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Home » Ingredients for a Successful Direct to Consumer Startup

Ingredients for a Successful Direct to Consumer Startup

March 7, 2019 by Publisher

woman concentrating on laptop

What do Casper, Allbirds, Brandless, Burrow, and Snowe all have in common? For starters, they are all ecommerce startups launched within the past few years that are extremely successful in terms of revenue, brand identity, and recognition. What else do they have in common? They all used the same brand company to launch their business.

Though you may not know the name Red Antler, if you’ve spent any significant amount of time on Instagram in the past year or so, you will likely recognize their work. Minimalist, direct-to-consumer branding that simultaneously conveys a practical affordability and exclusive luxury. In other words, products that Millennials can’t resist.

At the National Retail Federation’s BIG Show in January, Red Antler co-founder and chief strategist Emily Heyward led a panel featuring the founders of Burrow, Snowe, and Thirty Madison. Emily explained that  “We are in the middle of a direct-to-consumer revolution” that started with Warby Parker, which taught consumers that “the kind of thing people used to think they had to buy in person, you can now buy online.”

Then, Casper taught us that “any brand can be loveable. Most people don’t even know what mattress brand they have in their home.” But Casper changed the whole conversation on mattress brands. “Category after category is being disrupted by new brands that recognize an opportunity to streamline the supply chain, reduce costs, reduce friction and, many times, reduce choice for consumers.”

While these direct-to-consumer brands make their sales and success seem effortless, “it’s not as easy as it looks,” says Emily. “It’s HARD to sell direct to consumer. You’re asking a lot of customers. You’re asking people to change their buying behaviors.” Emily says in order to be able to convince shoppers to change their buying behaviors, you have to do three things:

  1. Build trust out of the gate. If you want shoppers to buy something from you online that they normally purchase in person, like glasses or a mattress, they need to trust your brand.
  1. Can’t play it safe. You need a point of view that gets people talking. It’s impossible to build a strategy on paid marketing alone. You need word of mouth.
  1. Give people a reason to change their behavior. If you’re asking people to shop in an entirely new way, need to give them a reason to do so. Create an experience that’s all around better than everything else out there.

In other words, when it comes to creating a successful direct to consumer startup, you need to go big and bold to spark curiosity and hold shopper’s attention. Aside from a bold vision, there are a few key differences between starting an ecommerce brand and opening a brick and mortar storefront.

Rachel Cohen founder of Snowe, a home goods brand, says that going direct to consumer gives you a lot more control. You “control all channels and touchpoints and experiences. There’s a lot more complexity in traditional retailing.” Going direct to consumer allows you to control the messaging, handling, pricing, and delivery around your product, which can help ensure you provide an excellent branded experience. But controlling every part of the process also requires a lot of monetary investment. Rachel says “with direct to consumer you need a lot of dollars to break through.” Emily continues, that all of the control you get with direct to consumer “comes with so much more work.”

Even though all of these brands start out as online-only, once they gain traction, the trend is to open a storefront. Stephen Kuhl co-founder of Burrow, which sells furniture, says it was “always in the cards” for them to go brick and mortar. “If you’re buying a sofa online you’re really hoping you don’t have to return it.” So, they partnered with co-working spaces and retail stores to let people try out the product before opening up their own location in Manhattan, which is complete with a movie theater and welcoming seating areas for anyone to hang out. “Furniture purchases are spread out over such a long period of time,” says Stephen, “we build the relationship now for the purchase in the future.”

Rachel says that she also envisioned Snowe having a physical presence. “Home is a very tactile experience. Even with free shipping and returns, it’s not easy for customers to return table wear.”

Today’s direct to consumer Instagram darlings may start out online, but they all end in a storefront. Burrow and Snowe are the rule, not the exception. Warby Parker, Casper, Away, and the majority of ecommerce startups that gain significant traction take their business to the next level by taking it offline.

Category: Ecommerce Tags: management, March 2019 Issue, small business

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