in association with:

SIX STEPS TO

DIRECT-TO-
CONSUMER
SUCCESS
Featuring "Behind the Bamboo Curtain" - an exclusive insight from
Samarkand Global into how to reach China's lucrative D2C market
 For more information

epri nt Lab
and to set up your

r rapid D2C blu

blueprint Lab, contact:

Introducing ou
An intensive two-day programme guaranteed
to deliver your D2C roadmap. Charlie Wade
Specifically engineered to Charlie.Wade@vmlyr.com

co-create with your team a Including: Or

world-class D2C business Turbo-charging your D2C thinking

Defining a sharp, innovative and value-creating customer proposition

Identifying the D2C skills you have, what you’ll need to have and
identifying the gaps

Rapid upskilling in current and fast-emerging technologies including David Roth

David.Roth@wpp.com
how to take advantage of the collapsing boundaries of “marketing”
and “transactions”.

t now…when?
I f no
 CONTENTS
5
1 3
Move At Speed And Keep Your Promises

Be Mission-Focused And Mobile First Use Data To Deliver On Detail Be Smart - Keep It Simple 79
Be Fast, But Not Hurried 82
Be An Opportunistic Experimenter 85
Think Of D2C As A Mission Shared With Consumers 12 Live And Breathe R&D 49 Keep Your Promises 89

6
Foreword Develop A D2C Mindset 19 Be A Data Devotee 54
Jon Bird & David Roth 7 D2C Doesn’t Just End With A ‘C’ 24 Deliver On Detail 58
Be Mobile First 28 Know Your Numbers 61

2 4
Be A Digital Native, But Not A Digital Captive
Introduction
Malcolm Pinkerton 8
Grow D2C Through ‘Dig-Etail’ 93
Don't Sell A Product, Tell A Story Open Your Mind, Be A Curious Collaborator Rethink The Competition 99
Do No Harm 102

Be A ‘Story Seller’ 33 Be ‘Unorganized’ 67

Don’t Sell Products. Create Experiences 38 Be A Collaborator 72 Conclusion 106
Look Beyond Your Bank Balance 41 Be Curious 76 About Us 109
Live For Loyalty 45

Behind The Bamboo Curtain

All trade marks reproduced in this publication are for illustrative purposes only to denote the goods or services put on the market by the relevant trade mark owners. Whilst VMLY&R,
How to go direct to China’s vast market of e-shoppers 114
The Store, WPP and Kantar has undertaken reasonable efforts to ensure the accuracy of matters set out in this publication it accepts no responsibility for errors or omissions. Special report with Samarkand Global
 Longevity and success in traditional retailing does not bring
FOREWORD a significant advantage to brands entering the grueling D2C
BY: JON BIRD & DAVID ROTH
world. D2C brands must be more comfortable with ambiguity,
more accepting of failure, and more responsive to daily changes
in the marketplace than is typically the case for retail brands.
It’s not just a matter of installing the right technology and
Direct-to-consumer commerce
‘There is no such thing
signing a logistics partner. In fact, legacy brands might actually
be at a disadvantage. To succeed in D2C, they must learn new
(D2C) has seen growth, success capabilities and dare to rethink every aspect of their proposition.

(and hype) unmatched by any other In this book we show how “The Six Steps to D2C Success” must

as a customer service
be applied to a whole business, not simply the marketing and
area of retailing in the past decade. customer service departments. Brands have to be customer-
centric from end to end.
JB

department. Everyone is in
Native D2C brands have ably demonstrated that D2C depends
Spurred on by the success of early movers like Warby Parker and on a set of connected skills, not a business unit. These skills
Dollar Shave Club, literally thousands of brands have sprung up unite strategic marketing, product development and customer
in virtually every sector of the economy, using the practices of engagement, upending “business as usual”.
the most nimble startups to create new products, experience

the customer development propositions and movements. Along the way, they have raised both
capital — over $4 billion at last count — and customer expectations.

As more brands enter the market, the ideas, operating principles,

In the pages ahead, we set out what these skills are, and
illustrate them with 26 case studies showing how D2C theory
works in practice. Some of the most agile and pioneering brands
in the world provide clear learnings on how to change products
DR

and satisfaction department.’

tactics and techniques of those that succeed are being understood and business culture in order to grow a D2C brand.
more widely. In this book, our team digs deep into this terrain to
explore the essential characteristics of strong D2C brands. We We hope you find this both informative and inspiring.
uncover what makes them tick and how they engineer growth, and
we show how the experiences of the best can be applied to other
brands and businesses.

“The Six Steps to D2C Success” provides a roadmap for any brand
or business seeking to serve customers in the direct economy, by JON BIRD DAVID ROTH
KATIE HUNT developing better products, more quickly, at price points and with CEO, VMLY&R Australia & New Zealand, Senior CEO, The Store WPP, EMEA and Asia
CFO, Showfields propositions that will bring new value. Advisor Retail & Commerce at VMLY&R Global Chairman, BAV Group & BrandZ™
7
 INTRODUCTION MALCOLM PINKERTON
Vice President, Retail Insights,
BY: MALCOLM PINKERTON
Europe, Kantar Consulting

The new retail landscape MP

The growth of direct-to-consumer Chief among them the rise of mobile connectivity and the
fragmentation of supply chains into flexible units that no
Next-generation retail simplifies all of this from end to end.
High-performing brands will cut out pain points, remove the

commerce has been driven by, and longer require huge investment of capital. middlemen and create streamlined digital-enabled route-to-
market models. Costs will fall as value chains are simplified,

is in turn accelerating, enduring Next-generation commerce will be defined by the seamless

integration of online and digital, offline and physical,
availability will grow thanks to improved supply-chain flexibility,
and sales performance and channel relationship visibility will

changes to the retail landscape. logistics and data across the entire value chain. increase thanks to real-time inventory and sales data.

Old retail was defined by multi-layered distribution Now, with greater control of the value chain, brands are
networks, riddled with customer pain points. Launch and introducing targeted retail formats and reducing communication
distribution costs were high, brands had limited control costs while increasing SKU productivity. Customer messaging
and little visibility of sales, and legacy systems were (and is more relevant, and insights generated from sales data are
are) unable to accommodate new routes to the consumer. leveraged to optimize products and portfolios of products.

8 9
 EMERGING CHANGES IN APPROACH saving time is as important as saving money for It will also become imperative to identify those moments
many consumers, with friction-free shopping now an of truth that a D2C experience needs to support, and
High-performing brands will be those with the ability to
constantly invent and refine new customer missions and
expectation. be able to ensure that they can be met on owned
properties, social channels and retailer experiences.
To compete in the
buying occasions, redefining commerce by creating truly Simultaneously, experiences that engage and inspire, era of marketplaces
seamless experiences across diverse channels, while while remaining tailored and appropriate to the shopping CONSUMER-CENTRICITY OVER CHANNEL-CENTRICITY
making more meaningful connections with consumers mission, are table stakes. Brands that can create and retail This requires a complete shift in mindset from Gaining a holistic view of the consumer across
through products and two-way conversations. integrated, consistent experiences at every interaction, Modern shoppers want to feel connected to brands
connecting with consumers one-on-one through unified and the lifestyles they promote. They are unbound by ecosystems, brands being transaction-focused to becoming
consumer-focused. Brands can only create
the entire retail ecosystem is vital to successful
direct-to-consumer solutions. The battle to win
Brands can now sell direct-to-consumer on terms online and offline engagement, will be the winners in channel thinking and are focused on the experience,
that can add value to the brand, the consumer and next-generation commerce. not simply the product. Consumers have been granted will need to be more competitive advantage by figuring out what customers the hearts and minds of consumers will be waged
want and how they experience the value provided with data. However, for many legacy brands, a
third-party retailers. The competitive dynamics of next- control over their experiences and are creating
generation commerce will see brands look to preserve The change in the conditions set by customer personal retail ecosystems, populated with those entrepreneurial, across all touchpoints. By placing them at the heart of failure to harmonize consumer data and insights
operations, by considering the end-to-end experience — across multiple brands and platforms will stall
valuable retailer relationships while growing consumer
connections through direct means. D2C success and
expectations can only be met by a change in approach
by brands. To compete in the era of marketplaces
best able to deliver the tailored, seamless, integrated
experiences they now expect.
willing to fail from awareness, to purchase, to referral. efforts.
success in third-party retail are not mutually exclusive. and retail ecosystems, brands will need to be more and learn fast, This requires being precisely where the consumer is LEARNING FROM THE NEW GENERATION
Indeed, one will increasingly become a condition of the entrepreneurial, willing to fail and learn fast, and
at the right time, in the right channel, with the right
other. respond with flexibility and speed. In other words, they and respond with product, ahead of the competition. Brands must look to To succeed, the next generation of retail brands
should be more like a retailer. Or more like an Amazon
Operational agility, a test-and-learn mentality, or Alibaba. flexibility and speed. build closer, more direct relationships with consumers
by establishing mission-appropriate experiences that
will need to create a structure that facilitates
agility, enabling greater control over brand image
willingness to collaborate, and new KPIs will be essential
meet “in-the-moment” needs. and the experience proposition while capturing
for high-performing brands looking to generate fresh Brands will need to be agile in every dimension.
shopper data and ultimately, gaining deeper
revenue opportunities. Extracting meaningful, relevant and appropriate
Successful efforts will focus on bringing retail to insights into consumer behavior.
connections with consumers from the value equation
the consumer with products, solutions and services
REASSESSING THE VALUE EQUATION is only half the battle. Brands will need agility when it
consolidating under a single platform as retailers and Great changes in the marketplace require great
LEADS TO REASSESSING THE APPROACH comes to assortment, tailoring products according to
brands either create or join existing ecosystems that changes by legacy brands and retailers if they
channels to enable more direct sales, and to capture
retain spend, drive engagement and foster loyalty. are to keep up with and satisfy the expectations
Retailers and brands have to rework their overall value targeted consumers in evolving channels, like social
This will lead to the path to purchase being shortened of their future customers. A clear view of The Six
propositions to account for the end-to-end experience, commerce.
through the establishment of new, more direct retail Steps to D2C Success laid out in this book will be
not simply the price of a basket of goods. For example,
models that result in routes to consumer consolidation. vital in helping them succeed.

