DTC holds a different meaning today than it did only a few years ago. What was once a simple sales and marketing channel has become more of a mindset – and a squishy one at that. Now, brands sell well beyond their own website, do not rely on Facebook solely for customer acquisition and are more focused on staying afloat rather than growth at all costs.
At the Modern Retail DTC Summit, founders and brand executives descended onto Miami Beach to discuss the biggest issues their businesses face. Some talked new marketing strategies, others how they’re approaching wholesale. While each session tells one brand’s story, put together we have a bigger picture of what the new DTC playbook looks like.
What follows are some of the most universal take-homes from the summit.
Eric Ryan is a startup launch veteran, and now understands the common obstacles founders face when growing brands. Having followed CPG playbook to grow his past companies, Ryan is now tackling the luxury DTC space with jewelry brand Cast. He went into detail about how the DTC playbook has quickly changed to focus on retail, why design and customers should be at the center and why it’s important to build a suite of experts at the early stages of the company.
Similar to the idea behind his CPG brands like Olly and Method, Ryan said there’s an opportunity for Cast to tap into the mid-market jewelry market. For Cast, Ryan and co-founder Rachel Skelly are putting the focus on approachable store designs and jewelry stylists to draw customers in. Ryan said he has plans to open 100 Cast stores, with the first location opening in the San Francisco Bay Area this month.
While digital marketing is important, Ryan said the jewelry category has a major reliance on high touch – but in a less stuffy, transparently-priced setting. He also emphasized the importance of founders bringing in expert executives to help guide the brand’s direction from the early days. Overall, Ryan described his approach to direct-to-consumer retail is to use creativity to take on a stale category.
- Find a category that’s primed for revamping, and can handle a new player entrance.
- Focus on product design and a customer experience that has longevity.
- Build an internal team of experts early on, who can then help scale the brand.
Cereal brands Three Wishes is attempting to get into traditional grocery stores as a smaller startup. Three Wishes was able to enter retailers like Wegmans, Whole Foods, Sprouts Farmers Market and Erewhon just three years after its founding. Its products are also available at its website, Thrive Market and Amazon.
Thanks to its positioning as a high protein, vegan and Non-GMO Project Verified cereal option, Margaret Wishingrad, co-founder and CEO, said that its products are catching the attention of grocers that want to prove that they’re “curators.”
The founders are eager to bring their products into more stores. So much so that they sent over samples to high-end grocery store Erewhon Market themselves to prove that Three Wishes’ products were a good fit. Now Erewhon has all six Three Wishes flavors on its shelves.
- Find white spaces that the mass market isn’t serving.
- Invest in the product and believe in it.
- Aim for retail partners that will help establish the brand’s rapport.
Operating a DTC brand is much different now than it was a few years ago. Emmett Shine, co-founder and executive creative director of Pattern Brands, made a presentation about what it takes to succeed as a DTC brand in today’s environment, which includes exploring multiple sales channels and connecting with fellow brands.
Being a DTC brand, he said, doesn’t just mean selling products only on the company’s website. He said that being a mono-channel brand can be hard due to the rising costs of customer acquisition. During the presentation, Shine encouraged the audience to test out different channels such as Amazon and wholesale in order to thrive.
Shine also emphasized the importance of building conversations with fellow DTC operators. He said that these conversations could help brands find solutions to their own problems. Having these discussions with other brands could also lead brands into finding areas of opportunity.
- Surviving is better than maintaining your brand’s image.
- Don’t be afraid to test out new sales channels.
- Stay in touch with other DTC brand executives.
These days, DTC brands are working hard to keep the customers they have. For home essentials brand Outlines, much of this is baked into its subscription model. The company started with a recyclable shower curtain, has moved to other products such as the body buffer – and soon will launch recyclable kitchen essentials.
Outlines co-founders Megan Murphy and Luke Young said that with so much subscription fatigue out there, they are trying to build a program that gives customers more control. And so Outlines built a website configurator to focus on recycling one component of its shower curtain in three, six, or nine month increments. During this plan-building, the configurator guides subscribers on what plan best works for their bathroom, based on factors like size and humidity levels.
But while sustainability is at the heart of Outlines’ mission, the co-founders said that the cleanliness factor is what many customers are gravitating towards. So to effectively message the need to replenish their products in an eco-friendly way, Outlines is emphasizing the convenience and hygienic advantages of subscribing. As the company continues building out subscription plans for upcoming products, Murphy and Young said it’s important to maintain clarity on why customers should replenish these products on time.
- Identify whether subscription plans are needed to get customers to repurchase the product.
- Build an easy-to-follow plan that helps subscribers receive products when they actually need them.
- Factor in how to use marketing language – such as recycling and sustainability – to ensure subscribers they’re doing good while replenishing products.
Ranjan Roy, vp of strategy at lingerie brand Adore Me, has taken a very meticulous approach when marketing the compay’s sustainability efforts. Adore Me, founded back in 2011, recently received B Corp certification – but Roy said messaging the environmental and social efforts is tricky.
This has prompted the company to adopt a different marketing messaging in relation to sustainability. In fact, Roy said the company receives a neutral reaction, or sometimes even negative, to its sustainability-focused campaigns.
