L’Oreal owns beauty, Gillette owns razors, and who really cares about the mattress market anyways. Right? Wrong. Direct-to-consumer (DTC) brands like Glossier, Harry’s and Casper are proving that legacy companies don’t have the same strong hold on their respective industries as they once did. These DTC brands sell directly to their consumers online - without wholesale “middleman” companies. Which means they can offer their customers more competitive pricing without a decrease in product quality.
Can you Warby-Parker it?
The direct-to-consumer business model is shaking things up in a major way. David Bell, a Wharton professor viewed as somewhat of a ‘DTC guru’ sees limitless potential for brands to disrupt major industries.
"If you went to your kitchen, your bedroom, your bathroom, your living room, and you went through all the stuff that was in there, from your toothbrush to your sheets and towels and curtains--you name it--it could all be Warby Parker-ed" says Bell.
Glossier, one of the biggest players in the direct-to-consumer game, recently announced that it has reached the ever-elusive unicorn status. The beauty company, owned by Emily Weiss, just raised a $100 million dollar round of funding from Sequoia Capital. It is now valued at $1.2 billion. Direct-to-consumer stars, like Glossier, offer compelling proof that smaller brands can disrupt previously stable industries in a big way.
Has the direct-to-consumer ship already sailed?
But, despite its mammoth popularity, is the novelty of the direct-to-consumer model wearing off? E-commerce and business experts are waving red flags at startups beginning their journey towards becoming the next Warby Parker. Startups targeting the same demographic are popping up everywhere. Over-saturation and the increasing pay-for-play environment on social media have become a major barriers to building brand awareness.
Direct-to-consumer success stories
So, what’s the secret sauce? What differentiates the brand that becomes a major player in their industry from the ones that fail to compete with other startups, let alone, their industry’s titans? There are many commonalities between the direct-to-consumer brands that have seen great success. But, one of the most compelling similarities between those that have excelled is radical vision and ability to think outside the box.
At a time where the Kardashians had everyone drawing lines all over their faces for contouring, and Kylie Cosmetic’s lip kits were selling out in seconds, Glossier’s founder was coining her company’s slogan: ‘Skin first. Makeup second.’ She developed a line of natural-looking make-up and skincare, using customers, real, everyday people in her marketing. Involving them in product development is what led to the creation of Glossier’s signature look - the dewy, fresh, natural face. A look that is, in many ways, antithetical to the Kardashian aesthetic that dominated at the time of Weiss’s launch.
Much like Weiss, Harry’s founders, Jeff Raider and Andy Katz-Mayfield, also did some outside-of-the-box thinking to come up with the idea for their razor company. Raider and Katz-Mayfield identified a key customer pain point; razors get dull and have to be replaced regularly. Pretty basic, common knowledge. It’s an obvious, not at all sexy and fairly boring fact of life. But, it’s a nuisance for consumers and no one has ever solved the problem. By taking note, Raider & Katz-Mayfield were able to disrupt an industry that hadn’t seen much innovation in decades. There are only so many blades you can add to a razor before people stop caring. By introducing a subscription model that solves a key customer pain point and offering it all at a cheaper price, Harry’s has become a major competitor for razor titan, Gillette.
Another example from the beauty industry, which has seen a great deal of upheaval in the past several years, is Summer Fridays. The skincare company was founded by social media influencers, Marianna Hewitt and Lauren Gores. They launched their brand with a single product, the Jet Lag Mask, a non-toxic, cruelty-free a hydrating mask. It was a risky move when completing with entire lines of skincare regimens. But, Hewitt and Gores wanted to spend their time, money, and energy formulating a product that worked for customers. Their main goal was to build trust with their community. “We do several rounds, back and forth with our labs. It’s important for every product to be really effective. We can do that best when we have the time and the space to do several rounds of testing” says Gores.
Hewitt and Gores definitely did something right in all those rounds of testing. The Jet Lag Mask, not only sold out on their own website but, also shot up to the top of Sephora’s best sellers list within two weeks of its launch. Since the launch of that first product, Summer Fridays has released two more masks that have both become best sellers.
Innovation is key for direct-to-consumer
Whether it’s offering a different price point, a unique delivery model or a new perspective, it’s clear that innovation is the key ingredient. It is what has put these brands on the map as major disruptors in their category. These companies prove that looking at a product or consumer pain points through a different lens and offering new solutions can set you apart. If that key insight is followed up with a relentless pursuit of a single vision, in time, a small brand can find itself amongst the biggest players in the market.
While every industry is different, there is an abundance of opportunity to disrupt across major sectors, and across multiple markets both in North America and abroad. Supported by increasing market demands, emerging technologies, new online media outlets and platforms, those who innovate and think outside the box have an opportunity to play toe-to-toe with, and even surpass, traditional industry leaders. So, don’t let anyone tell you there are too many players on the field. There’s never been a better time to join the game.