10 11
 1 For consumers, buying products is no
longer just about owning something.
There’s greater attention than ever before being paid by people rather than broad demographic profiles. That Leading D2C brands typically have a distinctive point
consumers to what else a product does, besides serving sounds like an enormous challenge, but the way of view; a clear perspective on what they intend to
its basic function. What it says about them, what it consumers relate to brands now is intensely personal, change, to eradicate, simplify or invent. They cultivate
means for the environment, whether it helps employees via the smartphone in their hands. The intimacy with forceful personalities and are often led by highly visible
and whether it projects an attitude they identify with. which consumers regard their phones — and the leaders who put their name to their brand and stand for
Brands have an opportunity to align with these new fact that so many use them to manage not just their authenticity. They are propelled by zeal and a sense they

BE MISSION-FOCUSED AND
consumer demands; those that do it with authenticity shopping needs but their entire lifestyle — means D2C can change the world, one customer and one delivery

mobile first
and creativity carve out a place in people’s lives. brands must be built with the highly personal mobile at a time.
experience in mind.
To be truly mission-driven, brands need to rethink True D2C brands forge a “friendship” with their
everything about the choices and experiences offered THINK OF D2C AS MISSION customers and engage them emotionally, rationally and
to consumers, as well as traditional views on consumer SHARED WITH CONSUMERS functionally. This friendship stems from a shared sense
feedback. Many consumers don’t just expect to be of purpose. Their mission is found at the intersection
heard, they expect to be able to play a role in the D2C customers are not just buying products, they’re of the customer’s aspirations and the brand’s desire to
development of a brand and its products. A fresh D2C fulfilling missions. As the boundaries blur between fulfil them.
mindset is essential. what people believe and what they buy, successful D2C
brands have devoted themselves to making something —
Focusing on the consumer takes on new meaning in and therefore someone — better. Whether they do this by
the D2C world; now, the consumer is an individual, and rethinking a category, a product or service, or through
successful D2C brands are those that cater to the unique pure invention, they ultimately call attention to a truth
needs and preferences of consumers as individual shared with their audience.

12 13
 BE MISSION-FOCUSED AND MOBILE FIRST

D2C brands have emerged at a time of incredible advances

in information, communication, and technologies,
people who don’t have access to, or the means to buy
the product. For example, there are many more fans of
Behind all D2C businesses
alongside dramatic and enduring shifts in consumer Patagonia clothing than there are people who can afford
attitudes and appetites. The basic assumptions
underpinning the era of mass manufacturing, mass media
and mass distribution have given way to a completely
to own much of it.

Another reason missions are so compelling is that they

are founders who have seen
revised set of “givens” that govern attitudes towards not only help define a brand’s purpose, but also help
what’s possible and acceptable in daily life. Behind all D2C
businesses are founders who have seen the world as it is
through a commercial lens and decided that “we should be
customers define themselves. With more than 3,500
D2C brands in the US alone, there is now a mission for
everyone.
the world as it is through a
commercial lens and decided
doing better than this now”.
Missions engender trust and affection and they are
Regardless of category, whether it be food, fashion, persuasive, not coercive. They don’t engage by force of
personal care or pet care, D2C founders have identified advertising, but rather by force of authenticity. These

that ‘we should be doing

an opportunity to invent a new reality that resets missions span the whole end-to-end supply chain
expectations. The reason this is so dangerous for long- rather than just functional needs, including sourcing of
established brands is the same reason it is so compelling ingredients and raw materials. Witness the growth of the
for new customers. It isn’t necessarily that these products clothing manufacturer Everlane, give-backs such as Tom’s

better than this now’.

are better (in many cases they don’t claim to be). It is shoes, and commitments to fair trade. As supply chains
that they are more suitable, more sustainable and more become more transparent, the demand to make them
desirable than what has gone before. A brand with a more sustainable increases, and D2C brands can market
mission cannot be competed away by companies that already-popular products with a fresh angle. For example,
customers view as mercenaries. Once a customer has HiBAR is a new shampoo and conditioner line that is
joined a movement or mission, they become off-limits fighting the war on single-use plastic by creating products
to competitors. The mission may be supported even by that come in bars, not bottles.

14 15
 BE MISSION-FOCUSED AND MOBILE FIRST CASE STUDY

Make it happen...
For many brands, it’s time to remember why they got into business in the first
place and to spread that message to their employees and customers. This Patagonia is an established brand built on the Products that are beyond repair are recycled. The materials
means doing the hard work of self-reflection and introspection. It may mean mission of maintaining and celebrating the from the recycled gear go back into producing something
reviewing and changing established business practices. environment. It sells its clothing and food lines new for Patagonia, which ultimately keeps it from ending
direct as well as through retail partners. up in landfill. For Patagonia customers, the Worn Wear
A D2C brand’s mission is the starting point for all its decision-making and program is a win-win. Not only do they get the chance to
communications – the touchstone that informs every aspect of their business. Its clothing is built to last and is expensive. clear their closets of unused gear, they can also buy new
Customers often feel justified spending big on products more suited to their needs at a reduced price.
A successful D2C brand must first view the world through the eyes of the durable products, because over years of use they
customer, then undertake a radical self-assessment of who they are and who get their money’s worth. But there’s still the risk of For Patagonia, the program is authentic to who the company
they want and need to be as an organization. They then determine the changes ending up with a closet full of clothing they’re no is and communicates the quality of its clothing. The brand
they must make to become who their customer wants and needs them to be. longer using, having moved on to a newer version has long been a staunch advocate for protecting the planet,
that performs better and is lighter and even more reducing its carbon footprint, and finding new ways to
The goal of this work is to unearth the often-submerged or suppressed truth at durable. reduce waste. Worn Wear helps accomplish all of those
the heart of the brand and what it does, how it does it and how it communicates goals. Worn Wear fits with Patagonia’s brand, positioning
with its customers. A purpose cannot be faked, but over time it can be lost. Patagonia has solved this problem with its and target market, hence delivering tangible value to
Processes like this are a means for brands to create themselves anew or for “Worn Wear” program, which it delivers direct to existing customers and Patagonia itself, as well as being a
the first time. It offers them the ability to recover and restate the truth that consumers on its own online platform and in stores. great means to bring new customer groups into the brand.
originally animated their business, so they can move onto the next step of It gives customers the chance to trade in their old
establishing a proposition worthy of their customers and the marketplace. Patagonia gear and earn Worn Wear Credit that Worn Wear amplifies Patagonia’s social mission and its
can be put towards something new, or another brand equity for making long-lasting clothes that tell a
Even brands that are already well regarded can use D2C principles and recycled product. It also allows outdoor enthusiasts story — as they say, “the scars tell the story”. By identifying
capabilities to reconnect their customers and themselves to their mission, on a budget to purchase recycled gear at a solid the season in which a product was originally sold, the brand
and breathe new life and passion into what they do. discount — all repaired, washed and ready to go. also creates a sense of history, permanence and community.

16 17
 TO SHARE YOUR D2C MISSION WITH CONSUMERS

ASK YOURSELF THESE QUESTIONS... DEVELOP A D2C MINDSET THE 4 NEW “GIVENS”

1 2
It follows that as D2C brands are utterly focused on

What is the simple essence of your mission? and driven by a mission, they also have a distinctive
mindset. Their unique perspective on the customer
and current market conditions is what allows them
Excellent D2C Excellent D2C delivers
Do you need to rediscover it or evolve it? to rethink basic assumptions about products,
structures and business models. That’s why D2C consciously avoids a distinctively new
brands see ways to bridge the gaps that others take competing with, value to the market
as an immovable “given”. They rethink the market copying and
according to a 21st century set of “givens” — whether
confusing the existing
they be consumer values, consumer context or

a teg or y se ttle d fo r that available technology. Legacy brands seeking to adopt market structure
c
What has the brand or
3 4
a D2C mindset also have four “givens” to guide them.

q ue s tio n o r je tt ison?
ld
a new competitor wou Excellent D2C seeks Excellent D2C is
to improve customer something only the

How could you adapt to ensure operations

satisfaction brands themselves,
not retailers or
marketplaces, can
reflect your mission from end to end? deliver
18 19
 BE MISSION-FOCUSED AND MOBILE FIRST CASE STUDY

