D2C101: Lessons Learnt From Studying Most Successful Brands
Retail as an industry is one that is so core to how we live our lives, but is often ignored when thinking about innovation and disruption. When I set out to start this series on D2C brands, I wanted to figure out why we should care about the evolution of retail, and what the new face of this industry looks like. In part 1, I set out to answer the first part of this fundamental question.
Maybe this is just the nerd in me, but I have always been fascinated by patterns in data sets. Recognizing patterns can help us connect the dots on the implications and future for a given product, problem, industry or the world at large. After diving deep into this world and studying some of today's most successful D2C brands, I started to notice that all D2C brands follow a very similar playbook on how to start and scale their companies and create well-loved brands. Here are some of the key takeaways:
Simplicity in product
Casper, Harry's, Bonobos, Allbirds. What four of the most successful D2C brands have in common is that they've simplified the purchasing experience by streamlining their product offerings to one (or a set of), best-in-class product(s). In product categories where choice is overwhelming and each new version is hyperbolically called, "the best", there is a massive opportunity for D2C brands to become industry leaders.
For example, when the founders of Casper studied all the existing options for buying a mattress, they combined all that knowledge into creating the mattress that worked for all types of sleepers - no choice needed. The proof is in the sales and Casper validated this strategy when they did $100M in sales in their first year.
This strategy works as it reduces the end consumer's anxiety with choice & creates a much more pleasant shopping experience minus the heavy price tag and the pushy sales people.
Taken from Live Tinted's Instagram
One of the defining qualities of being a successful D2C brand is the ability to own your own data and draw really interesting insights about how your company is doing in the eyes of your customers. Successful D2C brands collect massive amounts of data who's insights can enhance the entire supply chain. Because D2C brands own all of it, they can implement these insights to improve their unit economics, build better products and improve customer experiences.
Live Tinted, a promising startup beauty brand started as an Instagram community (now with an impressive 101K followers) to push the conversation on inclusion in beauty and keep brands accountable to create products that cater to a diverse market's needs.
Live Tinted's Founder and CEO Deepica Mutyala's YouTube following as well as the company's own Instagram page with 10K followers serves as two key customer touchpoints to get instant feedback. They used the massive communities they've built up to understand their customer's top beauty concerns and create their first product (The Huestick) to meet the biggest issue with their beauty routines that the customers were facing.
Companies like Warby Parker and Stitch Fix who have multiple different product lines created recommendation engines to understand key information about the customer and their needs and suggest the exact right products for them. This way they won't have to go through multiple pages of options and still not know where they should be looking.
The insights that are mined from the data brands collect from their customers act as customer feedback and provide direction during product development. The goal is to leverage all the customer feedback and data to achieve product-market fit by constantly working to make their products better and keep customers satisfied.
Building "cult" brands
Taken from memebase.com
Authenticity and caring deeply for the problem they are solving and the experiences they are facilitating for customers is a value that can't be replicated. It's very easy to detect when a brand puts the customer, mission, vision and values at the centre of everything they do.
Brands such as Glossier have achieved this by building a community of users that feel passionately about their products and the brand's ethos.
Glossier's community is rooted in their massive social media following (2.5M followers on Instagram) and engagement (twice the industry average in beauty) and their associated blog, "Into The Gloss". Since Emily Weiss first started her brand with the blog and built it up to 1M unique visitors each month, she was able to use the blog as a platform to launch products with an audience that she already captured. Glossier was founded on the basis that beauty is a conduit for human connection and the need to build a brand that would empower users to embrace their own beauty narrative whatever that might look like.
Their obsession with their customer and their needs means that Glossier makes and sells products that people actually want. Because of this, customers become passionate advocates of the brand since it caters exactly to their needs (effectively becoming micro-influencers). The fact that 70% of Glossier's sales comes from peer-to-peer recommendations is a testament to this.
There's no magic formula to virality - the brands that win are those that give power back to their customers and connect users to the brand and to each other on an emotional level.
Improved user experiences
Taken from cnbc.com
In a world where you can make all sorts of purchasing decisions from the comfort of your own home, D2C brands face a particularly critical challenge of standing out from the pack in terms of creating memorable user experiences.
With an audience that skews millennial and GenZ, optimizing your product, website, online and offline shopping experience for social media is critical. You can do this in a few ways. We've seen companies use neutral colors for products and product packaging, clean lines and modern fonts such as Sans Serif for all branding materials and a minimalist aesthetic that can integrate seamlessly into people's Instagram feeds.
Additionally, creating a smooth online shopping experience from when customers find out about you via your various promotional channels to when the product arrives at their doorstep is critical. This is so that customers get clarity on what to buy and limit distraction, thereby ensuring that the sale actually happens.
While people can buy literally everything online, brands have identified a massive opportunity to revamp retail experiences offline via brick-and-mortar stores. Dan Wenhold, Principal at Fifth Wall, agrees with this notion because"85% of commerce is still happening offline. While D2C brands' main value proposition is the convenience of being able to buy product online, physical retail is a great way to build deeper customer relationships and create immersive experiences to showcase the brand.
We're already seeing this strategy come to fruition with companies like Winky Lux where customers acquired via the brand's retail pop-ups were 3x more likely to become repeat buyers. Brands can create amazing offline experiences with exclusive in-store experiences/products, limited inventory with lots of open space so that the focus goes beyond just buying product, and translating the brand's aesthetic seamlessly from online to offline.
Ultimately, being customer-obsessed and building a brand that enables human connection via its online and offline touchpoints are the driving forces behind any successful D2C brand. Rather than merely selling products, companies like Away, Glossier, Live Tinted, and Warby Parker sell a lifestyle to connect and empower people to live life the way they want to on their own terms. By selling something so powerful and intimate as a way of life, they're able to create deep connections with their customers and enable the same feeling of belonging with each other.
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