With an ever growing number of product choices, more noise and distraction and evenly shorter attention spans people feel an urge to make the best buying decisions.
A new breed of brands is tapping into that phenomena creating minimalistic products that claim to be the best in their field. Ultimately, these are things nobody really needs – but a lot of people aspire to buy. A desire that is almost entirely created through Social Media.
But how does it work?
What is it?
Direct to Consumer (DTC) brands are vertically integrated brands that are designer, manufacturer and retailer at the same time. They find a niche in the market and fill that niche with one single product, that they usually claim to be THE best within the category. Instead of producing a variety of things they’ll do one thing very well – better and for less than well established brands.
Prominent examples are :
- Dollar Shave Club, a razor subscription that was sold to Unilever for $1bn
- athleisure brand Girlfriend Collective that famously spend their entire marketing budget on giving away free leggings to leads created through Facebook and Instagram ads
- beauty brand Glossier
- mattress company Casper
- a handful of players in the German market like Ace & Tate, Made.com, Horizn Studios, Lillydoo or Bloomon
How do they do it?
These products are highly instagramable and sell not only a product but a lifestyle (Although some people claim this means they all end up looking the same – think minimal logos, bold contrast with at least one shade of millennial pink and a modernist or 70s inspired font). Carefully curated Instagram feeds establish the brand’s image and story.
Technology and infrastructure
They make use of streamlined platforms such as Shopify and Stripe as well as increasingly easy access to global suppliers and rapid prototyping. Often a mobile first approach allows a seamless shopping experience from Instagram to checkout.
With a strong focus on qualitative and quantitative customer data they continually shape the product according to the audiences’ evolving needs. They also use their user data to refine performance advertising and create sophisticated CRM campaigns. Some even rely so much on customer’s data that they are unable to serve the GDPR-ridden European market:
DTC’s path to success usually means scaling extremely quickly and immediately raising massive funds once they establish a niche that works and created a product that can live up to its promise.
Relying heavily on advertising, the money is mainly used to fund the companies’
excessive social media spending. With Facebook becoming less attractive, Instagram has now become the main pillar of success for many DTC’s and is harnessed in order to build up massive reach and generate millions of leads as quickly as possible.
In a way its a winner takes it all market: the one with the biggest funding and highest advertising spend crowds out the others in its niche.