Make it happen...
RETHINK CORE BUSINESS OBJECTIVES

Because the core business objective for third-party retail is to

deliver sales, scale and market share, sales are the principal
D2C commerce adds value to the whole commerce ecosystem by meeting goal of those channels, followed by engagement and insights.
the customer where they are and creating distinctive new value in a complex
world of choices — all grounded in the current and evolving customer Conversely, as the goal of owned retail is to generate data Gatorade has created one being reliant on stores to stock giftable sets and a complete
experience. and insights, develop engagement, and deliver an experience, of the most comprehensive all the products they want. range of products that can’t be
sales themselves can take a back seat to engagement and varied D2C experiences found in any store.
That means D2C experiences should be created with the whole market in and insights. Indeed, direct feedback and insights are the in sports nutrition. It has Gatorade used its D2C site
mind, with brands seeking not only to address direct consumer needs, but principal value D2C experiences can create for a brand. brought distinctive value to to launch Gx, a pod system By owning and operating
also to create propositions that fill gaps in the market. the marketplace by creating that allows users to get a distinctive D2C property,
product bundles that are not concentrated products that fit Gatorade is supporting its
D2C experiences exist within a broader ecosystem than simply the system SHIFT COMMUNICATION GOALS only unique, but also highly within a bottle and that can retail footprint and at the same
owned by a brand or any given retailer, and brands must be conscious of this. valuable to their target market: more easily be ordered and time creating a domain that
For third-party retailers, the principal communications objective the serious teen athlete. Its shipped, and its G Essntl range maintains its complete range.
For brands that have a comprehensive distribution network, D2C offers the is usually to show brand utility, identity and presence, whereas subscription model helps of purer products. Gatorade uses data it gathers
opportunity to create insight into the marketplace that can serve retail and in the owned realm the objective is to generate advocacy athletes, many of whom have on consumer preferences to
distribution partners, while providing customers with an appreciation of the through engagement with and experience of the brand. their products paid for by their The site also addresses the inform retail partners about
complete proposition on offer. parents, keep to their nutrition casual athlete and the sports opportunities and trends.
The D2C mindset accurately reflects the customer’s view of the and recovery regimens without fan with unique bundles,
world and helps brands work within the customer context, not
simply their own channel concept.

D2C offers the opportunity to create insight into the

marketplace that can serve retail and distribution partners.
20 21
 CASE STUDY TO DEVELOP A D2C MINDSET

The customization engine is a great

tool to get upstream intelligence on
new product possibilities and to identify
of its most loyal customers who have
a product, size and style combination
that they particularly like. Far from
ASK YOURSELF THESE QUESTIONS...
highly engaged customers. being a site where seconds are sold,
Joe’s New Balance Outlet rounds out a

ll, and
What is the market already doing really we
Newbalance.com features every item New highly developed retail ecosystem built
Balance produces, enabling customers on the three value pools of insights,

can fill?
New Balance is a brand that

where do gaps remain that only your brand

to choose from classic styles and new engagement and fulfilment. New
sells through numerous retailers creations. Products are often launched Balance’s e-commerce team is able to see
on newbalance.com before wider search and online behaviors in all of its
and online platforms, including
distribution, to get customer feedback domains, as well as aggregate reviews
Amazon, yet it also maintains a and be tweaked as necessary. and use these to develop new products
strong D2C experience featuring and extend the life cycles of its most
exclusives, limited-edition and New Balance also addresses the reality popular styles.
customized products along with
a rewards program.
that many consumers like to buy older
and discontinued styles, through its Which consumers are being passed over because
joesnewbalanceoutlet.com store. This
It makes its core products widely
available through wholesale and retail
store is run on the same e-commerce
back end as the main New Balance store,
they are not seen as the primary target?
channels and also sells them on its own and features rare finds and styles that
properties. Additionally, it has a platform are no longer available in national retail
for experimentation and engagement or on newbalance.com.

How can customer and market insights

with its most ardent fans and advocates,
whether they be lifestyle customers or By creating a destination for these
serious athletes. styles, New Balance is serving some

improve engagement as well as sales?

22 23
 BE MISSION-FOCUSED AND MOBILE FIRST

REMEMBER:
D2C DOESN’T JUST END WITH A ‘C’ on “the customer” as an objectified generalization but
rather as a specific person. Making the customer the
An interesting implication of this is that for many
D2C products and propositions, while they have to be
At Warby we
didn’t just talk
It starts with a C for consumer as well. All brands, subject of everything they do, rather than the object of compelling, effective and materially valuable at the
regardless of their provenance, make the claim that what the activity, is a subtle but transformational difference. outset, they don’t have to be perfect at inception, nor
they do is driven by the customer. What distinguishes does the product family need to be fully built out. This
D2C brands is not the simple fact that this is true, but For this reason, D2C brands tend not to indulge in isn’t a license for mediocrity, but rather an invitation
rather the extent to which it is true.

Katie Hunt, the co-founder of D2C investment firm The

excessive competitive benchmarking or comparison.

D2C brands are seeking to be truly transformative in

from the brand to the customer to co-create.

Brands must create spaces for customers to engage

about ‘customer
Fund and the third employee at Warby Parker, says: “At
Warby we didn’t just talk about ‘customer satisfaction,’
we talked about ‘customer respect’, meaning we would
their industries for themselves and on behalf of their
customers. Comparison and benchmarking processes
can be level-setting activities that limit brands to looking
directly and immediately with the brand. They need
to be responsive and open about developments and
improvements they make to as a result of feedback.
satisfaction,’
we talked about
be completely drilled down on the customer’s experience for small incremental advantages over the competition,
even if we couldn’t make it work on the bottom line yet. rather than transformative gains in experience for This means openly admitting mistakes, asking for
Customer service or satisfaction are problem-fixing customers. D2C brands gain their information direct from feedback, and being able to transmit that feedback
mindsets; customer respect is an experience-building their customers and establish a relationship with them across the organization at speed.
mindset.”

Great D2C brands typically begin with a simple product,

on the basis of their responsiveness to feedback. They
earn the right to experiment with every aspect of their
proposition through transparent communication with an
Brands must adopt a “customer respect” mindset, and
use this to guide the creation of their full proposition and
‘customer respect’
proposition and experience, and broaden out from there. engaged and advocating cohort of customers. experience. Does it truly respect the customer, or does it
This enables them to target a very specific customer and ask them to carry a burden to support the brand?
use that customer cluster as a ready-made focus group Active, responsive listening is therefore a core skill of
to provide feedback, help advance the brand, and inform D2C brands. They cannot authentically engage with KATIE HUNT
Co-founder of D2C investment firm The Fund and the third employee at Warby Parker
its future product trajectory. Note that they don’t focus consumers without first understanding them.

24 25
 CASE STUDY TO REMIND YOURSELF WHY D2C DOESN’T JUST END WITH A ‘C’

ASK YOURSELF THESE QUESTIONS...

How could you make the cu
stomer
the subject of your experi
Marmite is an iconic British food spread produced by Unilever and

ence, rath-
made from yeast extract. It is similar to Australian Vegemite, the
Swiss Cenovis and the German Vitam-R.

er than the object of your

It has a distinctive, powerful flavor and is extremely salty. This unique
taste is represented in the marketing slogan: “Love it or hate it”, which goals?
is so prominent in British popular culture that the product’s name is
often used as a metaphor for something that polarizes opinion.

When Marmite launched a website selling directly to consumers, the

omers?
How could you co-create with your cust
company offered shoppers an opportunity to personalize jars and also
order a “Gene Project DNA Kit”, as a playful way to determine whether
consumers were Marmite “lovers” or “haters”, referencing a long-
standing joke in UK households.

By approaching its D2C sales in such a way, Marmite has not only
been able to deliver a level of differentiation that drives enough margin
to make the platform profitable, but also brings its “lovers” into a How could you earn honest feedback –
closer, enhanced relationship with the brand.

26
and get quicker at responding to it? 27
 BE MISSION-FOCUSED AND MOBILE FIRST
Imagine: what if mobile devices on patchy
networks were the only devices you designed for
— how would you do things differently?

BE MOBILE FIRST What capabilities would you expect as standard within a

mobile-only world? What opportunities does the mobile domain
D2C brands and businesses are built on and for the eliminating waste in advertising, and enabling them In the past three years alone, the time spent each day no such thing as a channel any more. The flow of offer that desktops don’t? Most pertinently, all aspects of
mobile economy. D2C businesses have always existed, to start incredibly small and grow with their audience. on mobile devices in the US, for instance, has increased communication backward and forward and the
broadcast and responsive communications should be optimized
but their modern incarnation is definitively mobile. D2C This has dramatically lowered barriers to entry in by 133 percent as the time spent on TV has decreased movement of the customer into different contexts
for mobile, both in terms of the medium and the message.
brands have exploded in number and scale since the every market, because brands can profitably focus on by 14 percent, according to Nielsen. This defines means mobile defines what a channel is. In the
launch of the iPhone in 2007, and now populate every developing a single, differentiated product. responsive marketing strategies and enables two-way US, one in three in-store purchases is made after
conceivable niche of the economy. The relationship communication as never before. The ability of consumers first shopping digitally, and one in four digital
between the explosion of mobile and the explosion in the Brands can now be built at human scale and in real time to respond in real time to their impulses and the reach purchases is made after shopping in-store. Mobile
number of D2C brands is causal, not coincidental. by founders with whom customers have a personal of advertisers has driven the rise of mobile e-commerce is driving product trial into the arms of D2C brands.
affinity. And these customers live their lives as mobile to 40 percent of the total. Mobile now accounts for $210
Mobile technology and the “always-on” society mean warriors. Their devices are their main source of news, billion in annual sales. It’s important to remember, though, that not all
ubiquitous connectivity of consumers to each other and entertainment, communication and shopping. They are customers have the same quality of connection
to brands. This creates the conditions for brands to listen young, often relatively wealthy, and they are purposeful. New payment technologies like Apple Pay and Alipay that those in well-served capital cities do. Even in
intimately and immediately to customer feedback, and to The brands they most need to reach are easily found via have increased convenience while reducing the fear of this connected world, there are plenty of people
respond to consumers directly and personally. mobile. The more time these consumers spend running fraud, further powering this trend. E-commerce has never with slow or patchy connectivity. That means
their lives on their devices, the higher their propensity had a down year; its growth in the past five years has every aspect of the design of D2C experiences,
The rise of smartphones has accelerated the growth and to purchase challenger D2C brands. Mobile media been almost entirely due to mobile commerce growth. from the front-end experience through ongoing
reach of social networks, increasing the accumulation of consumption has, among some audiences, overtaken communications, data collection and back-end
accurate personal data and clearly defining consumer linear TV, and with that the new standard for marketing Mobile isn’t confined to e-commerce, though. Mobile also processes, should be designed as if desktop
preferences. D2C brands have been able to identify has become the ability to drive mobile consumers to means physical, because the consumer using the phone computers and lightning-fast Wi-Fi did not exist.
their audiences and reach them directly, in the palms of digital retail, rather than TV viewers to physical retail. is unshackled and is moving around the real world. The
their hands, lowering the cost of reaching customers, mobile customer is omnichannel. In fact, there really is

