If you’ve been keeping up-to-date with recent trends in the world of eCommerce, you’ve probably noticed that direct-to-consumer companies seem to be popping up out of nowhere.
And you’re not imagining things. Even Amazon has over 80 private-label brands they’re selling “directly to consumers”. And if Amazon is going direct to consumers, there must be really something to it.
According to a recent report from eMarketer, there are more than 400 direct-to-consumer (D2C) brands in operation today. While that’s a drop in the bucket compared to the number of traditional brands out there, eMarketer also found that web traffic to D2C sites has doubled in the last two years.
What’s more, most consumers predict that at least some of their future purchases will be from D2C brands within the next five years:
(Consumers will purchase from D2C brands more in the future | Source)
While this isn’t to say consumers are becoming completely reliant on D2C companies, these trends prove that it is possible to experience major success operating under a direct-to-consumer business model.
But that doesn’t mean doing so is easy. Though it may seem like these companies are “popping up out of nowhere,” like we said, what we as consumers are seeing from these brands is the culmination of years of hard work and innovation.
In this article, we’re going to take a look at six D2C companies that are killing the eCommerce game with their unique approach to doing business. Within each section, we’ll also discuss what you can take away from these stories and use what you’ve learned to make improvements to your own business.
Let’s get started.
In a hurry? Find out which direct-to-consumer brands are killing it (and what you can learn from them):
- [D2C brands #1] Away builds a community by going beyond the products they sell
- [D2C brands #2] Quill keeps customers engaged with coupon “clipboard”
- [D2C brands #3] The 5TH builds anticipation using exclusivity
- [D2C brands #4] Casper sparks sales by alleviating analysis paralysis
- [D2C brands #5] Bonobos’ customer service ‘ninjas’ help the brand stand out
- [D2C brands #6] Tivoli Audio adopts a hybrid approach to fulfillment
[D2C case study #1] Away builds a community by going beyond the products they sell
As we’ve discussed in greater detail before, travel company Away has been about much more than just luggage since Day One.
In fact, co-founders Jen Rubio and Steph Korey knew from the get-go they’d need to do more than just sell luggage if they wanted to…sell luggage.
“Even before we were like ‘let’s choose luggage,’ we were talking about editorial content and all we can do in the travel space. We see the long-term potential for Away to be much, much more than just selling luggage.”
And this makes sense. After all, it would be impossible for Away to enter the saturated luggage market by simply offering a different version of a product that already exists. And it definitely wouldn’t be easy to generate brand awareness without relying on retail stores as middlemen.
So, instead of just being “just another luggage company,” Away positioned itself as a travel company. To do so, the team started churning out a variety of travel-related content and media, including a podcast, magazine, and active Instagram channel.
(With over 370k followers on Instagram, it’s safe to say Away is doing something right | Source)
In addition to its massive Instagram following, the website for the company’s magazine, Here, sees 800k monthly views. Also, while Away’s podcast has been discontinued, the published episodes maintain a five-star rating on iTunes.
Did the approach work? Heck yes it did: Away ended up pulling in $125m in revenue in just under three short years.
Takeaway: Sell a lifestyle, not a product
The main lesson to take from Away’s success is that—D2C or not—your brand should be built around more than just your products.
Rather, it should be built around the value your products bring to your customers’ lives. In Away’s case, this means building the company around all things travel-related—not just luggage.
It’s equally important that you communicate your brand’s mission to your customers, as well as the value you intend to bring to them—and do so in an engaging and authentic manner. Again, Away’s more intimate approach to content marketing allowed the team to build a strong following of loyal fans, using multiple channels.
No matter what your actual products are, look past the actual use of your product to determine how your brand truly fits into your customers’ lives. Once you figure out your brand’s true role in your customers’ lives, you can then work on filling out the niche entirely.
[D2C case study #2] Quill keeps customers engaged with coupon “clipboard”
We’ve all experienced the frustration of having a coupon expire, or finding out an offer “doesn’t apply to this item.”
