The retail shopper has never been more powerful. Not only can they choose who they buy from, but they can also decide where they buy from — a traditional retail store, a third-party seller or the manufacturer.
The flexibility to purchase directly from the manufacturer has turned the shopping market on its head, and direct-to-consumer (D2C) brands are taking the shopping market by storm. According to eMarketer, 4 in 10 Internet users in the U.S. expect D2C brands to account for at least 40% of their purchases within the next 5 years.
As a result, the market has gradually shifted toward direct-to-consumer brands. The D2C business model helps eliminate intermediaries and reduce business costs and provides a cost savings to consumers, creating a win-win for everyone involved.
Several successful D2C companies have set the standard for new players, and they have one thing in common – innovative ideas with customer experience at the forefront of their strategy. These D2C pioneers have shown how that common theme can lead to breakout success.
Two of the top needs for CMOs in 2021 are marketing agility and meaningful customer relationships. Both of these rely on trustworthy customer data. In this eBook, we discuss how to plan and build a marketing technology (MarTech) stack to deliver these and other capabilities.
23andMe offers direct-to-consumer DNA tests that let customers view their ancestry based on their genetic data. Its detailed reports also allow customers to spot potential health risks and genetic diseases. The brand promotes itself by having customers share their stories and talk about how the products have helped them learn more about their health, their ancestry, and even relatives they didn’t know about.
What You Can Learn from 23andMe
The power of compelling storytelling sets 23andMe’s marketing strategy apart. The company encourages customers to become part of the brand storytelling process and uses their stories to market itself. That’s proven highly effective. The brand has carved its own niche by offering something unique in a saturated market.
Peloton earned a cult following thanks to a fitness experience that’s as good as any high-dollar spin studio membership, from the comfort of your own home. Through live, on-demand classes streamed directly to its fitness bikes, treadmills, and app, customers get personal training from top instructors without the health risk of small studios or the inconvenience of a commute. The Peloton Bike and Tread both offer Wi-Fi connectivity and a screen to stream live or recorded classes. And if a little friendly competition is something you look for in a gym environment, the leaderboards, badges, and challenges can help keep you motivated.
What You Can Learn from Peloton
Peloton has a retention rate of 92%, and some of its on-demand classes have tens of thousands of rides completed. This was made possible in part because of its distribution channels. In addition to its members-only online channel, it also partnered with hotel gyms and set up retail stores to offer trials. The company’s community strategy also fuels its cult-like following. Its staff closely monitors social groups and forums and reaches out to members who hit personal milestones, on or off the bike.
Fast fashion has become the norm since the late 20th century, but many customers still want a personal styling service. Most companies haven’t dared to try to take that business model online, but Stitch Fix has done just that through its AI-based experience. Powered by smart algorithms and data science, the brand offers a curated box of clothes based on style, budget and size. After its initial launch in 2011, it exploded in the U.S. online retail sector and put up an IPO in 2017 with an astonishing valuation of $1.6 billion.
What You Can Learn from Stitch Fix
Stitch Fix offers customers access to clothing chosen specifically for them by its proprietary AI, based on a “style quiz.” Thanks to this unique approach, the brand has created its own space in the overly populated retail sector. Even if you can’t afford your own algorithm, AI can help you create hyper-personalized experiences for your customers.
The health sector is one of the few industries that hadn’t managed to take full advantage of the Internet. Diagnosis and treatment typically involve face-to-face contact between medical professionals and patients, but Lemonaid has managed to bridge the gap between traditional medication and ecommerce. Lemonaid’s users connect with medical professionals via the app, and the company offers options for a broader range of medical problems than most of its telemedicine competitors.
What You Can Learn from Lemonaid
Lemonaid’s brand is built on trust, and by offering complete transparency to customers, it has earned credibility in the online healthcare sector. The pricing is also highly competitive and on par with traditional healthcare institution costs.