28 29
 CASE STUDY IN ORDER TO BE MOBILE FIRST

ASK YOURSELF THESE QUESTIONS...

What are your customers’ p
A great example of how mobile can be deployed across the whole
experience is Care/of, the vitamin and supplement brand. Care/of is a New hysical constraints
York City-based technology company that is revolutionizing vitamin and
that mobile promises to lib
supplement regimes using mobile. Its first product is a vitamin experience
delivered monthly to consumers, personalized to the individual customer’s erate?
unique body, lifestyle, values and health goals.

The brand helps customers choose the right vitamins and supplements, via

ers
What capabilities do your custom
the mobile interface, and develop a tailored program that’s easy to stick to.

The Care/of app lets customers order individualized vitamin packs, set

expect in a mobile-only world?

reminders, track progress and earn rewards by taking them daily. Care/of
focuses on making vitamin consumption a fun experience, by making the
process a challenge that can earn them rewards.

Each month, customers receive a tower with their vitamins that’s like
a grown-up Pez dispenser. Each day there is an individual pack, and
customers get a reminder to take their vitamins in a daily notification
What specific oppor
on their phone. With the Care/of app, users can set reminders for taking
tunities does
mobile offer that oth
vitamins, and track developments in their health. By taking their vitamins

er screens don’t?
regularly, customers can even earn free vitamins and other perks.

30 31
 2 In the D2C world, smart brands don’t try to sell to consumers by presenting a list of
product features or shouting about price. They convince them by telling powerful
stories that reflect a mission shared by both brand and consumer.
Compelling stories are often based on the founder’s BE A ‘STORY SELLER’
passion or journey to product development, but
they rarely focus on the product itself. Instead, they Strong D2C brands have an intuitive — and a data-informed —
focus on the experience a brand can help deliver sense of who their customer is and what they hope for. They
for a consumer. It’s as much about how the brand construct purpose and meaning through the stories they
makes someone feel as what it actually does. tell, and enlist the customer to write themselves into the
story. Most D2C brands have an origin story that convinces
Sales are only one of the goals for D2C brands with customers that the brand sees the world the same way as
DON'T SELL A PRODUCT a long-term perspective; consumer insight, loyalty they do, with shared hopes, aspirations, and frustrations.

tell a story
and advocacy are also important wins for a brand,
and this informs development of the shopping Storytelling and mission are closely linked, and D2C brands
experience as well as investment in marketing. operate on a more intimate level than traditional brands. They
are carried by relatability rather than objective authority.
The importance of loyalty to D2C businesses
means that CRM programs are built into the entire When brands craft a personality that appeals to their
experience, rather than added on at the end. customer, this personality can be woven into a mission and
Consumers who are loyal to a brand feel part of a proposition that makes it not only easy, but also desirable,
community of people with shared values, and one for them to work with. In crafting their story, smart D2C
of the top priorities of the D2C brand is facilitating brands understand that they are not the hero, the customer
conversations between consumers as well as is. The brand is the guide and partner who helps the central
communication between individuals and the brand. character fulfil their purpose. This is “storyselling”.
32 33
 DON'T SELL A PRODUCT, TELL A STORY TO MAKE YOURSELF A 'STORY SELLER'

The brand cannot exist independently of the engaged

Make it happen... ASK YOURSELF THESE QUESTIONS...
customer and the context in which they are living. The

en and
brand and its stories ensure the customer believes that
Strong brands help consumers make better choices faster and
nd ’s sto r y ? W h
What is your bra
the brand cares about, exemplifies, and amplifies their own
central values and concerns. If they don’t, they might still be live fuller lives through both emotional and rational consumption
bought, but only because of a lack of ready alternatives. In choices. Storyselling is the art of bringing the customer and

h at h a s it b ecome?
ed? W
the brand together and sharing that same relationship with the

why was it creat

this fast-moving retail world, that’s shaky ground to be on.
world. D2C brands and their propositions are indivisible from their
Storyselling lowers customer acquisition costs. Anecdotally, stories, and the margins and loyalty they command are directly
brands report that customers acquired through storyselling attributable to them.
channels like podcasts have higher lifetime values. After
all, stories create better long-term consumer engagement, Brands need to reconsider their story, not merely their identity.

What could and should th

and are more shareable between consumers, meaning more Why do they exist? What do they aim to do? How can their

e story
“free” or at least cheap sales from referrals. customers write themselves into the story? When D2C brands
are storysellers, they excel in using media like podcasts and
The D2C sock company Bombas says that in any given week, Instagram, where stories are what the consumer is seeking.
be as you carry it forward
up to 40 percent of its paid acquisitions come from podcast
advertising. According to VP of Marketing Kate Huyett, On a practical marketing level, storysellers don’t separate media
planning and buying from creative strategy and execution or
?
podcasts give the hosts time to talk about the brand’s social
mission and more room to tell its story, which results in content creation. Every aspect of their communications is an
expression of the story.
How can you ‘collapse the gaps’ between brand
higher sales, better engagement and long-term value.

In an era of low switching costs and easy comparison Consider how you can “collapse the gaps” between strategy and

strategy and the end-to-end experience?

among numerous choices, only brands that create an execution in every aspect of the business, from experience and
emotional connection can command sustainable margins. product design to fulfilment and communication.

34 35
 CASE STUDY

‘The product gives

A great example of excellent storyselling is Frank
you the ability to
Body. #thefrankeffect is natural coffee-based
skincare made in Melbourne, Australia, which
was founded in 2013 after two women came into
start (encourage tri-
al) and sustain, but
the founder’s cafe and asked for leftover coffee
grounds to use as a natural body scrub.

the story and the

That first request has led to a range of 20
caffeinated products that have sold to more than
a million loyal customers and 700,000 Instagram

proposition is what
followers. Frank Body has been selling direct
worldwide since 2016, selling more than 3 million
products to 155 countries.

“We think about the persona of our brand and we

think about the ritual of the product. Everything
Frank Body’s origin story,
its brand persona, and the
enables you to scale’
from opening the box with a cheeky rhyme to creation and celebration of
taking a selfie in the shower. The experience
ritual, combine to create
comes down to what the brand allows you to
a story that enhances the
become in actual life and in your social media life NISHA KARNA
(which are often very different), not just the five product experience. Frank Body General Manager, North America

