help promote your product.
In promoting Casper’s mattress, they reached out to various Instagram and Twitter influencers, as well as leveraging Hollywood connections. Indeed utilizing influencers does involve a cost, but it certainly does pay dividend when the influencer is authentically active on social media.
When Kylie Jenner shared a picture of her new Casper mattress in March 2015, it generated more than 800,000+ likes and it immediately doubled Casper’s sales.
(You don’t have to hire Kylie Jenner-level influencers, of course)
Prior to launching to Harry’s, they were able to get 100,000 email addresses of potential customers in just one week. How did they manage to achieve that? By encouraging those customers who signed up to get their friends and family to sign up, and the more people they could invite, the more prizes they could get:
The Dollar Shave Club created a notoriously famous viral video that has been viewed over 25 million times. If you haven’t seen it, then I highly recommend that you do (see it below)!
The above video cost $4,500 to make and features CEO Michael Dubin delivering a speech in a sarcastic and nonchalant manner. When the video was published on March 6, 2012, at 6.30 am, Dollar Shave Club’s website had crashed, but when the site finally came back online, there were 12,000 orders waiting to be processed.
Even though the success of the video was sudden, a lot of deliberate steps were taken to ensure the video did go viral:
All of these steps helped to amplify the video’s reach. Plus, the video is hilarious.
Optical eyewear D2C brand Warby Parker set out to disrupt the $5 billion eye exam market.
When they were founded in 2010, they shipped 5 pairs of glasses directly to their consumers for them to try. They then went on to develop an augmented reality app for virtual try-on, in an effort to make the home try-on business model redundant.
But it wasn’t until 2017 when Warby Parker made their biggest move to disrupt the optical eyewear market. The company saw that customers typically spent $50 for an eye test at an optician, and at that same optician, they bought a pair of glasses as well. According to the Fast Company, optometrist get 59 percent of their revenue from selling Luxxotica-made frames.
To disrupt this widely accepted trend, Warby Parker knew they couldn’t ask their consumers to ask their opticians for a prescription and then walk out so that they can upload their details to a startup’s website since it is unnatural and quite rude.
That’s why they developed the Prescription Check app that enabled consumers to examine their prescription and pupillary distance via the app. The data from the app is sent to a contracted optometrist who assesses the results. It is a fast, convenient, and easy way to get your prescription without having to go the opticians.
If you don’t have the budget to use celebrity influencer, then you can reach out to micro influencers in your niche. Glossier engaged with their 800,000 strong community on Instagram to promote their brand.
They achieved this by allowing customers to create their own customizable product that encouraged them to create content around and share.
Those who produced high-quality and consistent Glossier-related content were invited to become brand ambassadors.
While viral videos can be quite powerful, achieving viral status is not necessarily guaranteed. But Warby Parker took a different approach. They asked their consumers to make content by posting pictures and videos on social media of them trialing their home try-on kit.
The company found that those who shared content were 50 percent more likely to make a purchase, so this strategy was focused on those who had an inherent desire to share photos. but rather than asking feedback from friends and family, Warby Parker asked their consumers to go a step further and share with the wider world.
As a result, there are over 56,500 YouTube videos that appear under the search term “Warby Parker Try On”. Of course, the top results are influencers who have been sponsored by Warby Parker.
(Warby Parker Try-On campaign is very unique)
Search Engine Optimization is – still – a sure fire way of getting widespread recognition and generating web traffic.
In dominating the search engine rankings in the mattress industry, Casper created multiple landing pages for every conceivable search term that people will use to buy a mattress. They also pumped a lot of money into Adwords to rise above their competitors to achieve a massive chunk of the 550,000+ monthly Google searches for mattresses.
While this may be an expensive way of building traffic, it has undoubtedly been a powerful trump card for Casper.
Never underestimate the power of visual content like memes and infographics. If it is able to strike a chord with your audience, then you will establish a strong brand following.
Clothing brand, Everlane, prior to their launch, produced a single infographic that laid out the actual total cost to make a shirt, along with the markup added by the wholesaler and retailer. The infographic gained nearly 20,000 notes on Tumblr and some controversial comments from individuals in the fashion and beauty sector.
(Everlane’s pre-launch infographic)
Everlane followed this up by posting the infographic and reaction on Facebook. Business Insiders reports that by combining all the social media campaigns to promote infographic helped Everlane gain 200,000 organic users.
