The retail model has shifted as new direct-to-consumer (D2C) companies revolutionize how people like to shop. Taking on conventional notions of retail, these companies offer their products based on simplicity, affordability and personalization – doing this almost exclusively online.

A brand no longer needs to own a large retail space right out of the gate to break into the market – whether you are looking to sell razors, detergent or glasses, products are increasingly landing in the hands of consumers without a retailer in the middle.

With hundreds of D2C brands vying for consumer attention and dollars online, what’s the next channel when that becomes saturated?

 

Online first. Store-front second.

Many D2C brands are finding success in traditional (more physical) channels after – like opening a brick-and-mortar store, or distributing through third party retailers. This lends itself to the idea that consumers love to try out a product (or at least see it up close) before hitting the ‘Buy’ button.

According to the IAB Direct Brands Report, mattress-industry disruptor, Casper, will open 200 stores in North America within three years, lingerie startup Adore Me will open up to 300 in the next five and Allbirds will open stores in four cities to sell its shoes, in the next year.

 

Distributing samples and coupons to an already engaged audience.

Sample and print distribution, though not new, is being explored in a more engaging and unique way – because the samples and coupons are landing in the hands of an audience that wants to receive them.

This is done by piggybacking samples, gift cards and coupons into the eCommerce packages of complementary brands. For example, if you were selling razors and grooming products targeting college-aged men, you may distribute samples into the online orders of textbook retailers.

This type of insert-marketing through Connections has yielded impressive customer acquisition targets for several D2C brands, including:

Mattresses with $600+ Transaction Size: A direct-to-consumer mattress company saw a conversion rate of 0.5%. Through the distribution of dollar off gift cards, their Customer Acquisition Cost worked out to be in the low $130’s, with an estimated Return on Ad Spend of 6.96x

Subscription Meal Kit: A meal-kit company targeting parents with young children saw a 0.92% redemption rate on their $ off gift card offer, resulting in an customer acquisition cost of $29 per sign-up.

Wine with a $40 to $60 Monthly Subscription Fee: Multiple online wine retailers that sells unique private-label wines, distributed a dollar off gift card. They saw a conversion rate of 0.44% to 0.65% on their campaigns, and a resulting CPA of $47 to $67.

 

Why have D2C companies taken the market by storm?

Putting Convenience First

One reason why D2C companies are so successful is the ease of connecting with the product from anywhere. While in a store, one has to browse through dozens of options, however, online shoppers can handpick sellers who specialize in superior items at competitive rates, then have their products delivered straight to their home. Even if you are a D2C brand that has recently opened a store, you can take advantage of curated packaging or parcels to provide consumers with a way to sample the product directly before committing to a purchase.

Creating a Memorable Experience

Many D2C companies excel at giving customers a unique, personalized experience. Using data from a consumer’s interactions with a brand, they can tailor experiences on a much more granular level. Today’s consumer requires more than a convincing sales pitch – they like to be sold a story that distinguishes a brand from the rest in the market and makes them personally feel good.

Being present at the ‘surprise and delight’ moment of a customer’s journey – when they are opening a package they’ve been excited to receive – helps move that story forward and is always a welcome surprise.

If you haven’t already tried sampling for your brand, how can we help you get started?