physical senses.”
36 37
 DON'T SELL A PRODUCT, TELL A STORY CASE STUDY

Make it happen...
DON’T SELL PRODUCTS.
CREATE EXPERIENCES
The experience is a combination of the shared mission, The clear implication of this is that brand owners yields advocacy and referrals as well as repeat
the proposition itself and a brand’s commitment to must be concerned with every detail and delivery purchases. The goal of the brand is to engage Nestlé Japan is using AI, social media, and
Good D2C brands differentiate themselves through their
understanding that the product and the experience are deliver it. The cultural and operational commitment to its point of the overall experience; they need to customers as users, not buyers, which means home-testing DNA kits to create personalized
not the same thing. The experience, as we have seen, is promise is ultimately the brand’s active validation of the consider all communications and fulfilment moving investments from pre-purchase diets for consumers, enabling it to evolve
predicated on a shared sense of mission and purpose. trust the customer places in it. processes as a means of creating differentiation promotion and sales, to post-purchase renewal from selling packaged products in stores to
The selling and value proposition — and the commitment for themselves and value for the customer. This and advocacy. becoming a healthy lifestyle brand.
or promise to deliver it — make up the experience. The execution of the experience isn’t limited to the extends to product packaging, the unboxing
Great brands sell a full experience proposition that product; it encompasses every aspect of marketing experience and any communications channel the Brands must create a two-way communication As lines between professional healthcare and
encompasses the product, the product’s use, the and communications. D2C brands are creating product brand establishes. Brilliant D2C brands are very loop with the customer before, during and after lifestyle-oriented healthcare are blurring,
community of other users and benefits beyond the experiences on relevant social platforms, such as conscious of their voice and tone, ensuring it is the “sale”. Often the moments of truth happen
personalized nutrition is improving. Food and
product’s functional attributes. Customer value and YouTube and Instagram. They “reach” and “teach”, always appropriate to the brand. after the initial transaction in the domains of
Because trust is a prime source of value for these through everything from product usage tutorials to drink brands can tap into artificial intelligence
experience propositions are a distinct mix of hard and delivery, service, education and advocacy.
brands, effective D2C brands also make clear claims unboxings. (AI), big data, and social media trends to create
soft benefits that position brands in the lives of their The purchase itself doesn’t sit at the center of the
regarding how they will support and address customers experience, as is often the case in expressions Every contact with the customer and every ultra-tailored choices for consumers. This is
customers, not merely in their hearts and minds.
throughout their life cycle. They make promises D2C consumers expect each communication to enhance of the customer journey; the experience does. variable in the experience can be conceived creating a completely tailored ecosystem of
D2C brands are typically constructed on a few key about transparency, refunds, returns, satisfaction and the experience of buying and owning the product, Understanding the customer experience as a loop as creating a competitive advantage. Returns food and health-related products, and locking
valuable claims. In developing an experience that will openness to communication, among others. Brands even seemingly mundane post-sale communications. highlights the modern reality that the purchasing windows and privileges, delivery options and consumers into not only products, but also
delight their customers, they lean heavily on a couple driven by an affinity to customers’ purposes will quickly Operational elements like the unboxing or pick-up and owning experience for a customer can begin cycles, product unboxing and packaging or protocols that aid and improve lifestyle.
of pivotal factors that together enhance the brand come unstuck if the brand and experience are not the experience are as fundamental to establishing brand anywhere - and need not end. YouTube “how to” videos and more can all be
experience. same. affinity and affection as the use of the product. created to improve the proposition, separating
At the core is the ownership (sometimes called the brand from the competition and altering the
the usage) experience. A great experience consideration criteria entirely.

38 39
 TO HELP CREATE EXPERIENCES

LOOK BEYOND YOUR THE THREE POOLS ARE:

ASK YOURSELF THESE QUESTIONS...

1 2 3
BANK BALANCE

D2C businesses offer brands three clear

pools of value, and the goal of any D2C

Which are the pivotal elements of

business should be to develop and
Insights Engagement Fulfilment
maximize each in support of the other.
Uncover new markets, Increase brand loyalty Sales and customer

your brand experience and how audiences, and

improvements to
and advocacy. satisfaction.

products and services.

can you make them more memorable?
They all ultimately exist to improve the customer experience over D2C brands measure their customers’ response and reaction to
time and increase a brand’s reach to serve more customers in everything — not only the presence of the reaction, but also the

ild
What promises can you make that will bu
better ways. Balanced in the right way, they ensure the money emotional temperature of it. They are aware of and care about
follows. how the customer feels about them in real time, and are focused
on that individual’s likelihood to support and recommend them.

perience?
trust and serve as a foundation for the ex
Excellent D2C brands set up their businesses to reflect the way They aim for frequency of activity because their customers are
customers want to shop and buy rather than how the brand wants identifiable and measurable. Because of this, brands can be
to sell. Because they know their customers both individually and confident in their judgments and make decisions and adaptations
at scale, they are able to customize their products, propositions in real time.
and services, and undertake a range of activities profitably that
Which points of contact enhance customer enjoyment of their proposition and story. D2C brands run their communications like a dynamic two-way
can you use to newsroom, knowing that each response they get yields new

communicate your comp They can intentionally develop insight and engagement knowing insight and can generate new advocacy, leading directly to

40
etitive advantage? that sales will follow. And they can track the relationship between
the different pools of value.
profitable sales.

41
 DON'T SELL A PRODUCT, TELL A STORY CASE STUDY

Make it happen...
The Old Rip Van Winkle distillery in Frankfort,
For established brands, D2C experiences shouldn’t For many established businesses, engagement is an
be evaluated on the same sales, share or profitability initial challenge, especially when competing for limited Kentucky, produces one of the world’s most
metrics as third-party retail. internal resources with comparable metrics and bases exclusive and in-demand bourbon whiskeys.
of measurement. When companies understand the Created by founder Julian “Pappy” Van Winkle
D2C brands built within the walls of legacy businesses ecosystem, they are able to frame appropriate goals and just prior to prohibition (when it was licensed
should be set up to enable the business to gain insight develop experiences that reward customers’ expressed to be sold for medicinal purposes), the Old Rip
and engender loyalty, distinct from the everyday course and unexpressed aims. Van Winkle brand was reintroduced in 1972.
of business. The objective of brands is to grow advocacy Demand is so high that it’s been dubbed “The
and sales over time, so much of the brands’ activity will Viewing the system this way ensures brands create bourbon that even billionaires can’t get hold of”.
be to engender engagement, even from stakeholders experiences that support the whole ecosystem, not just
who might never buy a product from the company. a single element. Data and insight captured in any part
Pappy Van Winkle’s great-granddaughters
of the system is valuable when deployed to all parts
started their own venture, Pappy & Company.
Tesla Motors is a clear example of this strategy working of that system. Loyalty earned on owned experiences
This bourbon-inspired lifestyle brand sells a
well. Since inception, Tesla has been aspirational, shows up as sales on third-party experiences and so
resetting expectations for the electric car and the auto on. Understanding the complete digital commerce range of culinary, apparel, home and barware
industry itself. The company’s buying audience is small, ecosystem and the three pools of value is essential products as well as an exclusive barrel-
but its advocating audience is huge, evidenced by its to ensuring D2C experiences deliver value for the fermented cigar line. Rather than explicitly
3.4 million followers on Twitter, even though it currently whole enterprise. Brands must create measures that selling bourbon, Pappy & Company uses its
sells only 300,000 vehicles per year. Compare this to GM, demonstrate the relationship between insights gathered, site to promote the promote the lifestyle at the
which sells 3 million cars in the US and 10 million globally, loyalty engendered, and satisfaction delivered. heart of the brand and develop relationships
but only has 680,000 followers on Twitter. with customers who might never actually taste
the real thing, but who want to experience the
brand and maintain a relationship with it.
42 43
 TO MAKE IT ABOUT MORE THAN MONEY

ASK YOURSELF THESE QUESTIONS... LIVE FOR LOYALTY

What value can you assign to each of the A smart D2C brand doesn’t run a loyalty program
as an add-on to their communications; the whole
but by their relational value. It is the quality and
frequency of two-way engagement rather than
proposition is intended to engender loyalty and give spend that genuinely reflects the value of the
pools of value (Insights, Engagement the brand freedom to develop their propositions
beyond a given product.
relationship created.

and Fulfilment), and how can you link them?

D2C brands do not stop at trying to create strong
This has significant implications for how businesses 1:1 relationships; their vision for loyalty and
establish and manage their communications engagement is to create groups of advocates who
programs. The most pronounced implication celebrate the community as well as the brand. This

for your
is that D2C companies don’t see CRM, social, 1:1 concept of loyalty ties directly to new customer

cre ate th e m os t v alu e communications, chat, IM, etc., as distinct, but acquisition, sales and repeat purchases. For these

Which insights would

rather as a single collaborative experience and brands, loyalty is shareable and reinforceable

yalty?
communication program that increases insight into among groups. They don’t manage loyalty

, satisfa ctio n an d lo
brand in terms of sales
customers at all points of the experience. programs — they mediate relationships between
consumers. Loyalty is conducted not only on owned
D2C brands seek to address all the stakeholders in properties, but also on shared social platforms.
the business, not just the paying customer, and they
regard advocates and critics differently to legacy As Ido Leffler, co-founder of Brandless, the
brands. They realize that the most valuable brand household supplies company says, “The biggest

Which KPIs would help you pursue advocates and the most constructively critical
consumers may be the same people. Relationships
part of our marketing goes toward our community,
through social media, community building and
are assessed not simply by their monetary value, information sharing.”
insights and engagement as well as sales?
44 45
 CASE STUDY TO LIVE FOR LOYALTY

ASK YOURSELF THESE QUESTIONS...

The cosmetics brand Glossier, founded by Emily Weiss, started as a blog
called “Into the Gloss” in 2010 and expanded into commerce in 2014. It
is reported to get 70 percent of its online sales from peer referrals. The
How can you transform the idea of loyalty from
brand’s interaction with its online subscribers (including 1.1 million
Instagram followers) has fostered strong channels of communication
something customers express toward the
company, to something they express to other people?
between brand and consumer and between consumers themselves.

Glossier has utilized these bonds to conduct free product research and
development, amassing user-generated content and building a solid fan
base of “Glossier Girls”. Its massive online ecosystem continues to drive

How can you create a loyalty program

the future success of the brand.

Being able to hold on to customer information for marketing purposes

or get sales data directly in real time is key to successfully launching
new products. The brand then creates an experience that matches the
that rewards engagement, not just sales?
expectations of the core audience.

A successful D2C platform will often feature exclusive items, which give
a sense of being part of a club, leading to increased brand enjoyment

yo u m a ke loy a lty shareable

and advocacy. Brands like Glossier are masters of driving traffic to
How can
tomers?
their site by using social media to create a buzz that builds the online

rc eable am on g cu s
and reinfo
ecosystem of engagement through direct and user-generated content.

