How DTC brands go from 0 to scale

The formula to be the next Casper, Away, Harry’s, etc

The original brick and mortar retail market customer experience made profits selling limited inventory because of shelf space. Amazon shifted the retail landscape by offering a vast selection of products online. In the last decade, a flood of direct-to-consumer companies burst into the scene. These startups radically transformed how consumers shop, their preferences and their expectations. Unlike traditional brick and mortar or e-commerce that uses Amazon as a distribution channel, these DTC companies started out as digitally native - connecting, engaging and distributing online. At launch, they set themselves apart not only with their products, but more so with the entire shopping experience. We’ll take a look at some of the leading brands to see what strategies and tactics they used to go from small start-ups to massive scale ups.

Strategy

At their core, most of these successes targeted the same customer pain point - the shopping experience. Think about what it was like to buy a mattress, a razor, a pair of pants, vitamins, or even glasses. That’s what the founders of Away, Bonobos, Casper, Harry’s, Ritual, and Warby Parker did. They found that people were frustrated with buying products from 

  1. brands they didn’t trust, 

  2. who charged way too much, 

  3. within a retail experience that did not value customers.

And then, they re-imagined this experience. They focused on product experience, buying experience and customer experience. Casper, for instance, sold $100M in mattresses by upending the traditional mattress shopping experience. Before Casper, mattress buying involved walking into a department or mattress store, interacting with pushy sales people, being inundated with confusing choices and inconveniently lugging the mattress inside your home. Casper sold mattresses in exactly the opposite way - just one bed, delivered to your door in a conveniently sized box, and a 100 night trial policy. Casper made $1M in sales in their first month. Bonobos, Warby Parker, Harry’s, Ritual and Away were conceived out of similar frustrations. 

Their solution:

  1. We make only one thing.

  2. We make it affordable and transparent.

  3. We make it easy to find, buy and return.

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Their solution also became their brand story:

  1. We make only one thing; we’re the industry experts.

  2. We make it affordable and transparent; bye, bye middlemen - you can trust us.

  3. We make it easy to find, buy and return; shop online - whenever and wherever you are, free delivery right to your door, easy returns. 

Plug in any DTC brand and you’ll see the formula at work.

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Tactics

The bigger question still remains - How did they get the target audience from shopping with traditional, sometimes centuries old, brands to switch to theirs? 

The answer? Laser focus on the customer experience. 

The customer experience for these digitally native DTC brands can be summed up with a well-known abbreviation, ASMR. This one, however, is an entirely different acronym.

Accessible

From a mattress in a box to the perfect shade of make-up, you can get it all delivered to your door. Digitally native brands understand the customer’s desire for convenience and capitalize on that by creating a great online shopping experience. Take Glossier, for example. Their online Shade Finder matches the right shade to the right skin tone. Warby Parker does the same with their Virtual Try-On tool for eyewear. These brands created a seamless buying experience, accessible anywhere you have an internet connection.

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Shareable

While the buying experience focuses on being accessible to the customer, the product experience focuses on being shareable. Design isn’t reserved for the product; it’s used on every part of the experience, from the packaging (shout-out to Lumi for stellar, share-able and sustainable packaging) to the inserts to the copy. This focus on design and share-ability leads to user-generated content (UGC), which drives social sharing. At ThirdLove, which transformed the bra shopping experience, a customer reached out about not seeing her size and shape visually represented. ThirdLove responded by asking her to model for the brand. Away, which started out selling luggage, gave vacation photos a whole new meaning - from the places you’ve been to the bag you’re carrying. AllBirds puts their Instagram user photos on each product page. For any of these brands, a quick look on Instagram reveals the power of UGC and social proof. Done right, brands can leverage this content to grow the business. 

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Minimize risk

While Zappos introduced the initial no-questions-asked return policy, digitally native DTC brands quickly followed suit. While traditional companies often charge for returns or don’t offer them at all, almost every single digitally native brand we encountered offers a hassle-free return policy, whether it’s a piece of luggage, a mattress, even vitamins. At one point, Dollar Shave Club offered a free trial razor, as long as the customer covered shipping. Harry’s and Dollar Shave Club both have trial boxes with risk-free cancellation if the product doesn’t suit the customer’s needs. While Casper offers a 100-night trial, the DTC mattress-in-a-box competitors that have followed often offer a 365-night trial. Offering easy returns and free trials minimizes risk for the customers and makes them more comfortable with the idea of buying from a new brand.

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Reduce friction

DTC start ups, like Away, Bonobos, Ritual, Harry’s, etc. were born out of the desire to replace a frustrating shopping experience full of friction. It started with the business model (DTC) and continues to be evident throughout every touchpoint with the brand. Beyond the basics of building a responsive and fast-loading site, reducing friction is about designing an end-to-end experience with the brand with the customer in mind. 

For example, think about the last time you had a question for a brand and couldn’t find the answer. A search button is great, but connecting directly with a human is even better. Casper, in the very beginning, had a “chat with the founder” button. Dollar Shave Club founder was the company’s first customer service representative. Away and Ritual respond to nearly every @ and comment on Twitter and Instagram. To this day, you can email the gTeam at Glossier for anything, including finding the right shade of make-up. Glossier even has a Slack group of the top 100 customers in order to receive constant feedback on every experience - from product to purchase. 

While reducing friction for each brand means something slightly different but the result is always increased engagement, which ultimately leads to increased revenue. 

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Amazon shifted the traditional brick and mortar landscape, and digitally native brands are shifting e-commerce. As malls are abandoned and traditional department stores shutter, it’s clear that the road to success for retail starts out as direct to consumer and digitally native.