The people behind office supply company Quill know you’ve had these experiences, too—which is why they created a “coupon clipboard” feature on their website. Here, consumers can save any coupon codes they come across (in the digital or physical world) to their account, storing them all in one central and secure location.
Quill’s president, Sergio Pereira, explains that the team’s initial goal, here, was merely to provide convenience to the consumer:
“This enhancement is a direct result of our dedication to making every experience on Quill.com as simple as possible…Our customers are busy enough as it is. Finding and keeping track of coupons is not something they have a lot of time for.”
As it turns out, Quill’s customers use the Clipboard for more than just convenience. They also use it to try and find the best deal possible. In this way, Quill’s customers have almost gamified the couponing experience. As Pereira explains, “We’ve seen that many of our customers actually have fun trying to see which coupon combinations save them the most money.”
Takeaway: Make things easy for your customers
Simplifying processes is at the heart of the D2C business model, so it makes sense that you’d want to extend this simplicity to your customers.
In Quill’s case, this means providing their clientele with a quick and easy way to organize and use their in-store coupons.
Now, taking this at face value, the message is for you, too, to ensure your customers can apply any discounts you may offer without much friction. While this is certainly true, we’re just scratching the surface, here.
Looking at the big picture, the message here is to streamline any and all processes your customers go through on their path to purchase. As a D2C company, you’re not pawning the shopping experience off on a retail partner; you own the experience, yourself.
That said, you want to provide your customers and prospects with whatever they need to take the next step in their buyer’s journey, and to engage further with your brand.
[D2C case study #3] The 5TH builds anticipation using exclusivity
Since eCommerce became a thing in the first place, one of its key selling points over brick-and-mortar stores is that consumers can make purchases at any time of the day, month, or year.
Which is why luxury accessory company The 5TH’s approach seemed so counterintuitive from the get-go. See, rather than keeping its eCommerce store open 24/7, The 5TH decided to only open its virtual doors for a grand total of five days each month*.
And it worked like a charm.
Think about how fads and trends typically work:
- One or two big names are seen wearing a certain style
- Suddenly, everyone’s wearing that same style
- The style dies out, and everyone moves on
- Rinse and repeat
The point is, whatever value the item in question once had gone away once everyone has access to it.
(The FOMO is real)
With The 5TH’s products, this isn’t an issue. Their products remain in vogue because they’re so rare. Those that have them feel like part of an exclusive group, while those who missed out are left feeling excluded…
…or, they simply start looking forward to next month, when The 5TH will open up shop once more! Needless to say, those who have set their sights on a certain handbag or other accessory aren’t likely to take their next shopping opportunity for granted.
Another thing worth mentioning is that, since The5TH only sells for five days out of every month, that allows them to go all-in on researching and engaging with their customers, creating marketing content, and validating products.
Co-founder Alex McBride explains:
“So many brands release products without testing the waters first and then wonder why nobody is buying their product. We’ve flipped the process on its head by creating an audience before we create a product.”
While completely unconventional, the process is nothing if not logical:
- Get your customers to tell you what they want
- Create whatever they asked for
- Make it available—but limit availability
It’s pretty simple, no?
(Side note*: The5TH operated in this manner for its first two years of operations. As of 2017, consumers can shop with the company whenever they like.)
Takeaway: Sell more by selling less
Do not underestimate the power exclusivity, urgency, and scarcity have on consumers’ purchasing decisions. Whether we admit it or not, FOMO is real.
But, it’s important to recognize the difference between authentically building your business model around exclusivity and manufacturing scarcity in a less-than-honest way. That is, you shouldn’t be thinking about faking product scarcity in an effort to trick your audience into making a purchase.
(If they don’t immediately see right through the ploy, they’ll eventually catch on—and will likely stay far away from your brand moving forward.)
In The5TH’s case, it’s not like the company was hoarding items in a warehouse all month and simply “pretending” they had limited quantities available. As we explained, their new products actually were scarce: they hadn’t even been created yet!