46 47
 3 One of the great advantages of dealing directly with consumers via a brand’s own online
platform is that every single thing a consumer does creates a rich trail of data.
This is a potential goldmine for D2C brands, allowing The other key aspect of data for D2C brands is in Fluid and fast supply chains enable brands to
them to adjust products and services and then see, measuring the performance of every aspect of the test new products and propositions quickly and
in real time and over time, how different customers business. Being on top of how different elements of responsively. D2C brands set themselves up as
respond. This feeds into an ongoing process of the offer and communication contribute to the cost of learning organizations, meaning they constantly
research, development, iteration and improvement. acquiring a customer, and to the lifetime value of each establish a hypothesis, determine expectations
one, is essential. and goals, and then measure outcomes. They
Data is where brands win insights into how not just aren’t wedded to a single hypothesis or point of
to satisfy consumers but delight them, and great LIVE AND BREATHE R&D view. If the customer doesn’t value the feature

USE DATA TO DELIVER ON brands know that delight is in the detail. Consider or product, D2C brands are able to move on

detail
which details of the whole experience you offer can Outstanding D2C brands are iterative. Flexibility, because they haven’t committed heavily upfront.
create true moments of delight, and remember that curiosity and improvement are built into their business
these moments can occur after the sale or in the models, from original inspiration to product and
unboxing or usage experience — things that aren't experience design.
strictly necessary, but are genuinely delightful.
The first goal of D2C businesses is to improve their
Given the wealth of what can be achieved with customers’ lifestyle over time, and first-party data can
data, it is tempting to try to collect as much of it be used to drive research and development. The brand’s
as possible. This is not just a waste of resources, it creative functions, including product development,
can easily backfire on a brand. Much better to focus marketing effectiveness, customer analysis and pricing
on the data a brand needs in order to create those should all be driven by data and customer feedback.
delightful details, and then set about creating it.

48 49
 USE DATA TO DELIVER ON DETAIL

In years past, experimentation directly with the

customer was impossible; the cost of creating an
experimental product run was prohibitively high.
Outstanding D2C brands are
iterative. Flexibility, curiosity
Experiments, as far as they could be termed that,
were largely confined to achieving incremental gains.
In other words, they weren’t really experiments at all.

and improvement are built

Outcomes would have to have a “certain certainty”
before trial, and they definitely couldn’t be tested on
large, engaged and directly responsive audiences.
They had to be limited and controlled. Testing

into their business models,

multifaceted and amorphous experiences were
simply impossible, because too many variables and
third parties made such a test unviable.

from original inspiration to

Modern, digitally enabled D2C experiences allow
almost complete control of the consumer experience,
enabling brands to delve into the mind of the
consumer to explore what is and isn’t working.

product and experience design

Failures do not happen in this lab; instead, hypotheses
are proved or disproved. This D2C retail lab is a place
to continually test, tweak and learn. And then apply
(and scale) elsewhere — and often on substantially
better terms than could be negotiated at inception.

50 51
 USE DATA TO DELIVER ON DETAIL CASE STUDY IN ORDER TO LIVE AND BREATHE R&D

Make it ASK YOURSELF THESE QUESTIONS...

happen...
co lle ct t hr ee data
If you could only
why?
Kellogg’s Bear Naked granola brand,
Brands need to decide what they are sold in stores like Target, Walmart

ou ld t he y b e a nd
sets, what w
using their D2C platform for. A D2C brand and CVS, uses its own e-commerce
experience is composed of many interrelated site, BearNakedCustom.com, to allow
parts: product, proposition, fulfilment, customers to create their own granola
marketing, loyalty communications, mix and buy directly from the site.
supply chain and more. Brands can create
experiences outside their typical business
realm to test and learn from new hypotheses
The site showcases the breadth of the
product range; creates a unique and
If you could get it, what data or insight
that communicate value into the main stream. personalized experience for users;

Everything can be tested — not only the

and plays a key role in new product
development, allowing Kellogg’s to By combining data and detecting
would be truly transformative?
product, but also every aspect of the capture a large amount of consumer certain patterns, Watson has learned
communication and experience cycle. The data and understand the preferences to suggest combinations of up to
results of these tests can be used to improve of its most engaged customers. four different ingredients that
every aspect of the company’s business Kellogg’s also employs IBM’s Chef blend together well, and is helping

How might you use a D2C platform to test not jus

function and customer experience. Watson AI API tool set to power the Kellogg’s redefine the granola-eating

t
experience. Watson draws on the experience from one synonymous
chemical composition of hundreds of with breakfast to one that can occur
different ingredients and analyzes
some 10,000 recipes from Bon
at any time of the day or night. Olive
and Kale Granola is one of the site’s ‘what is?’, but also ‘what could and should be’?
Appétit. many successes.

52 53
 USE DATA TO DELIVER ON DETAIL

BE A DATA DEVOTEE

Data must be ‘created’, and

The consumer data that D2C brands can capture enables Many brands focus on the second purpose, but those To create memorable customer engagement, boost
them to create great experiences that get better and who focus on the first really stand out. Engagement ROI, and identify new customer segments, brands must
more useful for the customer over time. Smart D2C is about collecting insight just as much as it is about have a focused and objective-driven data strategy. The

retailers and brands need to

brands use data as a strategic business asset; they know increasing sales, but this perspective is surprisingly rare. first rule of first-party data is to only ask for and collect
what data they want, why they want it and how they plan Forrester reports that only 9 percent of marketers cite information that is useful and will ultimately serve the
to use it. They strive to understand the context in which customer data collection as a top business objective for customer. First-party data includes information on
data was generated, and what combinations of data their customer loyalty strategies (Forrester, Q2 2018, behaviors, actions or interests demonstrated across
generate richer consumer insights. Global State of Customer Loyalty Survey). For emergent
brands, the value of this first-party data is inestimable
and not simply confined to improving the efficiency of
a customer’s digital and physical properties, as well
as the data that brands hold in proprietary CRM and
subscription systems, and other sources, such as social
build data strategies around a
The currency of digital commerce is information, which

new question: ‘What data do

is intelligently aggregated and communicated data. marketing campaigns. data where the customer is known and identifiable.
But the paradigm of capturing data from customers to Data is collected directly from the source, for a specific
persuade them to buy more is not only dated but flawed. purpose, and is therefore accurate and relevant.

we want to create?’, instead of

Data must be “created”, and retailers and brands need
to build data strategies around a new question — “What Successful D2C brands collect data to better understand
data do we want to create?”, instead of “What data can customer needs and improve the role the brand plays in
we capture?”. fulfilling those needs through a commerce experience.

When D2C brands offer a highly engaging experience,

They don’t collect data for the sake of collecting data.
They collect, create, analyze and synthesize data to
advance the customer experience, improve engagement
‘What data can we capture?’.
they are able to draw on customers and their data to
incorporate R&D into their proposition. They can all and inform strategy — not simply to tweak tactics.
readily identify their best customers, and focus on
increasing the strength of their relationship with them.

54 55
 USE DATA TO DELIVER ON DETAIL CASE STUDY TO BE A DATA DEVOTEE

Make it happen... ASK YOURSELF THESE QUESTIONS...

What fun can you have with data in your busines
Regard data as an asset that interprets and shapes the customer
experience, enables better understanding of the audience,
Stitch Fix, the D2C clothing brand
founded by Katrina Lake, employs
s?
improves brand strategy, and fosters product and proposition 80 data scientists so they can deliver
innovation. It also helps build a more fluid supply chain, fulfilment “personalization at scale”.
and business operation. Data collected via owned digital

m a ‘data
experiences can stimulate brands to develop new revenue models, Writing in the Harvard Business

t y ou sw it ch fro
How migh
promotions, and marketing communications, in addition to Review in 2018, Lake said: “Data
optimizing the shopping experience to sell more products. science isn’t woven into our culture;
it is our culture. We started with it

‘data c re atio n’ m indset?

capture’ to a
Albert Einstein is often credited with the aphorism “Creativity is at the heart of the business, rather
intelligence having fun”. Brands can have fun with data when they than adding it to a traditional Lake says data should
think of it as something they want to “create”, not something they organizational structure, and built be reported to the CEO,
want to “capture”. Data becomes insight when brands collect and the company’s algorithms around our innovation should all be
synthesize information for the purpose of improving the product clients and their needs. The part of me data-driven, and data
and the customer experience. that loves data knew it could be used should be combined with

How can you move from using data to

to create a better experience with a human perspective in
apparel. After all, fit and taste are just order to generate the
a bunch of attributes: waist, inseam, most powerful insights.
material, color, weight, durability, and
pattern. It’s all just data. If you collect improve marketing efficiency to using
enough, you’ll get a pretty good

