Cutting out the middleman: How to build a direct-to-consumer brand
If there’s one buzz term that will come to define business in 2019 more than any other, it’s “radical transparency”. With the rise of social media comes the rise of accountability and the increasing power of the consumer, who no longer wants unsustainable, mass-produced products at elevated price points.
As a result, direct-to-consumer brands have begun to emerge from the woodwork, offering consumers the kinds of goods and services they can feel good about, and integrating customer feedback into everything they do.
So, what is a direct-to-consumer brand? If the jargon is making you queasy (jargon has a tendency to do that), rest easy: You actually probably already know a lot about DTC brands and marketing, you just haven’t realised it yet. Ever bought a product from Everlane? Left a comment on Glossier’s Instagram account? Used Warby Parker’s at-home try-on service? Then you’ve supported a DTC brand.
In a nutshell, DTC brands have no third-party retailers or wholesalers, they often don’t utilise traditional retail methods (like bricks-and-mortar stores), they interact directly with their customers on social media and they have loyal brand communities.
From a business perspective, the DTC approach has plenty of benefits. For starters, the collection of data and customer feedback is simple, immediate and unfettered, allowing for real-time improvement and fast response times to consumer queries. It’s also a freeing approach for those who’d prefer not to be beholden to the traditional retail cycle of seasonal sales and markdowns and, of course, those pesky retail markups.
"By the time clothes are sold to customers, they are marked up as much as 10 to 12 times,” Corey Epstein, co-founder and creative director of DTC denim brand DSTLD, explained to Racked.com.
“Then they go through this very vicious sales cycle. When you go buy a car for $50,000, if you saw it on sale for 30% off the next week, you'd freak out. In clothing, it's accepted. If you want something first, you're going to pay this ridiculous markup. Or you can wait to pick off the racks what's left over at more fair pricing. That's just not very customer-friendly."
Jennifer Rubio is the co-founder, President and Chief Brand Officer of luggage brand Away. She decided to start her thriving company as a result of a personal pain point she encountered during a stressful travel experience - having her suitcase break on her in the middle of Zurich airport, with none of her friends able to recommend a suitable replacement. Since having the inkling of an idea for the brand, she’s been able to grow Away far beyond that stressful travel moment and into a company that exceeded $12 million USD in sales in its first year
Speaking to Business of Fashion, Rubio (who previously worked at DTC eyewear company Warby Parker) shared her tips for founding a DTC brand in an online education course. Below, we’ve summarised her advice into four broad brush strokes that should help you get started. And if you want to go further, we highly recommend tapping into the full course here.
Step 1: Find the whitespace
Where’s the gap in the market that needs filling? To find it, you must undertake market research, which can range from simply shopping for the product yourself, to attending trade shows, to holding focus groups or conducting surveys.
“It’s really important to know what else is being offered out there so that you can decide if you’re actually offering something that doesn’t exist yet,” Rubio explained.
Market research has multiple stages, beginning with defining the problem you’re trying to solve and your end objective, to developing a research plan, collecting the information, analysing the information and, finally, presenting the findings.
Need help? Here are some great market research tools to try according to BOF...
JWT intelligence: Identifies global shifts in the zeitgeist.
Stylus: Global consumer trends.
Trend Hunter: Consumer, travel, design and fashion specific trends.
WGSN: Macro consumer trends across beauty, fashion and lifestyle.
The Future Lab: Top level business and consumer trends, especially in the luxury space.
Step 2: Build your brand or product
Now it’s time to use your research to start informing your new project. Start by profiling your target consumer and identifying their pain points. Choose your brand positioning (are you luxury or mass market?) which will then help you determine your competitors and pricing guide. Ideally, you’ll also identify the things you can do in-house and the things you have to outsource (manufacturing, design, marketing, PR etc).
This is also the perfect time to outline your brand’s DNA and write your mission statement by asking yourself what makes your brand different from its competitors. What do you stand for and how do you want to make your consumers feel?
“It’s so important to have a north star and a true vision for the product you’re creating - what are the things you’re willing to bend on and what things are total deal breakers?” Rubio said.
This mission statement is what you will use to attract investors. Need help? This Forbes article has four great questions you can answer to help define your mission statement.
Step 3: Brand launch
By now, you should have built a brand or product story to share with your current and potential stakeholders and developed a strong go-to market strategy (this blog post should help with that). After all, you’ve only got one chance to launch your brand and do it well. Prior to launch, meet one-on-one with media in desksides and coffee catch-ups so they understand your journey, consider getting external PR assistance for the launch period, start building long-term relationships with on-brand influencers and set objectives for your first few months.
While advertising is still an option for new brands, there’s a shift toward PR and social media as the main drivers of sales. Use this to your advantage by offering exclusive discounts, launch offers, social media sales, vouchers and incentives to follow your brand on Instagram at the time of launch.
Step 4: Brand growth
Now that your brand is out there and (hopefully) succeeding by hitting the targets you set, you need to continue to grow it. This means building upon your existing community of customers and social media followers, finding new investors to continue to raise capital, and branching out beyond sales and into experiential events, collaborations with other brands or influencers, and product range extensions. From here, it’s all about ongoing innovation and sustainable growth - never get too comfortable or too settled in one way of doing things. What’s that saying? Certainty is the death of creativity. Being a little flexible and a little reactive is a good thing.
To conclude: your mission, should you choose to accept it, is to cut out the middle man, take your brilliant idea direct to the masses, and conquer the market one sale at a time. Best of luck!