With news of yet another legacy retailer (Sears) becoming a victim of disruption this week, the retail industry now turns its attention to the onslaught of fast-emerging challengers: direct-to-consumer (D2C) brands.
Several D2C brands, including Warby Parker, Allbirds and Parachute, will be presenting at NRF’s annual Big Show next week, where one of the event’s content themes is “Disruptive Models,” which focuses on retailers that are “challenging standards, flipping old models on their head.”
That makes sense, as 40% of US internet users surveyed by Diffusion said they expect D2C brands to account for at least 40% of their purchases within the next five years.
The beginning of the D2C paradigm shift can likely be traced back to a 2012 viral video sensation from a then-unknown upstart brand, Dollar Shave Club. In the video, which quickly traversed social media and today boasts more than 25 million views on YouTube, founder and CEO Michael Dubin introduces himself and his brand to the world. “I’m Mike, founder of DollarShaveClub.com,” he began. “What is DollarShaveClub.com? Well, for a dollar a month we send high quality razors right to your door. Yeah! A dollar! Are the blades any good? No, our blades are f**king great.”
Simple and to the point: The Gillette razor blades you’re used to buying, behind lock-and-key at the store, are unnecessarily expensive and a hassle to buy. Ours aren’t. Though we didn’t realize it at the time, this brand and this video mapped out a challenger strategy that has become infused into the DNA of so many D2C brands we see today. Undercut on price and emphasize value? Check. Make buying more convenient? Check. Speak to millennial audiences? Check. Use unconventional methods to market on the cheap and hack your way to customer growth? Double-check.
Big brands used to be built around the water cooler. In the pre-digital era, everyone gathered around the TV at primetime and watched the same shows with the same commercials, giving us a common frame of reference for the small handful of brands we saw on store shelves, put into our shopping carts and invited into our homes. Big-budget brands controlled the airwaves, product supply chains and retail distribution points to cement their dominance.
Brands today must contend with a splintered media landscape and the disruptive nature of D2C digital commerce channels. And with consumers scattered across so many different touchpoints, those cultural touchstones that used to come from congregating around the same linear TV events now find their way to consumers at the speed of light through social media.