56
picture of what clothes people want.”
it to improve customer experience? 57
 USE DATA TO DELIVER ON DETAIL
Great D2C CASE STUDY The “out-of-box experience” (OOBE) is a Casper has also aced the OOBE, delivering its mattresses in a
key moment of truth in which brands can box that one person can carry, then the inflation is unleashed by
brands live on connect with customers, and one that too simply cutting open the cellophane. When Casper launched this,
it was such a different experience to typical mattress delivery
the truth that many brands take little or no heed of. One
that consumer unboxing videos generated millions of online
DELIVER ON DETAIL ‘The operation brand that stands out in this regard is Apple, views. The focus on the details of delivery and unboxing of the
famously designing the iPhone box to open mattresses were the finest and most visible articulation of the
is the brand’ slowly — taking three seconds — to make the
The proof of a brand’s ability to create experiences brand proposition.
that improve over time is found in the tiny details of its unboxing of the product more memorable.
proposition, and these are inseparable from data. Casper Sleep was founded in 2014 and sold $1 million worth of
mattresses in its first 28 days, largely fueled by viral videos of
For brands to earn the right to collect and create customers receiving their mattresses and having them “magically”
data from engaged and supportive customers, they Customers expect to not just receive their product or
inflate on their beds.
must demonstrate they are doing it for reasons that service, but also to delight in it. The delight (and not the
customers value. They must also able to identify and act devil) is in the detail.
Their proposition was simple. Mattresses are in reality quite
quickly on the insights this data generates. The great
failing of many companies and brands is they use data This mindset extends beyond conceiving the product, simple, and they had designed the best mattress for most uses,
and analytics to tell, or worse, “to sell” a story, rather and extends to every detail of how the proposition is that could be delivered in a box small enough to be carried up to
than shape one. communicated digitally and physically (for example any urban apartment.
on packaging or in video). The purchase, delivery, out-
Collecting and using first-party data creates an of-box, usage, review and reorder experiences are all Casper had thought through every aspect of what it was really
expectation and a tension, which means that D2C brands contributors to the overall experience. like to buy and install a mattress for young millennial customers.
must be committed to the fine details of their offering. The product had to be great, but their full focus at launch was on
Great D2C brands live on the truth that “The operation A great experience end to end is built on strong creating buzz and delight around the experience.
is the brand”. This means that the authentic truth of analytical and customer experience skills and a
the brand is carried by the operational details. If these responsive approach to customers. The real value for
Casper has gone on to develop a range of sleep products, most
are executed badly, trust erodes and with it the faith in customers is created when there is no gap between their
recently launching a night lamp that promotes better sleep, and
providing personal feedback and information. aspiration — and that of the brand — and the reality.
is working with American Airlines to counter jet lag. At its heart,
Casper is selling sleep, not mattresses.

58 59
 TO DELIVER ON DETAIL

ASK YOURSELF THESE QUESTIONS...

Which elements of the customer KNOW YOUR NUMBERS

D2C brands are constantly focused on reshaping and

Drilling down into data is important for all the reasons

experience are currently flat but we’ve already outlined, but there are two key figures
that D2C brands simply have to be on top of: their cost of
increasing their LTV, because growth depends on it.
While they are trying to keep their CAC down, there are
acquisition of customers (CAC), and the lifetime value of numerous pressures on it. CAC typically rises over time

could be opportunities to create delight? those customers (LTV). The relationship between these
two is crucial to engineering success. The higher the LTV,
as early-adopting customers tend to be the more easily
reachable cohort of customers. Later cohorts cost more
the higher the CAC the brand can sustain, giving marketers to reach, and brands are keen to show that these later
more flexibility and options in seeking new customers. cohorts offset that cost by an increased LTV.

tio nal ne ce ssitie s a nd details

Which opera
D2C brands are able to measure, manage, and develop LTV is increased through frequency and value of
individual customer relationships at scale; they know the transactions, and through the creation of new products

nd pro m ise fo r y ou r brand? effect of their communications and user experiences and services to go alongside them. D2C brands that

carry the bra

on their ability to collect personal data that can drive have anchored their customer on a belief in their story
engagement, response, shares and sales. Everything they and authenticity in a category then broaden their
do leaves a data trail they can examine to understand reach. Brands that began with a simple razor and blade
immediate and consequent effects. subscription begin to add a range of male grooming
products. Away, the travel brand that began with carry-on

How can you ensure that the customer Think of CAC as rent, so all media strategy and luggage, has gradually expanded to become a travel
experimentation is backed by a provable CAC strategy. lifestyle brand.

can see your care and respect for them?

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 USE DATA TO DELIVER ON DETAIL CASE STUDY

The equity built by addressing a singular product with an

eloquent solution ensures that deepening the portfolio is natural
and LTV rises. A vital component of this is the development SOCIAL COMMERCE
of community. Community and the sense of being part of a
movement and a mission not only enhance margin at the single Social platforms like Instagram are increasingly enabling seamless experience, especially for those just browsing
purchase level (LTV might also be called lifetime margin), but D2C brands to develop “performance branding”. for inspiration.
also create a momentum to grow the range and frequency of Instagram’s “Instagram Checkout” feature allows
transactions. And because all of this is measurable, brands shoppers to seamlessly access a retailer or brand’s The possibility to create shoppable posts directly moves
quickly know what works and what doesn’t. website without leaving the platform, and gives brands the shoppers from “I want to buy” stimulus to conversion. But
opportunity to drive impulse purchases. be warned, social commerce is becoming more expensive.
This has given rise to the term “performance branding”, meaning D2C drinks brand Dirty Lemon was spending $20,000 to
all advertising and marketing must perform. It must work to Brands need to know their numbers and find ways Social media offers retailers and brands a new way of $30,000 per day on Instagram and Facebook, but it came
boost brand awareness and perceptions, as well as sell, develop a to establish both their true customer acquisition cost creating urgency around products and promotions, off the platforms in December 2018 because it was no
community and motivate repeat purchasing. Distinctions between and marketing becomes a shoppable tool. Brands like longer cost effective. the expense. “The lifetime value of the customer from
and their true lifetime value. For legacy brands, these
above the line and below the line no longer exist. There is no line. Charlotte Tilbury and Liz Earle have created shoppable Facebook is the highest LTV we have,” says CEO Amy Erret.
numbers can be hard to pin down; however, they have
social media posts to sell directly to consumers via social The CAC that a brand can sustain is directly proportional The brand maintains an LTV calculation for each marketing
a head start on startups, because they have established
Performance branding means brands manage every touchpoint platforms linked to their own e-commerce operations. to its ability to develop an increased lifetime value by and distribution channel (stores and online), as well as a
history to work with. A great first step is to ask: “What increasing frequency and range, and reducing churn blended LTV for each cohort of customers to ensure the
and talk point of the entire customer life cycle.
should they be?”, and work back from there. Social commerce is still in its infancy. However, brands of existing customers. Dirty Lemon has moved on to ratio remains profitable. CAC and LTV are very closely
D2C brands need to know the relationship between their
advertising spend and all of the contributions it makes to LTV. looking to win with younger shoppers should prepare podcasts, and is investing in retail stores and hospitality related.
Most D2C brands try to work with a minimum ratio of 1:3 for Jiobit makes a child and pet tracker it sells exclusively for this to change over the next few years as technology venues as a new means to increase sales and maintain
CAC:LTV, because they know their ratio is what drives decision- D2C. Its founders began the business with a single tracker advances and a new generation of shoppers comes into the right balance between CAC and LTV. “D2C brands have to know their unit economics and be
making. Having specific targets informs product, merchandising bought for a fixed fee, and added subscription tracking spending power. Social commerce strengthens a brand’s able to develop products and experiences that enable
and marketing decisions at every stage. services and hardware payment options, as well as pet ability to be part of the conversation on consumers’ terms Madison Reed, the in-home hair color brand, still uses higher LTV, which in turn enables them to spend more in
trackers, to broaden its audience and boost lifetime value. — wherever and whenever they choose. This creates a Facebook as its primary acquisition channel, despite marketing,” Erret says.

62 63
 TO KNOW YOUR NUMBERS

ASK YOURSELF THESE QUESTIONS...

‘D2C brands have to know e tim e va lu e ( LT V)
f
their unit economics and be What should the li
tom er s r ea list ica lly be?
of your cus
able to develop products and
How can you develop the variables that
experiences that enable higher compose your LTV (product lines,
LTV, which in turn enables them frequency, tenure etc) to increase your LTV?
to spend more in marketing’
What new marketing opportunities would
AMY ERRET
CEO, Madison Reed
present themselves if you could increase LTV?
64 65
 4 The structure of D2C brands needs to be flat and open
in a way that differs vastly from traditional businesses.

An entire organization needs to be focused on BE ‘UNORGANIZED’

the customer experience, and that can only be as
good as the weakest link in the chain. Everyone in D2C brands need to behave differently to brands
the business needs to see their responsibility as that sell via third parties as they own every aspect of
reaching beyond one department; their success their customers’ experience. Customers expect the
depends on together achieving shared goals. brand promise and brand attributes to show up at
every touchpoint and in every interaction. To describe
Collaboration between employees is therefore these brands as “unorganized” is not to call them
OPEN YOUR MIND, BE A essential, as is collaboration with a range of business “disorganized”, but to recognize that these brands are

curious collaborator
partners, from logistics teams to external marketing comprehensively committed to and integrated with
partners. It also applies to a brand’s relationship with customers, because they are comprehensively committed
consumers. One is not simply a supplier to the other; and integrated internally. This is a defining characteristic.
they have a shared interest in product development
and a broader shared experience. Every job within the brand is pointed at delivering a
full end-to-end experience for the customer. They are
Curiosity is the way a business discovers ways “unorganized” in the sense that the mantra of the
of making people’s lives better, and D2C brands’ culture is to collaborate and simplify every process and
curiosity is unencumbered by legacy systems or the every task. This enables the customer to buy from and
need to defend long-standing products. An essential experience the brand in the way that makes sense to
part of being curious is also being ready to act — to them, rather than in the way that reflects the company’s
move the business based on what you discover. org chart.
66 67
 OPEN YOUR MIND, BE A CURIOUS COLLABORATOR CASE STUDY

