How Direct-To-Consumer brands are winning consumers from industry incumbents
More and more consumers find themselves reaching for niche brands for almost every product category in their daily lives. What happened? It turns out that people are developing very particular taste for things that solve their very particular needs. Traditional CPG incumbents are challenged with evolving effectively to meet consumer’s changing needs, and are threatened by tech giants (Amazon, Google) that rein significant control over customer relationships.
Craft brands, ie. direct to consumer niche brands, are gaining accelerated momentum because they’re great at “selling the hole and not the drill” — such that it make consumers feel like the product closely relates to their personal needs. Ultimately, the “bespoke” and direct approach is becoming more compelling than the traditional consumer brands and has proven that it can be scaled. By focusing on a specific product category, craft brands are able to win incumbent Goliaths. Here’s how they’re doing it.
1. Precise Targeting — make the audience feel uniquely understood
Today’s consumers look for an expression of themselves in products, not only for the utilitarian value. Craft brands are particularly good at understanding the value systems of their customers. By clearly defining the unique characteristics of their target segment, they can more efficiently reach them, resonate with them, and convert them into loyal fans. It is an “attention economy” after all, with so much content out there, it takes a lot more to capture someone’s attention. It pays to be focused.
Case: Ritual vitamins — aesthetics & science
As if the vitamin market isn’t saturated enough, Ritual managed to stand out with its beautifully designed pills that rose to popularity on Instagram. Beyond the aesthetics, its recent campaign is titled “made by skeptics”, focusing on the hard science behind its product, and head-on demystifies suspicions of pseudoscience. Ritual’s precise targeting is clear from the words of its founder, Katerina Schneider:
“Our woman is the kind of woman who reads her labels and is skeptical of what she puts in her body…She really cares about her ingredients, where they come from and why they’re there.”
And in case you needed more clues about their targeted customer:
- Product design — crystals suspended in clear oil attracts women who appreciate good aesthetics and have tendency to share on social media
- Emphasis on science — speaks to people who are skeptical of hype, and feel they’re smarter than fads and trends
- Name — “Ritual” immediately speaks to those who value the spiritual experience of a good routine
- Focus: there’s only one product — a multivitamin for women. This makes choice easy for people who don’t want to waste time researching different products to create the right concoction for themselves.
2. Personal engagement — build a direct connection with the target consumers
Craft brands put an emphasis on the “Direct” in Direct to Consumer. To a niche audience, being small and vulnerable can create an alluring sense of belonging to a special club (tribe), amongst people who resonate with you in value and taste. It almost induces a smug joy of discovering a hidden gem. When a brand owns the direct channel of communication to its audience, it has an opportunity to get personal and tell a compelling brand story.
Case: Ministry of supply — newsletter for a friend
This brand specializes in making performance business wear, ie. classic business styles with performance fabric that’s sweat-licking, wrinkle free, and comfortable.
On New Years day 2018, they sent this personal newsletter to its customers, titled: 2017 by the numbers 👶🏽🧦✈️🌏
The level of specificity, detail, (and emojis) in this very personal email feels as if it’s from a friend rather than a retailer. As a customer, you can’t help but feel pride for their achievement and for being one of their early supporters. It still used the medium to introduce a few pieces of information that promote the brand, such as their new Shima Seiki garment machine, while carrying a humble tone. Every touch point with the customer is an opportunity to create a personal bond and share a piece of the brand story.
3. Direct Go to Market — go vertical for greater control, experience, and economics
Direct sourcing and distribution allow craft brands to optimize the entire customer purchasing journey and cut out the intermediaries.
Everlane is the poster-child example of leveraging direct relationship with manufacturers to offer price transparency as a value proposition. Vertically integrating the supply chain gives greater control to rapidly adopt customer feedback in product iteration, while direct distribution provides better margin economics that translates to better value for the end consumer. Great products don’t have to cost a fortune — what a sensible rise of the “affordable luxury” trend!
Case: Away — First class luggage at a coach price
Away is a direct to consumer luggage brand that’s obsessed about elevating the entire experience of travel. Its luggages are an excellent representation of “affordable luxury”, where durability, usability, great aesthetics, and delightful features (the infamous ejectable battery) come with a reasonable price tag. Away is able to achieve this by owning the supply chain from design, manufacturing, to retailing.
Its co-founder Steph Korey describes:
It started as an online-only store and by now has four retail stores across the U.S.
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Being niche and solving a very particular problem for a very particular type of customer is a powerful thing. If you try to please everyone, you might end up pleasing no one. Take advantage of direct channels to design products driven by your niche user’s needs, build a personal bond, and provide a compelling, transparent value. This will no doubt make the choice effortless for the desired consumer.
Here are more success examples of how craft brands are disrupting traditional industries:
Warby Parker — glasses; Casper/Endy/Leesa — mattress; Glossier — beauty; Bonobos — men’s clothing; Brooklinen — beddings; Dollar Shave Club — razors, and many more!
What are some of your favourite craft brands? How did they win your heart?
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