DTC Update: The Latest Direct-to-Consumer Business Models and Strategies

Do you know what it takes to build a successful, rule-breaking direct-to-consumer brand?

Direct-to-consumer brands are using well thought-out marketing strategies to promote new product launches and introduce new categories. They’re also merging online, mobile, brick-and-mortar, catalog mailers, pop-up shops and more. And while different brands are branching out to do their own things, we’re seeing the biggest shifts in the way they choose to deliver products. It’s all strategized pretty brilliantly and they’re reaping the rewards for it. Here’s what’s new in the world of DTC fashion.

Organic Evolution at Everlane

When it comes to direct-to-consumer, we used to look at Bonobos and then Warby Parker before taking a look at what’s happening at brands like Outdoor Voices, Amour Vert and Everlane. Everlane is a great example of the strategic ingenuity of some of the best DTC brands in the business. They started by selling basics on their e-commerce site, branched out into RTW and accessories online and then introduced denim. They also introduced a pop-up shop that eventually evolved into a brick-and-mortar store. And now, most recently, they’ve launched underwear via influencer marketing and a dedicated pop-up – leading to sold-out goods and a waiting list of 30,000 customers on their site!

An Everlane Women's Underwear Pop-Up in L.A.
An Everlane Women’s Underwear Pop-Up in L.A.

Warby Parker Has a Need for Speed

Warby Parker was one of the earliest adopters of the DTC business model. Founded in 2010, they solve the customer point of finding great glasses at value prices. They started with e-commerce before venturing into pop-up shops, opening stores across the U.S. and partnering up for some press-worthy collaborations (Amanda de Cadenet, Off-White).

Warby Parker Union Square
Warby Parker Union Square

Warby Parker’s growth was thanks in part to tech innovations and strong customer service, but now they’re focusing on a new domain – speed to market. In an effort to combat shipping behemoths like Amazon, they’re working on getting orders home to their customers faster.

Breaking Away from Seasonal Collections at Gosha Rubchinskiy

Russian streetwear designer phenomenon, Gosha Rubchinskiy, recently announced he’s stopping his regular seasonal collections. A Comme des Garçons label, he and his team are reportedly working with their parent company to come up with new ways to produce and sell his products. Radical move? Maybe. But we’re pretty sure they’re on to something here and we suspect direct-to-consumer will have something to do with the outcome. Why? Because going DTC allows you to make up your own rules and deliver goods in a way that opens up lots of different options.

A New Approach to Wholesale

Band of Outsiders founder Scott Sternberg is back, launching a new brand called Entireworld. The clothes will have a much lower price point than Band of Outsiders pieces and he calls it Democratizing the Commodified Products, bridging community and connection. But there was something else he said in his BoF interview that really stood out: he was very specific about his interest in wholesale partnerships and collaborations for the future – not wholesale distribution. When you look inside his statement, what he’s saying is wholesale is still important but he’s going to do it in a way that counts.

Entireworld
Entireworld

In fact, DTC brand Madewell introduced wholesale in 2015, selling their collections on Net-a-Porter.com (sister brand J.Crew has been on the site since 2010). They understand that wholesale is still a very important channel and that it adds to their brand equity in a lot of ways. It provides that element of curation, showing how brands can come together – and the ever-weighty social proof.

If it’s your goal to build a billion dollar brand, you need your own physical stores and to be sold in others’ physical stores. Physical footprints allow you to deliver more product, more often so there’s recency. Even brands like American Apparel that started with basics, saw growth by extending product categories and delivering more frequently. To do volume right, you need newness and frequency, pop-ups and flagship retail.

The RealReal, even with a resale business model, has opened up pop-up shops (we went!) and a permanent brick-and-mortar NYC store. And Stitch Fix, with its subscription-based business model, is a direct-to-consumer business that has launched national ad campaigns on television to reach wider audiences.

A Stitch Fix TV Ad
A Stitch Fix TV Ad

To build your own distribution, follow a similar strategy. Start with a niche, grow to the next level in that niche, and when you’re well-known but not yet mass, start launching mass advertising campaigns. Mass can mean national marketing like Stitch Fix’s TV ads or regional marketing like MM. LaFleur’s subway ads in NYC.

To succeed as a direct-to-consumer business, you need to break the rules with really well thought-out strategies…

How To Build a Direct-to-Consumer Brand

So why doesn’t everyone go the DTC route? First, it requires a significant financial investment. Second, you have to truly live the brand. Finally, you have to properly leverage marketing to make sure your products are exciting in a single-brand universe.

1. Allocate a Healthy Budget.

DTC brands need more funding than wholesale fashion businesses. First you need the extra investment money to make your brand known. Then second, you need to set up the necessary infrastructure to sell products through various channels (e-commerce, pop-ups…). For example, when you launch e-commerce, you need money for high-quality images, marketing your products, getting on camera to talk to people about what you’re doing as a brand…

2. Be Your Brand.

You also need to make a huge personal investment into your brand. You’ve got to be committed to your consumer because the DTC relationship is very intimate. As a DTC brand founder, you need to live the lifestyle and eat, sleep and breathe the brand. You’re in front of the media and passionate and present at all times.

3. Leverage Marketing to Maintain Excitement.

Lastly, it isn’t as simple as launching a DTC business and becoming a runaway success. We’re seeing more brand loyalists and fanatics, however, the flip side is you have to work extra hard to make sure they don’t get bored or feel totally consumed by your world. That means you need amazing curation and editing – along with a solid point of view.

Getting ready to launch? Contact Scaling Retail to uncover the right hybrid business model for your brand. Call us at 310-957-5264 to schedule a consultation session or email hello@scalingretail.com.

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