Strategy

How Direct-to-Consumer Brands Can Continue to Grow

They need to revise the marketing innovations that gave them early momentum.

by

and

Leonard A. Schlesinger

by

and

Leonard A. Schlesinger

From the Magazine (November–December 2021) · Long read

Robert Goetzfried

Summary.

Direct-to-consumer (DTC) brands such as Allbirds, Casper, Peloton, and Warby Parker have creatively found a weakness in the marketing citadel of incumbent brands. By using data gleaned from daily interactions with customers, these brands have been able to adapt how they serve their unique customer communities across a start-to-finish purchase journey. The best of them have parlayed that ability into a profitable business model applied across multiple channels and customer segments. But as successful DTC brands mature, they must recognize the need to evolve. The authors offer four principles for continued success: (1) Focus on deepening customer relationships, not just making comparisons with competitors. (2) Accompany the customer beyond the initial transaction. (3) Omnichannel is about value addition, not cost reduction. (4) Strengthen the core first; consider extensions later.

Idea in Brief

The Problem

Despite early success, many direct-to-consumer brands have struggled as they’ve grown.

The Cause

Intense competition from incumbents has eliminated the advantages of being an early mover on digital media. And shortcuts taken to bring the brands’ products to market later complicated their progress.

The Solution

As successful DTC brands mature, they should be very careful about aligning themselves with large e-commerce platforms or making product extensions. Above all, they must maintain an intense focus on customer loyalty.

Emily Weiss’s personal blog was never supposed to become a $1 billion brand. The 24-year-old Condé Nast assistant considered Into the Gloss a hobby, a stage for her personal beauty recommendations for fellow Millennials. The blog, which she started in 2010, featured how-to tips, daily routines, and information typical of beauty publications. By 2014 it was attracting more than 10 million page views a month. Using Into the Gloss as a springboard, Weiss founded Glossier, a direct-to-consumer (DTC) line of beauty products. By providing both recommendations and home delivery of the products they featured, Glossier disrupted the traditional two-step distribution chain, in which a customer might receive advice from a department-store beauty consultant and then buy a product from the shelf. Endorsed by Kim Kardashian, and with product waiting lists that have been more than 10,000 customers long, Glossier has surpassed $100 million in annual revenue and has been valued at more than $1 billion.

A version of this article appeared in the November–December 2021 issue of Harvard Business Review.

VR

V. Kasturi Rangan is a Baker Foundation Professor at Harvard Business School and a cofounder and cochair of the HBS Social Enterprise Initiative.
DC

Daniel Corsten is a professor in the Department of Technology and Operations at IE Business School and an investor in retail start-ups.
Matt Higgins is an executive fellow at Harvard Business School and a cofounder of RSE Ventures, a private investment firm. He is the author of Burn The Boats: Toss Plan B Overboard and Unleash Your Full Potential.
Leonard A. Schlesinger is the Baker Foundation Professor at Harvard Business School, where he serves as chair of its practice-based faculty.

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How Direct-to-Consumer Brands Can Continue to Grow

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