Glossier was inspired by Emily Weiss’ blog “Into the Gloss,” which helped identify a gap within the beauty industry. The brand was founded in 2014, and its novel business model involved customers in the product creation process through feedback. The brand sells skincare products targeted at Millennials through online channels. It offers a curated set of products through its monthly offerings, keeping its product lineup fresh. Its content creation practices and constant involvement with its online community have helped it grow over the past seven years.
What You Can Learn from Glossier
Glossier has re-established the importance of content creation and an innovative social strategy. With more than 2.7 million followers on Instagram, Glossier’s digital content and marketing strategy have turned it into one of the biggest beauty brands among Millennials.
BarkBox is a subscription service that sells toys, treats and chews for pets via a monthly delivery that takes into consideration your pet’s size, dietary preferences and how tough they are on their stuffed friends. A new theme is announced each month, and add-ons are available in case you want to add a specific item, like birthday surprises. The monthly curated subscription boxes evolve over time based on feedback. While customers don’t get to choose the theme of the products that are sent out, the brand ensures that all toys are safe and from the highest quality suppliers.
What You Can Learn from BarkBox
Barkbox strengthens its D2C model by connecting with its subscribers and encouraging engagement on social media. With happy customers sharing posts on Instagram and other platforms, BarkBox gets to market the brand while creating a sense of community.
Dollar Shave Club
Dollar Shave Club is arguably one of the most easily recognizable D2C brands, thanks to its influencer marketing. Despite being a much smaller business than the likes of Gillette and Schick, the company has managed to carve its own market space through a unique subscription model. One of its biggest marketing successes was a Father’s Day commercial that helped it connect with its demographic, the everyday man who shaves every day. Most beauty and healthcare products reflect unrealistic standards, but Dollar Shave Club shattered stereotypes and welcomed everyone to “join the club” through its viral ad titled “Manifique,” which featured “the magnificence of otherwise overlooked male body types, often the bodies of dads.”
What You Can Learn from Dollar Shave Club
Authenticity helped Dollar Shave Club make a name for itself amid heated competition. Unique advertising campaigns and partnerships with social media influencers have created a distinct brand identity. Most important, it made daily shaving affordable for its customers.
HelloFresh, known for its healthy, zero-waste deliveries, has earned a cult following. It offers multiple meal choices each week with customizable options. Subscribers can select their favorite meals, dietary preferences and number of servings and can skip weeks if they need to. The brand touts access to home-cooked meals with the convenience of traditional fast-food delivery. The meal kits are easy to prepare and eliminate the last-minute grocery run to pick up a specialty food item that is then likely to remain untouched in your fridge for months.
What You Can Learn from HelloFresh
HelloFresh’s zero-waste model caught a lot of attention, especially among health-conscious consumers who want to do their part for the planet. The brand invests heavily in research and collaborates with packaging solutions to reduce environmental impact.
Warby Parker was one of the first D2C pioneers to disrupt traditional retail businesses. While clothing solutions have been available online for years, few eyewear companies have attempted an ecommerce model. And quality eyewear has historically been expensive, thanks to the costly supply chain. Warby Parker broke down the traditional supply chains and started offering high-quality eyewear at affordable prices. With no licensing fees or middlemen, Warby Parker became a hit. It offers a customized experience in which customers can select multiple products for a try-on period before submitting their final order online. Shipping costs are included in the brand’s pricing policy, which removes concern over hidden costs and decreases abandonment.
What You Can Learn from Warby Parker
The customer experience team is the largest at the company, and the brand is built upon their work. Its efficient supply chain and customer-focused approach have helped it become the biggest D2C eyewear brand in the world.
Luxury linen and bedding were out of reach for the typical consumer until Brooklinen’s model of purchasing luxury-grade sheets and offering them at affordable prices via a D2C model. Through the right technologies and online marketing, the brand has been able to grow and prove that luxury living is accessible to anyone if businesses do it right. The company is growing fast, raising $50 million last year to expand internationally.
What You Can Learn from Brooklinen
By cutting out the middlemen and adopting a D2C approach, Brooklinen has made luxury products accessible to the average consumer. The company has invested heavily in its marketing channels to spread brand awareness and compete with traditional retailers.
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