Direct to consumer models are on a roll. From foodie options like HelloFresh, Graze and Pact Coffee to Birchbox and other curated beauty box subscriptions, entertainment providers such as Netflix, flowers, furniture and more, there are an ever-increasing number of D2C businesses vying for our attention. In the last couple of years things that we never previously thought much about – like mattresses and loo roll – have become front-of-mind, with new and desirable brands attached to them and an avid audience of mainly younger consumers.
In most cases it’s not about totally ‘new’ products, but a fresh way of presenting, curating and selling them to an audience. Going direct means gaining access to vast amounts of customer data, which in turn empowers brands to enhance and sometimes pivot their offering in response to rapidly changing needs.
The repeated lockdowns of 2020 and 2021 have boosted D2C sales as shelves emptied, shops closed and consumers scrabbled to stock up in case of having to self-isolate. Starved of the possibilities of going out, people have also been actively looking for ways to entertain and treat themselves at home, swapping salon visits for luxury beauty products and restaurants for high-end groceries. In the US alone, DTC sales increased by 24.3% in 2020.
In the last 12 months a multitude of brands both big and small have pivoted swiftly to D2C out of necessity, joining all the companies already out there who built their businesses purely on selling direct to the consumer. With some high street stores closing for good, easier deliveries through home working and online shopping habits becoming ingrained it’s a business model whose popularity looks like it’s here to stay.
But what are the guiding principles behind popular D2C products and services, and how can new entrants into the market ensure success long after COVID has retreated into the background of our lives?
Add value to ordinary products
As D2C customers are usually paying for delivery they want to feel like they’re getting something special. Even the most everyday products can have added value. Toilet rolls for example are usually – forgive the pun – bog-standard. Australian D2C brand Who gives a crap’s products arrive beautifully packaged in a variety of decorative patterned papers. This not only makes unboxing an exciting experience in itself, they’re also easily recognised. Spot them in a friend’s/workplace’s/restaurant bathroom and it becomes an indication that your host cares about the small things. The toilet rolls themselves are a quality product, made either of recycled fibres or from sustainably sourced bamboo. And the company gives back a hefty 50% of profits in order to build toilets and improve sanitation all over the world, as well as taking steps to make shipping carbon neutral. Every detail of the product, the brand and the delivery has been carefully thought through.
Provide an outstanding online experience
There’s no room for compromise, the customer experience online has to be exceptional. Customers want clear and simple journeys built around them, with bite-size content, choice – but not so much choice that it’s overwhelming – and easy-to-access support if they need it. The good news is that though today’s customers are demanding they are also happy to pay up to 16% more for a product or service that comes with a quality customer experience.
Take extra care over delivery
Delivery must be fast, consistent and high quality. Customers are paying for reliability; no-one’s going to come back for inadequate packaging, squashed boxes or after their weekend treat turns up on a Monday afternoon in a postal depot miles away. Any issues should be dealt with fast and with as little effort from the customer as possible.
Provide extraordinary access to niche products
The USP of curated beauty boxes like Birchbox, Lookfantastic and Glossybox is that they’re an easy way to try out premium and niche products in an affordable way. It’s never very tempting for customers to splash out £60 on a luxury face cream they’ve never used before. But by paying less than a third of that for a monthly subscription of trial-size products, customers can try out a range of different options, personalised to suit them and often at much smaller prices.
Beauty Pie works slightly differently, with customers paying for a ‘membership’ that then allows them to purchase products at a fraction of the ‘typical price’. The business manages this by buying direct from the factories supplying luxury beauty products.
Personalise the experience
People increasingly look for personalised experiences, with 80% of customers saying they are more likely to do business with a company whose products and services aren’t just one size fits all. According to McKinsey, getting a personalised experience that becomes more tailored as time goes on is the most important reason for customers to continue a curation subscription like the beauty boxes already mentioned.
Vitamin subscriptions are another great example of personalisation that resonates with consumers. Nourished offers something genuinely new, the world's first 3D-printed vitamin for gummy sweet lovers. Fill out an online quiz and Nourished will post a month's supply of edible supplement stacks to support immunity, gut health and energy levels. Vitl’s subscriptions help customers towards goals like better sleep quality, improved skin, hair and nails and better nutrition in pregnancy.
Social media is key to building an audience
Social media offers something traditional advertising can’t keep with, a direct way to connect with an audience. Successful D2C brands build communities that generate their own content, reaching millions more like-minded potential customers through Instagram and YouTube. Well-targeted Facebook and Twitter advertising can also prove effective. Pact Coffee offered particular groups of people their first 250g bag for just £1, getting the product into the hands of potential new customers efficiently and getting the opportunity to communicate their message: world-class coffee at a great price with a fair deal for farmers.
Discussion around the ‘death of influencer marketing’ is probably premature. 92% of people around the world still trust recommendations from people they know more than any other kind. D2C brands like Away luggage, Glossier and Warby Parker have built their empires through peer-to-peer and organic marketing. But brands should always remember that customers value authenticity and transparency and won’t react well if they think they are being played.
The D2C model offers a number of benefits to manufacturers and retailers: it offers a direct route to sales when consumers are shopping less in physical stores, reduces reliance on the likes of Amazon, increases profits by cutting out middlemen and allows more direct control over the brand. But by far the biggest advantage is customer loyalty and being able to make smart use of data in order to constantly improve the product offering and react to changes in the market.
For SMEs starting down the D2C route is almost a no-brainer while for established businesses the challenge is to develop a strategy that complements other sales channels rather than being in direct competition with them.
But the most important thing to remember is there’s got to be a compelling reason for consumers to buy direct, whether it’s a better product, increased access to luxury or niche goods, lower prices or added convenience. Armed with all the knowledge Google can provide, people are looking to be impressed by D2C offerings, but for businesses who choose this route the rewards can be immense.