On that note, the other lesson to take away from The5TH’s success is to listen to your customers. The reason the company’s products would sell so quickly is because they were made based on customer feedback and suggestions. Like we said earlier, if they ask for it, and you make it, of course they’re gonna buy it from you.
[D2C case study #4] Casper sparks sales by alleviating analysis paralysis
Pulling in $100m in revenue over your first two years in business is pretty amazing.
Doing so while only offering one product, though? That’s ridiculous.
But it’s exactly how Casper made a name for itself in the slumbertime industry.
(Caper has outpaced other mattress companies in terms of online sales | Source)
See, the team behind Casper realized two glaring problems with the current mattress industry:
- There are way too many options available
- These numerous options really aren’t all that different from each other
For the consumer, this can lead to major analysis paralysis. Since they have a ton of choices, but none stand out as the clear-cut best choice for them, they’re liable to become like deer in headlights: too afraid to make a decision that may end up being the wrong one.
Of course, for retailers, this all adds up to one thing: No sale.
With this in mind, Casper set out to create the best mattress on the market, period. Basically, the team threw out all that pseudoscience about “back,” “side,” and “front” sleepers, and focused on making the mattress that would be most comfortable for everyone.
(And, when you think about it, this makes sense from a business standpoint. I mean, if you tell a customer “this mattress is best for back sleepers,” what you’re really saying is “if you’re not a back sleeper, this isn’t the mattress for you.” You don’t want to turn off your customers to your products, right?)
In addition to making smart business sense, focusing on perfecting their initial product provided Casper the opportunity to say with 100% confidence that their mattress is the best on the market. In turn, their target audience had (literally) no choice but to give Casper a try.
Takeaway: Don’t overwhelm your audience with too many choices
Earlier on when discussing Away, we talked about how your D2C company needs to be about more than just your product.
But, that doesn’t mean the quality of your product isn’t important at all. Those are table stakes, really.
So, first and foremost, focus on developing a product that provides more or better value than your competitors’ offerings in some way. If your product doesn’t stand out, what’s the point?
Moreover, rather than trying to cater to everyone by offering every product variation under the sun, consider narrowing your product library down to your most valuable offerings. That way, instead of providing average value to a large amount of people, you’ll provide a ton of value to a tight group of engaged customers; in turn, these individuals will likely become loyal followers of your brand for some time to come.
In creating this more loyal following, you can then begin developing other products to provide further value to them. Still, your focus should be on creating a single, cohesive product that caters to all of your customers—not creating a bunch of so-so products that they could care less about.
[D2C case study #5] Bonobos’ customer service ‘ninjas’ help the brand stand out
We’ve talked a lot about the importance of connecting with your customers as a D2C company, but there’s an aspect of doing so we’ve yet to touch on:
Customer service and support.
Since your entire business model is built on having a line of support between your company and your customers, it just makes sense that you’d want your service and support efforts to be considered top-notch.
This is especially important when operating in industries in which product differentiation is less about quality and more about preference, such as the clothing industry.
Generally speaking, the products offered by competing companies are pretty similar in terms of quality—which would explain why you never see companies like Gap, American Eagle, and Aeropostale try to compete on quality alone. Often, these companies simply try to appeal to the individual’s preferences and tastes, and compete with each other on that level.
Rather than fighting that battle, Bonobos decided to be a bit more productive in developing their unique selling point by focusing on its customer service and support initiatives. These initiatives are spearheaded by the team’s “ninjas” (customer service reps) and “guides” (akin to sales reps, with a skew toward providing a streamlined shopping experience).
(No, seriously. They have “ninjas”)
By providing these employees with high level of autonomy when working with customers, Bonobos allows their reps to provide personalized service to their individual clientele on a level they simply aren’t used to.
