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How These Brands Caught the DTC Trend Ahead of the Rush

There were a good number of brands that were on top of the direct to consumer (DTC) trend ahead of being compelled to digitally transform in 2020 due to COVID. How did they anticipate this need and how can your brand anticipate the next one? Consumer and market intelligence is the key to spotting emerging trends – and these brands demonstrate how!

Exploring DTC brands, and how yours can be ready to adapt, we’ll share:

  • Some 2019 DTC early adopters and projected growth
  • Winning brands and what they got right (or wrong)

And if you know where to look, facts and statistics can help shed light on DTC emerging trends, such as:

  • 2022 research indicates the number of DTC ecommerce buyers will reach 103.4 million
  • eCommerce still only represents 10% of retail sales in the U.S. – leaving plenty room for DTC to grow
  • Brands that lead in customer experience outperform others by nearly 80%

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DTC Brands That Came in Hot from 2019

DTC has been building and transforming for two decades. Cutting out the middle-man appeals not only to consumers but to brands as well. Pre-COVID-19, DTC was speeding along with $14.28 billion in sales. It now has a projected growth of $17.75 billion in 2020. With new brands entering the arena every day, by 2022 research indicates the number of DTC ecommerce buyers will be 103.4 million.

Market intelligence allows us to look back in time at the emerging trends of 2019.

These clusters below represent different segments that encompass direct to consumer sales. Inside these clickable nodes are articles, blogs and news sources that reveal emerging trends and show how DTC is discussed.

DTC-conversation-in-2019

A deeper analysis into the segment Brands Exploring DTC speaks to the varying ways brands are thinking. News sources illustrate luxury brands getting their foot in the DTC door, and creative ways brands are connecting with consumers. And it all points in the direction DTC brands were moving:

brands-exploring-DTC-in-2019

This revolution is still in its early innings, with eCommerce only representing 10% of retail sales in the U.S., so there’s still time to hit a home run. Using consumer and market intelligence, we’ll explore retailers who are swinging for the fences.

A Real Squeaker – NBA on Demand

Before COVID-19 hit, the NBA shook up their game by creating an NBA Digital with access to more than 100 live NBA games, original programming and on-demand video content. Basketball is one of the world’s best loved sports, after all.

Using personal narratives to separate the love from hate, helps a brand understand what they’re doing right, or wrong. Our crosstab below shows a comparison, with “I Love” selected, and sample soundbites revealed.

personal-narratives

And with 38.54 million fans on Facebook alone, one has to wonder if the sporting giant didn’t have a little help from consumer intelligence to spot this digital DTC emerging trend.

Other retailers got it right too though, coming at the concept from different angles.

Retailers Getting It Technically Right

DTC allows brands to control their destiny and it’s a great chance to test new products. But just “being there” is not enough. This timeline illustrates how the DTC Brand Marketing conversation has grown and shifted:

retailers-on-DTC-brand-marketing

And then we see How to sell direct to consumer and find the right tech to do it. This could be the kind of market intelligence that inspired Bluecore to create a system to help brands identify customer and product data, providing custom-made experiences for consumers, and enabling companies to deliver 2x the revenue in 1/4 of the time.

DTC-brand-marketing-articles

And Colgate-Palmolive saw the promise in having the right technology as well. Cloud advertisement has been important for them, and combined with e-commerce, has delivered strong growth.

Having the right tech is only part of the puzzle though. “Tailor-made” experiences are the newest in DTC emerging trends.

Fashionably Focused on Consumers

Lululemon is one of the fastest growing apparel companies in the world, and its DTC segment has been the single largest contributor to its success, accounting for nearly 40% of the company’s growth.

Concentrated on making the online experience engaging and seamless, Lululemon’s consistent gains are due in part to having strong digital campaigns, such as their SeaWheeze challenge. Lululemon inspired people to complete their own half marathon virtually, bringing this “together” vibe to their social media pages, and personalizing consumers interaction with the brand:

lululemon-as-early-DTC-adopter

Market intelligence supports this sort of next level customer experience insight. And brands that lead in this outperform others by nearly 80%. And consumer intelligence insight agrees. This sentiment wheel shows interactive words and social posts about them over the past month. Clearly, people approve:

consumer-sentiment-around-lululemon

Another brand tailoring customer experience to audience needs is Walmart-owned Bonobos.

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Bonobos Offers Ultra-responsive CX

For Bonobos, DTC meant being ultra-responsive. This resulted in a 90%+ rate of responding to phone calls within 30 minutes, 24-hour average email time and a 90%+ rate of “great” email ratings. And brands with superior customer experience bring in 5.7 times more revenue than competitors that fall behind.

Gillette is keeping pace with consumers, as it relaunched its DTC program with an emphasis on meeting consumers’ demands. Making it easier than ever to order from them Gillette on Demand allows consumers to reorder with just a text—or, no action at all via subscription. This super “sharp” brand knew consumers viewed personalized engagement as essential, and gave it to them.

Many DTC brands have experienced similar transformations – and a few have attracted unwanted attention as a result . . .

Transformations & Antitrust

Chief marketing and communications officer Keith Weed of Unilever, recognizes the importance of DTC as the way brands will stay relevant: “What you can’t do is post 150 Hellman’s mayonnaises on the store shelf of Walmart or Tesco. You can certainly put 350 on a website.” Which is what Unilever expects to do with its prominent mustard brand Maille.

Variety is important online. And of course, Nike Direct knows the value of being able to offer variety. Since Nike Direct was launched, its stock rose more than 73% in 2019, with revenues of $10.7 billion in the first quarter. And digital was up 42%.

And when a DTC brand has grown significantly, it either becomes a Nike or Unilever or sells to larger prominent brands, like Sephora, for instance. But knowing when to do that without attracting antitrust attention can be tricky.

This was a lesson learned razor brand Harry’s and would-be buyer Edgewell Personal Care. Perhaps if Harry’s had the right market intelligence, they could have learned from other brands’ struggles and been a bit quicker to the draw. Also, as a massive brand buyer, consumer and market intelligence can help those mega-brands know who they’re running against and who may make a great acquisition in a given space. And when.

Our heatmap shows the number of companies within a given category; the compound annual growth rate of the segment and details around who is investing and where. This helps companies see which markets may be over or under saturated, and to make moves that fly under that antitrust radar.

heatmap-of-DTC-contenders

But it’s not all graphs and charts in the DTC world. And it’s not all sports, food and clothing. It’s a widely expansive and ever-growing sector that’s attracting a variety of players.

It’s Not All Food and Clothing

DTC is being re-imagined with companies like Ethereum – the second-largest cryptocurrency platform. When they first arrived on the scene, a single ether was 40 cents, now a single ether is around $400. And then DNA testing has become hot with Pathway Genomics leading the way. Niether are the typical DTC contenders, but both are entirely relevant and growing.

Consumers loves Pathways genetic tests providing ancestry, fitness and skin quality services. And genetic testing is estimated to increase its global market value to $350 million by 2022.

Right now, investment into DNA and Biotech is quite low, and we can see who has invested to the far right. Opportunity awaits in this seemingly small segment.

investment-intel-around-DTC-brands­­­

26 million people have taken DNA tests at home, and Pathway saw an opportunity to maximize its consumer base. Now they’re working with IBM on an app to help consumers better read and understand their medical tests. And looping back to digital currency – if you haven’t explored it yet, you soon will. Physical currency, particularly change is almost obsolete, so this is possibly the coming standard. Who knows? Market intelligence will!

Is there are area were your brand could be a first mover? With the right consumer intelligence, you can be equipped to spot emerging trends and win! Be sure to reach out for a demo to explore the possibilities.

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