Thanks to brands like Casper and Warby Parker, the direct-to-consumer (DTC) business model has taken off. You only have to look as far as LUMA Partners’ direct-to-consumer LUMAscape to see that the model is booming. eMarketer estimates that 400+ DTC brands exist today, and traffic to their websites has almost doubled in the past two years.
Spanning categories like apparel, beauty, personal care, baby, pets, travel and financial services, they’re growing at an exponential clip, and established consumer brands are taking note. The findings show that B2Cs are very concerned about DTCs impacting their marketshare, and that DTCs are concerned about the next steps for their business.
As DTCs gain authority in their respective industries, they pose a threat to established brands. According to Euromonitor, Gillette controlled ~70% of the U.S. market a decade ago, but their marketshare dropped below 50% last year, due to disruptive brands like Harry’s and Dollar Shave Club. With DTCs’ emergence comes an opportunity to adapt and adjust—for both kinds of brands.
By digging into how these businesses changed the game, marketers of all stripes can stand a fighting chance at sustainable growth in the new DTC world.
Thanks to their various and evolving business models, DTCs can be tricky to pin down. But these characteristics can help you spot most of them:
- Digitally native
- Innovative, disruptive brand storytelling
- Bypassing traditional supply chains
- Customization in product and experience
- Upending established products and
- services in their category
- Minimal offerings (intent that the same
- few products work for all)
- Centered on convenience (e.g., delivery,
- online sales, recurring payments)
As DTCs look to improve customer experiences and engage in all relevant channels, our research finds that more will consider moving away from a pure DTC approach. One of the ways this will manifest is by more DTCs moving toward a non-DTC model, and established brands attempting a DTC model.