The Unlikely Secret to Direct To Consumer Success?

People think it's the data DTC companies have that sets them up for success, it's something far more timeless.

When I was 8 years old each I would walk to Hook Norton Village shop & buy the TV Times and the Radio Times, it was our way to know what was on TV.

The Radio Times covered the BBC channels and I could tell it was a bit posh.

The TV Times was downmarket, I knew this because the ads were for crap things. It had coupons to buy slippers that old people must have liked, or mail order firms that sold only Trousers, these were companies for cheaply made things that surely no retail buyer would ever risk stocking.

What was interesting about these products was not how they got to us.

There was little talk about “Direct to Consumer”, about how “mail order is rewiring commerce”, it was quite simple, here was a way to phone up someone, or post something and get what you wanted, a lot lot later. 

Because everything is new today for some reason, we call this new tranche of trendy brands, with snazzy websites, with groovy (identical) logos and an influencer marketing department, Digitally Vertical Native Brands.

We are supposed to forgive the fact they make zero profit, make relatively uninteresting products, and we are supposed to worship them and learn from them based on their unquestionable beliefs.

Learning from todays errors.

Today we’ve become fixated with the things that matters least. How all these trendy new “ DVNB’s get stuff to us.

We assume that Casper is amazing because it was the first to cut out a middle man, that Away Suitcases change the game because they “are online”, or that Warby Parker is insanely great for both selling things in shops and also, wait for it, from a website, as if Argos hadn’t done this 23 years ago.

We think it’s the modern language of these companies which gets us. It’s the founders' story for the products. We think that wanky jeans brands thrive because they disrupted fashion or that it’s the shampoo that has “reimagined” shampooing that is changing the world of commerce. It’s not a reimagined shampoo, it’s a shampoo that is precisely the same in every single way, as every other single bloody shampoo in the world, but it’s got a nice website and an instagram feed. We think these brands succeed because "they have customer data", despite most companies still not knowing my gender after buying mens shoes.

The biggest error marketers make in the modern world is not understanding ANYTHING AT ALL about contemporary consumers.

For many reasons the number of products in the world has massively expanded in the world, the number of decisions per day people to make has grown, the amount of media and distraction has ballooned and our attention feels short and harrowed. In this environment of doubt and confusion and is Jane boning Jack, we need a few things. We need to make good decisions fast. All of the time. We need three things.

1)A brand to believe in.

When we buy stuff we need tiny bit of reassurance that we’ve not been scammed or are about to get poisoned. Because life is empty, short, stressed and futile, we also sometimes need to use brands to bring meaning to our life, to tell the world we have money, too much money, or use brands to signal to others we don’t care about brands.

We use brands mainly to justify to ourselves that we are not being a moron.

We use stories sometimes to give us a little thing to believe, a little hook to hang a feeling on.

Brands have never been more important.

DVNB’s use simple effective, powerful confident media, typically outdoor first and then TV when the VC money comes in, to impart in a highly wasteful way, their confidence in the world. 

( Please shut up all Silicon Valley types who say brands are dead while wearing Atom shoes and drinking Blue Bottle coffee)

2) Easy Buying

We need to buy things fast.

Yes we need fast delivery to quench our need to own things, but more than anything else we need websites that make extracting money from us easy.

If you don’t take Apple Pay and PayPal, we can’t be arsed to get up and find our credit card.

If you need us to fill in address forms that take longer than 10 seconds we move on. The only reason we put up with Amazon is because we can't be bothered to fill in another address form on Target/Walmart/Carrefour.

What modern DVNB’s do well is they use conversational forms, they autopopulate entries, and they just feel nice.

They are the digital equivalent of being seduced at a bar, not interrogated by someone with amnesia. These companies break the main rule of advertising, you either do performance marketing or build a brand, they use shoppable advertising on premium, highly visual media like Instagram to spread the word and convert interest in once place. 

3) Simplicity.

The most often aspect of these brands is that they sell one things well.

We just don’t have the time, mental capacity or will to try 50 mattresses, we just want one type that is fine.

We don’t want to navigate 1356 colors of elaborately named paint, with Satin, Gloss , Sparkly and Incandescent options for each, and then to think about undercoats.

We don’t want a niggling feeling that the UMSPD-42-APS TV was actually better than the MSRAPI-42-APD model.

I’d love a company that just sold one TV for each size and called it “VISION ONE” or something simple.

We largely and increasingly don’t want choice, we want good, better, and best at the most.

( Now it's because of all this time, mental energy and effort saved, that we then may decide to find a couple of products each month that we savor the act of buying. We may randomly love tasting olive oil and listening to stories about the terroir. We may relish buying a car. But these are exceptions to the rule )

What do we take from this?

Digitally vertical brands are fascinating. They have changed a lot of the playground for all.

a) Poor business models

For one they often have disastrous terrible unit economics and like Dollar Shave Club extract all profit margin from a category. These companies largely exist to scare or irritate a more incumbent legacy company into buying them to remove the threat or to look on trend.

Most DTC companies have no realistic way to survive for more than a couple of years.

b) They evolve to become like the brands they challenged.

Casper "succeeded" because the product architecture was super simple, because they had a clear offer, and because they charged so little money that they lost money on every sale.

They then follow the "DTC path to profit" of

-Opening stores to build presence, make trial possible and potentially act as local distribution center

- Sell more products, move "upstream" to sleep and sell pillows, sheets, slippers, lavender, ideally items that make sense to sell online.

-Offer more premium products, ones they can actually make money from and move the brand upmarket and create a halo effect.

The only problem here is DTC brands evolve to become precisely the same as the legacy brands we're supposed to be laughing at.

c) They democratize commerce.

A quick visit to Alibaba, a drop shipping arrangement, a Shopify website and a nice logo from Fivrr and a global FCMG or Fashion label can grow overnight. 

Advertising is different now too, we can now grow brands, do performance marketing and even make ads Shoppable ( more on this another day) in a single ad format on a premium site like Facebook and all without agency expertise or buying rates. They can refine copy and images and optimize in real time.

So now we face a near endless cycle of brands set up to destroy other startup brands and Media rates going up, and CAC costs increasing, and new entrants getting funded and one wonders where it heads. They can die as easily and pointlessly as they started.

We can’t keep talking to the 1/100 companies that make it as anything other than survivorship bias. But we can all learn from them.

The world now allows us to make ads you can buy from, websites you can buy from, payment details can be stored and accessed by our faces.

We like a bit of a narrative, we like a bit of product innovation, but more than anything else we want three things. Brands to reassure us , simplicity in product offer, and for someone to take our money fast..... before we change our minds. It's 2021, we buy remarkably little from need.