Key tactics or strategies that successful direct-to-consumer brands are using in the US are social media, pop-up stores, native ads, subscriptions and influencers. Facebook and Instagram are the most used social media channels by direct-to-consumer brands. D2C company Glossier uses its community of 1.7 million as micro influencers, and peer-to-peer referrals accounts for 70% of their business. 83% of new moms are millennials, and they are powerful in influencing digital marketing.
AN OVERVIEW OF D2C TACTICS
- D2C companies have complete control over their reputations, products, brand message, and customer service. Since D2C companies market directly to their customers, they have a clear picture of their buyers and can give them personalized experiences. Working directly with customers gives them more opportunity to build customer relationships.
- Recent market research has shown that consumers are less trusting of traditional advertising. Today's shopper looks for information from family members or reviews from the internet. D2C companies often start on Amazon, Instagram, Facebook, Kickstarter, and Google.
D2C AND MILLENNIALS
- Millennials, the generation born between 1981 and 1996, are currently driving change in consumer expectations, looking for convenience, streamlined purchasing, and authentic brands. 70% of millennial consumers check out a company's values before purchasing their products, in comparison to 52% of US adults in all age groups.
- 83% of new moms are millennials, and they are powerful in influencing digital marketing. Over 30% of millennial moms work full time and are single. 21% of millennial dads are the primary caregivers and stay at home. Within the next 15 years, 80% of millennials will become parents.
- Many D2C companies rely on social media such as Facebook and Instragram to target audiences because these outlets have excellent history with reaching consumers. Even B2C marketers use social media as an additional tool to find new customers.
- Social Media is used to tell a story, using pictures and words, along with asking a brand's audience questions and polling the audience, to engage them to interact with the product or service. 81% of consumers are willing to pay more for a product or service with user generated content.
- Pop-up shops give consumers a chance to see products in person, creating a personal brand experience. With a pop-up D2C strategy, companies can showcase popular products or introduce a new line, while personalizing the experience with the latest technologies. Pop-up shops usually appear during the holidays or in conjunction with a popular event, which are great times to promote a brand and find new customers and engage current ones.
- Native Ads take place when content is published on premium websites as third party content. Consumers are more likely to trust this type of ad over traditional ads, and native content is less likely to be blocked by ad blocking software.
- Most times this content is marked as sponsored feature, or promoted content. This transparency is important to the consumer. Brands offering transparency have 94% of customers remaining loyal.
- Many D2C companies have a subscription package. Consumers like subscriptions because they save energy, time, and money. Businesses know that subscriptions lead to better customer retention, and a continuous revenue stream. Subscriptions also save the consumer the frustration of the need to review all the options every time they shop.
- D2C companies have seen huge increases in sales when using influencers. An Influencer post can provide an instant promotion of the company's product and greatly increase sales.
- Influencers provide authenticity to the company's products. For example, the D2C company Glossier uses its community of 1.7 million as micro influencers, and peer-to-peer referrals accounts for 70% of their business.
EXAMPLES OF MARKETING TO MILLENNIALS
The Honest Company — Social Media
- The Honest Company was founded by a celebrity with 15,000,000 Instagram followers, and Jessica Alba was able to use this to get her company noticed. The Honest Company sells all natural baby, beauty, and home care products. What set the Honest Company apart was the fact that they had a larger product line than most D2C companies. This was a calculated move, bringing all the natural products parents would be looking for in one place, and by doing so keeping the consumer from searching other websites to find what they need.
- The Honest Company earned $10 million in its first year, and three years later earned $150 million, with a valuation of $1.6 billion. The Honest Company is an example of a company founded by a millennial parent for other millennial parents who share the same concerns.
Monica and Andy — Pop-Ups
- Monica and Andy is an organic baby clothing company. Owner Monica Royer noticed her baby daughter was irritated by most baby clothing fabrics and chemical sprays on them, so she set out to create better clothing for infant skin and launched her company. She began with pop-up boutiques that became meeting places for moms because she knew what it was like to be alone at home with a young child.
- These small stores create a community, and even though Monica has launched a website, those little stores are the backbone of her business. Most stores have classes for moms in groups of five. Monica also runs a blog with wellness information and gift guides for new parents. 83% of new moms are millennials.
- Brooklinen is a D2C fine bedding company. Brooklinen uses Outbrain to place their content on multiple published sites, in 'articles' and sponsored ads with earned and owned media. Consumers trust publisher based information over social media by 24.4%.
- Published content has driven Brooklinen's conversion rate up 15% from using social media. As their demographic changes from young millennials to older millennials with families, Brooklinen has now released a new line called Brooklittles, bedding for babies and children.
- KiwiCo is an educational toy company that has a monthly subscription toy sharing service. There are many millennial parents who use a toy subscription services to bring their children new toys every month at a lower cost, and this also reduces the family's environmental impact with less plastic.
- Parents spend about $6,500 for 71 toys in their homes. With toy sharing, they would have 260 toys for the same amount. KiwiCo was one of the first companies to create toy sharing and has shipped over 10 million 'crates' to children of all ages. Kids love to receive mail each month, and parents share these unboxing pictures in their social feeds.
Extra Example for Millennial Pet Parents
BarkBox-Social Media/Subscription Service
- BarkBox started with three founders and one staff member and a website. The company noticed customers opening their boxes on videos on Facebook, and realizing the consumers liked to show off their dog, Bark Box decided to create a marketing campaign around this. Bark Box began to encourage its customers to show their unboxing videos and photos on YouTube or Facebook, and new customers were given discounts on orders when using hashtags for liking and sharing. Those who shared video also got discounts.
- BarkBox currently has 3 million fans on Facebook, and 1.5 million fans on Instragram. Stacie Grissom, head of content at BarkBox, says that if it weren't for social media, there would be no BarkBox. BarkBox is an online subscription dog treat seller. Millennials are having fewer children, and many love to treat their pets. 44% of millennials call their pets "starter children." BarkBox claims to have over 600,000 customers and a 95% retention rate.
We searched industry publications such as CB Insights, Trade Gecko, eMarketer, and Forbes for articles on D2C business practices. We found many articles on how to start a D2C business and success stories of current D2C businesses, as well as lists of D2C businesses to watch. We also found that many larger corporations and brick and mortar businesses are adding D2C companies to their portfolios. We reviewed all these articles and found several D2C marketing strategies repeated in many of these articles. The most commonly repeated strategies are included in this report.
We also found several marketing publication articles in sources such Retail Drive, Fundera, and Business Insiders, that list hundreds of D2C companies today, and report that millennials are driving this market requiring convenience, low cost, and a good shopping experience. Marketing to millennial parents is a smaller, but growing market. The companies used as examples that are included in this report were chosen because each had a different strategy used for promoting their business and marketing their company to millennial parents. One additional company was included because it also had a unique startup marketing strategy, but it markets to millennial pet parents. All of these companies have been featured in news publications and industry articles.