While eco-friendly language has become all the rage among DTC brands, Roy said that Adore Me customers fall outside of the typical DTC brand shopper demographic. For instance, the brand’s subscription members tend to lean more mass market, as opposed to urban millennials that most digitally-native brands court. Currently, most of Adore Me’s demographics is between 25 and the 45-years-old range. With this contention in mind, Roy said the company is messaging sustainability by making access and price points the main focal point.
- Make sure your marketing messaging matches with your customer profile.
- Advocate for policy changes to help create change within the retail industry – not just to make a marketing point for customers.
- Present appealing products as a concrete way your customers can vote with their dollars.
Prebiotic soda brand Poppi is leveraging TikTok’s algorithm not just to build its brand, but also to reach the right audience and for conversion. Allison Ellsworth, co-founder and chief brand officer of Poppi, talked about how TikTok virality gives the company brand awareness and reach in just two years of being on the platform.
Ellsworth said a big misconception about the app is that only younger consumers are on it. Poppi found that it can reach its target market on the app, resulting in more in-store and online purchases. As a result, the company has moved a big chunk of its marketing efforts over to TikTok from Meta.
The company also uses TikTok to gain traction for Prime Day. Poppi utilizes contests and campaigns on the platform to engage with TikTok users. A video announcing the latest Prime Day contest garnered over 1.5 million views on TikTok.
- Don’t try to outsmart the TikTok algorithm.
- Don’t be afraid to test out new platforms.
- Online impressions can lead to sales, if leveraged correctly.
Jane Win founder Jane Winchester Paradis is a big proponent of including the customer service team in the marketing strategy. For instance, Jane Win’s customer service team is incorporated within the marketing department – which has led to a better understanding of what shoppers want.
Winchester Paradis said that not only has this move helped create better communication, it has also helped maintain a low return rate. For instance, instead of automating the returns and exchanges, Jane Win representatives personally troubleshoot the process with the customers.
Personal social media use is another customer service tactic Winchester Paradis has been applying since the early pandemic days. She herself uses Instagram to stay in touch with customers, and shows behind-the-scenes footage of operating out of the Jane Win showroom. Winchester Paradis said that these touches have created a better connection between the brand and customers, in turn leading to return shoppers and overall loyalty to the brand.
- Insert the customer service team into every part of the marketing strategy.
- Apply personal touches while communicating with customers interested in the brand.
- Use typically unpleasant opportunities, such as returns and exchanges, to create deeper connections
DTC luxury handbag brand Caraa has nailed down how it acquires and retains customers to a science. Caraa co-founder Aaron Luo explained that after becoming known for their reusable masks at the start of the coronavirus pandemic, Caraa received 1.5 million new customers.
Now, the challenge lies in how to fold this new audience into Caraa’s long-term marketing strategy.
Luo said the trick is to figure out who this customer is, and talk to them about different ways Caraa products can fit into their daily lives. For instance, new moms have become a big segment of the Caraa shopper base, and so many of the brand’s latest campaigns have focused on the function and design of Caraa’s popular baby collection.
Part of getting to know these new customers also requires investing in first-party data, Luo said. And while data collection is a sensitive topic, he believes it’s a priority for brands trying to retarget their shoppers without paid digital advertising. For instance, the Caraa team is currently in the process of growing its loyalty program to gain more granular insight on new customers.
- Be prepared to find creative ways to speak to the influx of new customers you’ve acquired.
- Figure out who these customers are, what milestones they’ve hit, and how the product can fit in their lifestyle.
- Invest in first-party data as much as possible, including email marketing and rewards programs.
Stitch Fix uses insights from its clients to help its partners grow their brands. By collecting qualitative data and using a tool called Style Shuffle — a short quiz that looks similar to a dating app — the company is able to gather billions of data points from customers about their apparel preferences.
The company — which offers personal styling services — has over 3.9 million active clients, per its third-quarter earnings. Though the company uses various methods to gain feedback, Choy said customers know they can benefit from giving Stitch Fix more detailed information.
Chief Merchandising Officer Loretta Choy said the company provides some of its partners with detailed reports, complete with pie charts and graphics. These reports help its brand partners identify areas of their business that resonate with customers and areas that don’t.
- Retailers and their brand partners can mutually benefit from sharing data with each other.
- Brands must be eager to establish a close relationship with their retail partners.
- Customers are more willing to share personal data if it benefits them.
Despite being a global brand, Levi’s doesn’t approach every market the same way. Rui Carlos Da Silva Araujo, SVP of Latin America at Levi’s, spoke about the company’s retail strategy in Latin America.
He said the company typically chooses items from its global collection and then adapt to the needs of each local market. Each market is completely different, which prompted the company to find a formula that would fit, he said. For example, consumers in Argentina, Brazil and Colombia are more fashion-driven, while consumers in Mexico are much more formal.
When it comes to e-commerce, the company has a strategy in place with online marketplaces like Mercado Libre. Levi’s controls the pricing and the product instead of letting the marketplace control the brand. The company said the traction the brand gets from these platforms is much more robust than what it can get on its own site.
- When expanding globally, choose a localized strategy for each market.
- Get to know the clothing preference of the local community.
- Don’t let online marketplaces control the brand.