Co-Founder & Managing Partner
D2C Should Borrow Old-School Tactics For New Multichannel World
Online D2C brands are having a moment. Venture capital has invested $4 billion in D2C brands since 2012 in a broad array of consumer categories: everything from mattresses to suitcases to sofas. D2C entrepreneurs have developed a new brand-building playbook designed to exploit the vulnerability of legacy brands sold through brick-and-mortar retailers.
While it's clear D2C brands are successfully disrupting legacy brands, we believe D2C brands can also learn from the “old school.” D2C is becoming hyper-competitive in its own right. Additionally, D2C brands are beginning to migrate to retail stores to build mass. Both of these developments mean that traditional brand-building methods are increasingly relevant to D2C brands.
Selling brands in brick-and-mortar retail has been hyper-competitive for decades. The plethora of brands and private-label options forced traditional brand marketers to develop sophisticated segmentation approaches to determine attractive, underserved target audiences and to design brand benefits that were meaningful and differentiated.
D2C categories are now becoming saturated. Today D2C shoppers commonly toggle between browser windows comparing D2C brand offerings in the same way they do when faced with different brands on a shelf in-store. Just being easier or more convenient than bricks and mortar is no longer enough. D2C companies need to segment their categories and develop a more strategic approach to their product benefits and value proposition.
Brands sold through brick and mortar lose control once their packages leave their factories. To regain control, they craft strong brand assets: visual branding tools like icons, signature visuals, signature benefit images, and distinctive brand colors Then there’s good old "Mad Men" slogans -- all in the service of being remembered.
Until now, D2C brands have not needed these tactics, opting for cleaner, more minimal style.
D2C brands are now at a crossroads. How can they strengthen their brands within an increasingly competitive D2C space, and how can they translate their brands into the brick-and-mortar world?
Shaving startup Harry’s is an example of what to emulate. The D2c company built a brand with a sustainable strategic benefit from the beginning, identifying a consumer pain point: over-engineered, difficult-to-shop shaving solutions. It created a strong brand in the classical school: trademark-friendly name, mammoth icon, and bold brand colors. It created a superior product based on blade quality and German engineering. Harry's operated in D2C and physical spaces and created distinctive brand assets that were not defined by channel. The result: The brand thrived in multiple channels, and was recently sold to Edgewell for $1.4 billion.
Unquestionably, new brands like Casper and Care/of have opened the eyes of shoppers and investors to a new way of operating. They have put the consumer at the center and designed new solutions that resonated.
We believe now is the time for D2C brands to stop defining themselves by channel, and revisit many of the strategic and executional techniques of their legacy cousins.
This article originally appeared in MediaPost.
How Non-Profit Brands Competing with PrivateSector Brands Can Thrive
by Giovanna Blackston Keren
by Andrew Salzman