Says Cory Perret, manager of Bonobos’ New York headquarters:
“Some guys like their pants tailored and sleek, others don’t. Some guys get scared of the ugly S-word when I mention our slim fit. You have shoppers who have been wearing the wrong type of shirt their whole lives, so when they come in and try on our fitted blazers that have low armholes, they get what we call ‘the flying squirrel.’ We get the gears going. Our team guides them in the right direction and the guys are usually pretty receptive to it.”
With Bonobos, it’s not about selling new clothes to prospective customers—it’s about creating a new look for them. By taking a fully hands-on approach to customer support, the Bonobos team guarantees their customers will find exactly what they’re looking for every time they come around.
Takeaway: Focus on customer service to differentiate your brand
We touched on this earlier, but let’s make it clear:
The phrase “direct-to-consumer” refers to more than just your fulfillment processes. The nature of D2C is that you have a direct line of communication with your customers—and you should engage with them in some way whenever the opportunity arises.
In addition to simply “being there” for your customers in a more direct manner, you should also be learning about them through each engagement you have with them. Whether your conversation concerns their preferred styles, their in-store or on-site expectations, or the potential issues they may have faced with your brand, your customers will always be telling you something that could help you improve your business moving forward.
If you can show your customer that you’re willing to not only listen to them, but to actually act on their suggestions, well…you’ll pretty much have gained a customer for life.
[D2C case study #6] Tivoli Audio adopts a hybrid approach to fulfillment
Tivoli Audio is an audio electronics company of about thirty employees that does business with individual consumers and companies all over the world.
Yes, you read that right: A team of fewer than fifty individuals is able to do millions of dollars of revenue throughout the entire world.
And they do so by using a sort of “hybrid” approach to fulfillment. While Tivoli Audio operates direct-to-consumer when doing so is logistically sound (and when profit is optimal), the team also doesn’t shun the more traditional approach to distribution and fulfillment altogether. Instead, Tivoli Audio forges partnerships with distributors and wholesalers in areas in which true D2C operations just aren’t plausible.
(Tivoli Audio French website)
Even when taking the traditional route, Tivoli Audio adds a little “twist”: When partnering with local distributors or wholesalers, they (Tivoli Audio) create a local website (e.g., Tivoli Audioaudio.com.au) and develop marketing initiatives targeting this geographic segment, while their partners are still in charge of distribution in that area. They then split the profits made through the local version of Tivoli Audio’s site.
It’s a mutually-beneficial agreement: The distributor sees increased business due to laser-focused marketing initiatives, and Tivoli Audio can enter new geographic markets without having to be physically present in these areas.
Takeaway: Partner up with your local distributor for a win-win scenario
Let’s be clear:
There’s nothing that says your business needs to be fully D2C in the first place.
As Tivoli Audio shows, it’s possible to use a hybrid approach to fulfillment, where you operate D2C when logistically sound, but go the more traditional route when D2C would prove to be too costly or inefficient.
That said, when implementing a hybrid approach, it’s important to ensure the customer experience remains constant across the board. In Tivoli Audio’s case, customers are always doing business directly with Tivoli Audio when it comes to browsing, making purchases, and receiving support. The only difference, for some, is in the actual fulfillment process.
(Having everything managed in one platform helps too)
And, as we said, there’s nothing wrong with this. As long as you’ve figured out the most effective and efficient way to get your products into the hands of your target audience—without disrupting their experience—you should absolutely take advantage.
One overarching message that has woven its way through each of these mini-case studies is the idea that operating direct-to-consumer allows for a sort of freedom that doesn’t exist for traditional companies.
Because D2C companies own the entire customer experience, this means they have the ability to tailor every aspect of it as they see fit. In turn, they can use a variety of approaches to engage with—and provide value to—an even wider variety of consumers.
So, above all else, if you’ve decided to go the D2C route, the most important lesson to take away from all this is to be creative in everything you do.
Because you own the entire customer experience, you have a ton of opportunities to differentiate yourself from your competitors. Once you figure out where your specific strengths lie, go all-in to provide your customers with the best possible experience they can imagine.
This article was originally published by our friends at Coredna.