D2C Retailing – Evolution or Revolution?

Direct to consumer retailers have been the success story of the 2010s. Brands such as Harry’s, Caspar, Made.com, and others, have gone from fledgling start-ups to agile VC backed businesses. As they continue to evolve, market expectations are defied, and the traditional retail space is disrupted.

D2C’s have several key characteristics:

  • Typically they launch with just one specialised product, often in a cluttered marketplace
  • Often founder-led, they have a strong ‘reason-for-being’. This is often underpinned by a unique story of how their founder became frustrated by a gap in the market which they sought to fill. Such a ‘frustration’ is one the target market relates to
  • They are experts in the use of online, highly personalised, targeted consumer messaging leveraging a combination of social media, Chabots, and email marketing. This creates a strong brand and a personal connection with the consumer.

Conventional wisdom suggested that although they may acquire customers cheaply and intensively at the start-up phase, converting this to long-term success in the marketplace would be challenging. Many competitors and observers felt they would need to adopt more traditional marketing techniques if they were to become more than ‘one trick ponies’ thus preventing their customers moving onto the next big thing.

The challenges facing D2C businesses do seem to bear out some of that thinking. As D2Cs have grown and saturated their target market, the cost of customer acquisition has increased, leading many to abandon their traditional marketing avenues such as Instagram and Facebook. Others have chosen to explore the world of bricks-and-mortar retailing (but that is not to say that they have begun to take on the characteristics of traditional retailers).

Two brands that have come of age in recent years, and pushed the boundaries of D2C retailing, are Caspar, the US-based mattress manufacturer, and Harry’s, the subscription male grooming brand.

Caspar, is a great example of a D2C wunderkind who are growing while continuing to leverage their brand identity. The result is a business which obeys none of the rules of traditional retailing. Having grown rapidly on a base of loyal fans purchasing their mattresses, they realised there was a market out there of brand ambassadors who were invested in the brand. But a mattress is a one-off purchase for most people, so why not offer other products? Casper moved into bed frames, bedding, pillows, nightlights and even dog beds – effectively repositioning themselves as a sleep company. They are also partnering with bricks-and-mortar retailer John Lewis, allowing an avenue to market for consumers who are reluctant to shop online, while retaining the sense of exclusivity and selection that D2Cs are known for.

Harry’s, the razor and blade subscription business has also grown to take ownership of their category. Harry’s built a brand on simplicity. In stark contrast to the overwhelming range of handles and blades available to consumers from the major players, Harry’s offered one type of razor, which took one type of blade. The blade was a distilled version of the ‘best’ blades on the market; their branding emphasised the simplicity and lack of design in their razor and blade cartridges. Even their name was designed to appeal to the everyday man about town. They also offered a subscription service, so customers need never run out of blades again. In one package, they offered a solution to two ‘frustrations’ they knew their target audience would relate to, and marketed heavily online around that point.

As the cost of customer acquisition went up, they sought more options to increase the amount their customers’ spend. Adding a line of male grooming products to their offering was a logical step, however each product was carefully selected to resonate with their brand identity. There is only one of each product type – one shave gel, one after shave balm, one moisturiser. Just like the razor, each product distils the ‘best’ of what is available, and offers it to their discerning customer. There are no variations for different skin types, or different scents, or special seasonal products.

In October 2018, Harry’s took the simple step of expanding further, into female grooming products. Crucially, they launched under a different name, Flamingo, to avoid obfuscating the Harry’s brand. Flamingo shows the same strong identity with the same simple ethos, offering just one of every product type in the larger category of female depilation. By early 2019, their products were available in the large US retailer, Target. As part of their arrangement, Flamingo insisted on customised shelving, allowing them a level of control over their consumers’ shopping experience in store, just as they would online.

As we enter a new decade, it’s clear that D2Cs will continue to go from strength to strength, and are certainly here to stay! As they evolve, their intensive customer relationships and strong brands are being leveraged to expand in their categories (think of Caspar which is inventing new categories which resonate with their avowed mission statements). We expect to see more brands appearing, with different product and portfolio lines, in our physical stores, as well as online. And like a true revolutionary, D2Cs will continue to do it on their terms, changing the consumer landscape, one product at a time.

If you would like to confidentially discuss how Norman Broadbent could help you overcome your business or people challenges, please contact James Peskett on +44 (0) 20 7355 6936 or via james.peskett@normanbroadbentsolutions.com