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As Facebook and Google ads, the bread-and-butter of many direct-to-consumer brands' customer acquisition efforts, become more expensive, there's also been a rise in companies eager to give money to cash-strapped DTC companies -- for a fee. One of the most prominent of these companies is Clearbanc.
There's a growing group of business evangelists online who love to wax philosophic about DTC brands. But it's not only a pocket of Twitter, but a thriving social network of entrepreneurs, VCs and consultants. But does it run the risk of becoming too much of a clique?
Multi-touch attribution has become the attribution method of choice for brands, especially direct-to-consumer ones, once they start advertising on more channels than just Facebook and Google. But switching to a multi-touch attribution model isn't as simple of a switch as transitioning from one software vendor to another. It is often a months-long project, that requires close communication between a brand's marketing and data science teams.
As DTC brands grow, they face the issue of copycats encroaching on their space. This is increasingly becoming an issue founders are being forced to reckon with. The latest example is Ro, which noticed that competitor Hims had a UX almost identical to its own.
As direct-to-consumer brands expand into new categories, they're starting to hire more marketers with a special focus on retention, whose goal is to win over more business from repeat customers. Brands that currently have openings for retention marketers at various levels include Brooklinen, Care/Of, Peloton and Prose.
Attribution has been a sore spot for brands, especially those that are diversifying their marketing mixes, for years. There are many different methods to figuring out attribution. One that's increasingly popular is "fractional attribution." And for so-called DTC brands, who are now diversifying their ad spend beyond Facebook and Google, they're more likely to allocate their marketing dollars based on a fractional attribution model instead of last-click or click-based attribution model.
Returns are one of the most ubiquitous part of the online shopping process. They are also extremely expensive -- as well as difficult to accurately quantify. For DTCs, returns are one of the large-yet-invisible problems continually hampering the bottom line.
As they grow up, direct-to-consumer startups are starting to partner more exclusive product drops, giveaways and events, all in the name of cheaper customer acquisition. While many of these partnerships are only responsible for incremental revenue, they are one of a number of ways that today's DTC brands are trying to find cheaper and more organic ways to get more people to hear about their brands.
When Dan Levitan, along with former Starbucks CEO Howard Schultz, launched consumer-focused venture capital fund Maveron in 1998, the pair decided on eBay as their first investment. Maveron's thesis was that technology was going to play a bigger role consumers' lives and how they buy products. At the time, that meant getting in early on marketplace startups, where customers could for the first time buy from a wide selection of products online. Today, it means that brands are able to go from "obscurity to ubiquity" in an unprecedented amount of time, thanks in large parts to investments in digital media like Facebook and Google.
In February, Target announced that it was launching a third-party marketplace called Target+ to grow its online assortment in areas like home, toys, electronics and sporting goods. At the time, Target's chief marketing and digital officer Rick Gomez said in a blog post that the marketplace was "in its earliest stages," and that Target would keep the program invite-only to focus on building curated assortment. Still, six months later, the amount of products available through Target+ remains limited.
As direct-to-consumer brands have come to dominate the new retail landscape, they've also brought with them a new set of vocabulary. Many of these terms -- CAC, LTV, AOV -- are important for any retail company, regardless of whether or not they sell directly through their website or not. But they've become increasingly important to DTC companies, particularly the ones who have taken on venture capital funding.
As the direct-to-consumer space matures, private equity brands are starting to play an increasingly heavy hand in picking category winners and losers. One of the most active private equity investors in the DTC space is L Catterton, which has taken stakes in Mizzen + Main, Peloton and Third Love. Most recently, it announced on Monday that it had invested $100 million in bedding brand Boll & Branch. Some of these DTC brands are taking on private equity because they believe it allows them to grow at a more manageable pace than if they were to take on venture capital money.
It's become one of the most talked-about subjects in the DTC world: one of the biggest challenges brands face today is the rising cost of customer acquisition, particularly on digital channels like Facebook and Google. But, the customer acquisition challenges DTC brands face goes beyond cost, and as such, it will take more than just an advertising channel offering low CPMs to win them over.
As Trump's increased China tariffs continue to take a toll on the US economy, many smaller DTC businesses are faced with some tough choices. But for most, it's not simply as easy as moving manufacturing out of the country.
SmileDirectClub will soon be one of the few companies that started as an online-only, direct-to-consumer startup to make it to the public markets, setting the bar for what it will take for other DTC companies, particularly in the health care industry, to go public. On Friday SmileDirectClub -- which sells teeth alignment kits direct-to-consumer -- made its confidential IPO filing public, revealing that the company generated $423 million in revenue in 2018, with a net loss of $74.8 million.
For years, retail experts have touted live streaming as the hottest new way to acquire customers and create instant sales. However, executing video commerce isn't a one-size-fits-all strategy, as lingerie brand Adore Me has found.
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