(The pre-launch infographic worked like a magic for Everlane)
When Everlane eventually launched after their viral infographic campaign, they sold out their first product — a $15 t-shirt.
In addition to customer acquisition, it is also essential to maintain strong customer relationships throughout the customer journey, this includes after sales.
In observing the growth of Zappos, Bonobos founder Andy Dunn realized that their growth had very little to do with the products they sold, and more with delivering an excellent service.
Bonobos developed a culture of ultra-responsive customer support that delivered:
Bonobos saw their direct traffic rate increase by 53.5 percent — which is an industry best, and the company also won the Multichannel Merchant’s Customer Experience Leader award in 2015 and 2016.
Meal replacement brand Soylent became actively involved in a Reddit forum that emerged soon after the product was launched.
Soylent was born after founder and CEO Rob Rhinehart posted a blog entitled “How I Stopped Eating Food” where he shared a meal replacement program that he had developed. In this post, he listed all the ingredients and the method. When the Soylent subreddit emerged, it became a community for experience Soylent mentors to discuss ingredients, recipes, and dosages. The Soylent brand itself became heavily involved in the community by joining discussions and conducting AMAs (Ask Me Anything).
Soylent became more than a product, it became an idea. The community became so big that it attracted a $20 million investment from Reddit user a16z.
In addition to their SEO campaign, Casper also utilized Facebook Ads as part of their digital marketing strategy. Facebook ads have the ability to target and retarget a specific demographic. And similar to Casper’s SEO campaign, they also ran multiple campaigns to target as many demographics as possible.
Plus, with over 30 million Facebook Business pages, many brands have taken advantage of Facebook’s eCommerce feature, with Shopify stating that 85 percent of orders from social media comes directly from Facebook.
A case study by Facebook showed how ASOS saw their orders triple and they also saw their outreach increase by 35 percent.
Over a billion people use Instagram, along with that, there are also more than 25 million business profiles.
In the last year or so, Instagram has developed a variety of paid advertising formats, from the “Shop Now” button introduced in 2015 to the “Swipe Up” feature found in stories and IGTV that directs the consumer straight to the site.
According to Global Media Insight, 60 percent of people prefer watching a video rather than reading text. Furthermore, most people tend to remember a video ads more than textual ads — 50 percent of viewers say they can recall an ad, so if even they don’t engage with the ad, they’ll still remember.
There is a number of options for delivering YouTube ads, there’s skippable ads that allows a user to skip the ad after 5 seconds, non-skippable ads which are videos less than 30 seconds or bumper ads which are non-skippable and are up to 6 seconds in length.
Plus, YouTube lets you control your spending and allow you to stick to a budget.
Last year, Amazon invited CPG brands to a three-day event in Seattle to promote their Amazon fulfillment center. Selling D2C requires logistics, storage, and fulfillment capabilities.
For most D2C brands, this will involve having to incur a high capital cost. But by utilizing a fulfillment company such as Amazon, you gain access to their logistics and distribution facilities in exchange for the percentage of your sale or for a fixed monthly price.
Plus, since Amazon has a huge number of monthly visitors, placing your product on their platform will give your brand excellent exposure.
The way consumers are making their purchases online is changing. With the advent of voice assistant devices, OC&C Strategy Consultants have predicted that voice shopping will grow to more than $40 billion in the year 2022, which is up from the $2 billion expenditure that we see today.
By investing in a headless CMS — like Core dna — you will have the capabilities of reaching out and engage with your consumers on various devices and channels as well as taking payments from them as well. Headless commerce holds many advantages over traditional commerce platforms like Magento.
Headless commerce is more flexible and adaptable to the ever-changing consumer trends of the IoT-era and is able to provide a better and more personalized experience for your consumers.
A vast majority of the strategies listed above will not work without a ship shape digital experience. Core dna has helped D2C brands like Tivoli turn into a global company with sales and distribution in more than 50 countries.
Tivoli’s D2C site was originally built on Magento and required a dedicated team to manage and maintain their site. Their Magento site relied on a lot of plugins and heavy customization, and the solution was both unstable and unscalable.
On moving to Core dna, they saw their conversion rate increase to over 30 percent, and they also freed up their resources to concentrate on marketing and running campaigns.