The document provides advice for startups on accelerating their direct-to-consumer strategies. It recommends that startups 1) have a clear vision, business strategy, and goals with key performance indicators, 2) put customers first by understanding their needs through research, and 3) take an iterative approach of testing, analyzing, evaluating, and optimizing to improve customer experience and conversion. It also emphasizes establishing a single source of customer data, focusing on retention, and doing a few strategic things well rather than many things adequately due to limited resources.
4. The world is gone digital direct
• US DTC ecommerce sales make up 14.0% of total retail ecommerce sales in 2020. While in Europe overall
digital adoption in 2020 rose from 81% to 95%. By 2023, DTC ecommerce sales will reach $174.98 billion
• Last year, direct to consumer (DTC) ecommerce sales rose by 40% in 2020
4
Why go DTC?
Digital transformation has created and democratised the tools for start-ups to build and
scale a business directly with customers
Get to know and own your customer
• It eliminates the barrier between the consumer, allowing brands to get to know and learn from their
customers. This ability to deeply understand and directly interface with customer is key to creating a
successful brand
5. Greater control and Personalisation
• Brands that go direct have greater control over their brand, marketing, sales tactics, data (especially first
party data), messaging and how the product and the brand is presented to the end consumer (customer
experience). This makes it far easier to provide the superior/unique customer experience that today’s
consumers demand
5
Why go DTC?
Financial control / de-risking
• Allows brands to better control their finances and thus potentially increase revenue and
margin and reduce capital expenditure. It also allows brands to de-risk their channel strategy
as they are no reliant on distributors and they have a direct link to their customers
Digital transformation has created and democratised the tools for start-ups to build and
scale a business directly with customers
6. DTC is being reinvented,
it isn’t as easy as
it once was!
7. 7
DTC is being reinvented!
Over the last two decades start-ups emerged that took first mover advantage. Today we
see that while it has never been easier to start a DTC business, it is much harder to scale!
Competition is fierce and competitors have flooded in
• Neil Blumenthal, CEO of Warby Parker noted “It’s never been cheaper to start a business, although I think it’s
never been harder to scale a business”. Competition has flooded in, the price of ads has increased and
standing out is much more difficult making customer acquisition much harder
Legacy Brands have caught up
• Legacy consumer mega-brands have caught up, launching their own DTC lines such as P&G’s Native
Deodorant and Unilever’s chic bandage brand Welly. They have large budgets and deep resources
(which can be an advantage, but not always)
8. 8
DTC is being reinvented!
Over the last two decades start-ups emerged that tool first move advantage. Today and we
see that while has never been easier to start a business, it is much harder to scale!
It is how you do it that matters
• Creating a DTC business 10 years ago was innovative. Now it is all about how you do it. Now innovation is
thinking about how you create a unique compelling human-centered customer experience along the
end-to-end journey for your customer (that really resonates, solves their problem and builds a
relationship with your customers)
Driving visibility and conversion is hard
• While digital tools such as social media make it easier than ever to reach potential customers, driving them to
sites where they can become buyers—and turning fans into customers – is much more difficult
• The old I’ll build a site and do some social media posts / ads does not work any more
• The old arbitrage model in most cases is facing sever challenges
10. What can start-ups do to accelerate?
Vision, Strategy Goals and KPIs i.e. the key building blocks 2nd
• Have a clear Vision, Business strategy, Channel / Distribution (Inc. DTC) strategy and roadmap, Marketing and Customer
Experience strategy (journey’s / funnel)
• Have Goals, KPIs and a framework for testing and measuring performance so you can improve (Customer / Financial)
• For each channel think about the time, capabilities and costs required to effectively convert customers through the
channels you want to use
• What is the role of your DTC (and other channels) strategy? Will it help drive sales? Combat churn or drive retention?
Drive insights or help establish your Brand? Make sure they all work together
• Think deeply about how you will evolve from a Single to Multi and finally Omnichannel distribution strategy. Everyone
speaks about Omnichannel experiences, but creating a compelling one is really really hard. Therefore, think about how
you build towards this in a managed way
Customer 1st
• Everything should start from learning what your customers needs, goals and pain points are. Take time to really
discover, understand and get to know your customer through desktop research, interviews, questionnaires and more
importantly getting out of the office and speaking to them. Create Personas and empathy maps to help you get down
on paper an initial picture of your customers. Keep involving your customers at every step of the process so you can
deliver for them
11. What can start-ups do to accelerate?
Execution - Test, Analyse, Evaluate, Optimise, Repeat 3rd
• This goes for everything you do from your Distribution / Channel Strategy, Marketing, Customer Experience or Funnel
perspective and Customer journeys
• Write down the assumptions you have across the different strategies you have created, define what tests you can carry
and what KPIs you will measure. Then test, measure learn, optimise repeat
12. What can start-ups do to accelerate?
Customer Experience
• Understand the Customer – Create Personas, Customer journey, identify pain points and opportunities to provide a
great customer experience
• Service Excellence - Think about how you can deliver excellent service where it matters most to the customer i.e.
Delivery, Returns and Refunds
• Personalisation – user data and customer insights to provide a richer more personalised experience that show you
know your customers. An Epsilon survey indicated that 80% of customers are more likely to support brands that
emphasize personalization. e.g. Curology asks customers to fill out a form which they then use to develop a formula
labelled in the buyers name
• Brand Values - share your values around important social issues, ethical production, and sustainability, Deloitte
found that the majority of customers across a range of age groups are willing to pay between 1%-20% more for certified
socially compliant products
• Community - create an environment where you customers are welcome share their experiences and feedback as the
know it is valued. DTC brand Glossier is planning to build its own social selling platform which integrates elements of
both social media and e-commerce. Nielsen found that 92% of customers surveyed globally trust earned media, such as
recommendations from people they know
13. What can start-ups do to accelerate?
Establish a single source of customer truth (data) early on
• Ensure you have a platform / tool set that allows you to create a single source of truth regarding you customer data.
Many tools like HubSpot and Monday will allow you to do this from day one and have great deals for start-ups. This
investment will build one of the key foundations to allow you to execute your CRM / retention strategy as well as
build better and more personalised customer experiences
Focus on retention
• It is much more cost effective to retain an existing customer than find a new customer, so focus on developing a retention and
subscription strategy early on (this should be part of CRM / funnel strategy)
• According to a 2018 McKinsey report, the subscription e-commerce market has grown over 100% year-over-year for the past
five years and a key part of that growth was through retention
Less is more
• You have limited resources and budgets so focus doing a few things really well rather than a lot of things ok.
This same mantra should be an important part of your channel / distribution strategy