Make it happen...
Outwardly, the two purposes of a D2C brand are to build
a differentiated customer experience, and an audience to
appreciate and encourage it. To do this, each role must be Brands should assess to what extent the experience they are providing is a reflection of their
Hardvark is a performance clothing brand based in the US, but
subservient to the totality of the experience. organization and organizational compromises rather than a reflection of the real needs and
birthed in London, that brings performance fabrics to urban styling
aspirations of their customers.
It has been said that marketing is “too important to be by knitting together operations in China, Italy, the UK and the US.
left to the marketing team”; likewise, it could be said that Brands need expertise, but to truly develop an end-to-end customer experience, they need to respect
fulfilment is too important to be left to the logistics team. In knowledge, but not be beholden to it. Vetos don’t create fluid, real-time customer experiences. In 2013, founder J.J Symons, an avid skier and longtime equity
fact, every aspect of the experience is too important to be analyst, set out to design a shirt that would enable him work with
left only to the team “titled” to deliver it. To create a truly connected customer experience — one that inspires the customer, develops the same freedom and comfort that he experienced when skiing.
engagement with the brand and creates a sense of commitment over time — brands need to break
The business-ready D2C team appreciates that every detail down internal silos, enabling the business to maximize the company’s technology investments and This meant creating a formal shirt made from the finest merino
of the customer experience carries the weight of the whole develop its processes and skill sets. wool. As well as being crease-free and anti-odor, merino maintains
experience, and should be conceived and executed as comfort on the move and in changing temperatures. The journey
though everything depends on it. Because it does. Hence Regardless of who “owns” a given environment within the organization, they should view increasing
from design to market took him from Switzerland and New Zealand
the effective D2C team does not comprise only a siloed team engagement and the two principal outcomes (insights and affinity) as tangible business goals. By
to China, Italy and Death Valley. His team is an integrated and
of subject matter experts, but also an integrated team of this definition, every element of the experience is a channel of communication.
distributed network of freelance and full-time experts based in
customer experience-obsessed teammates who understand
each other’s responsibilities and the impact they have on Having done this, D2C brands built within the walls of larger organizations have an opportunity LA (marketing, design and photography), logistics (Poole, UK),
the customer. Granular details like same-day fill rates are and an obligation to improve the whole of the organization, while at the same time observing and garment technologists (London) and factory agents (Portugal).
the concern of everyone who is concerned with the outcome respecting the value and advantages the organization confers.
of the brand, not simply the team charged with shipping. Coordinated brands don’t need to be co-located, but they do need
Silos that compromise the customer experience are typically reflections of how an organization to share a common mission and vision that runs across all their
sets incentives and goals that cause conflict among divisions. These conflicts spill into the customer disciplines.
experience, either through outright competition or unhealthy compromises that serve no one, least
of all the customer.
68 69
 CASE STUDY TO BE ‘UNORGANIZED’
Standard Textile is a family-owned textiles business founded in 1940

ASK YOURSELF THESE QUESTIONS...

that has manufactured and sold bed and bath linens and towels to
hotels and hospitals throughout the US.

In 2018 it launched a D2C site under the brand “Standard Textile

you need
What disciplines and processes do
Home”, with a range of 24 sheet and towel sets that had proven
popular in high-end hotels. The development of the site was inspired

ized’?
to put in place to become ‘unorgan
by the insight that many of their products were either taken home
by guests after their stays at luxury hotels, as well as from direct
requests from customers who had been so impressed by their towels
and sheets that they found the label and called the company to ask if
they could order direct.

Starting with a team of just three, Standard Textile launched an How do your current experiences reflect the
organization’s needs rather than the customer’s?
e-commerce site using the Shopify platform, as well as a pop-up
store near its headquarters in Cincinnati. The team flexed across all
aspects of the business strategy, design and development of the site as

What changes could you make to this?

well as creating new products and a supply chain that could deliver to
customers’ homes. Working with agency partners, the team created
its go-to-market program and all aspects of customer support.

As the business grew, roles became more clearly defined as some

tasks became less necessary and planning and developing the site
was superseded by “run the business” necessities. Standard Textile
How can you incentivize your team to ex
Home is an example of how small teams working multiple disciplines
can leverage the business assets of parent companies to create new ecute
value for the brand and a new cohort of customers.
a great end-to-end customer experience
70 ? 71
 OPEN YOUR MIND, BE A CURIOUS COLLABORATOR

BE A COLLABORATOR The D2C customer’s relationship with a brand is

founded on mutual values and an ongoing quest for
That means D2C brands should be demanding partners.
Marketing, logistics and supply chain partners all need Make it happen...
The skill that underpins every aspect of D2C improvement. This progressive relationship focuses to move at the speed of D2C: fast but unhurried. Fast and
on who the consumer and brand are becoming, accurate. Fast and eloquent.

2
brand success is a culture of collaborating
The only way to drive a cohesive end-to-end customer Brands must create an ecosystem of trust that ensures
across domains and simplifying outputs. not merely who they are now. This customer
experience is to drive integration across the parts of third parties will not just agree to keep your promises,
How many customers think of their “collaboration” is something distinctive about D2C As well as strong relationships with the right external
the enterprise that design it. That means D2C team but actually want to keep them. Factor in the interests
shopping experience as something that brands — not distinctive in fact, but in intensity. partners, D2C brands need collaborators within their
leaders must clearly understand the business they of suppliers, internal departments and subsidiaries,
spans “functions” of an organization? None. business, focused on creating an experience, rather
Their employees, are in, and their internal and external partners, then combined with the pressure to be profitable, and the
Forward-thinking D2C brands will partner with than just developing and shipping a product. This means
ruthlessly simplify systems so the D2C brand can move margin for error in delivering on a brand’s promises
This means brands must be great to ensure that no companies in almost every sector, including that every team understands their role in the consumer
with agility. is minimized. Partners need to be motivated to go the
collaborators in three dimensions. They communications, marketing, product development experience, and brings not just their professional
internal divisions extra mile, beyond the bounds of their contractual
collaborate with: and supply chain, and these partnerships and the expertise, but also their personal support for the totality
arise that damage capacity and flexibility of the partner will be central to of what the brand is crafting.
Indeed, a D2C capability within a large organization can obligations, all the while maintaining their own

1
the experience bring the value of collaboration and simplification to profitability.
the customer experience. D2C brands must work with
the wider business. While it is undoubtedly hard for a
businesses that share their concern for the customer, D2C brands are, at their heart, strategic marketers rather
large enterprise to adopt the agile “design, deploy and Likewise, key performance indicators and service
and incentivize them to keep consumer promises. than product marketers. This means that everyone on
improve” processes required by D2C brands, the D2C level agreements must be based on key points in
the team, whether a full-time or shared resource, must

3
Their customers, capability is founded on them. the customer experience, not just efficiency. This is
be committed to working cross-functionally.
particularly important in the early stages, while a brand
to engage them in
Many of a brand’s promises will be kept by partners is building its reputation.
the brand’s mission who are responsible for delivering key aspects of the
and stay open to new Their suppliers and lived customer experience. Brands can control the Delivery partnerships are vital for many brands going
opportunities to intended proposition and the communication of it, direct to consumer for the first time. There are many
marketing partners, but need to be confident and comfortable with the potential delivery partners and managing them is a key
serve them to develop and execute elements over which they don’t have overall control. skill for brands.
the experience

72 73
 CASE STUDY TO BE A COLLABORATOR

ASK YOURSELF THESE QUESTIONS...

Coca-Cola established a global partnership with food delivery app Delivery Hero
to make its products available to shoppers “where and when they need them”
How can you create a truly collaborative
in several markets. Coca-Cola’s logo is featured prominently on Delivery Hero’s
pages, offering shoppers deals on soft drinks with their meal. This is a step
toward owning visibility on this third-party platform directly, rather than
experience for customers?
relying on restaurants and food service operators to provide visibility to its
brand as the drink of choice.

How can you encourage and reward collaboration

Other brands seeking to better connect with shoppers need to identify
the right platforms for digital connection and leverage online visibility

within the enterprise and with business partners?

on these platforms to develop a direct conversation with shoppers.

e su pp lier a g reements
How can you refram
the cus to m er ex pe rience?
74
to improve 75
 Make it happen... TO BE CURIOUS
OPEN YOUR MIND, BE A CURIOUS COLLABORATOR

BE CURIOUS

Curiosity about the world, markets and people is fundamental to

being a D2C brand. The mission’s first spark of inspiration — seeking
Brands can promote truth-seeking curiosity by building more collaborative and fluid
organizations that not only collectively own the total experience, but also are able to
ASK YOURSELF THESE QUESTIONS...
a solution and experience for consumers — and their devotion to respond rapidly and in meaningful ways.

perience
Which aspects of your brand ex
understanding their customers, hinge on the brand staying both
curious and optimistic in the face of challenges. Consider first the ways within a business that curiosity might be disincentivized.
There might be competing interests across divisions, or a team might self-censor
out?
should you be more curious ab
The curiosity that feeds the persistence needed to begin with a their curiosity because they feel unable to act on what they discover.
small idea and turn it into a huge movement can only be maintained
by teams that appreciate the maxim: “The truth will set you free”.

D2C brands as R&D organizations are constantly looking to have CASE STUDY Unilever’s Sinsei brand provides
their hypotheses disproved so they can focus what adds the most
customer value. The listening systems they create are not echo
customized skincare solutions through
a monthly subscription format. The How is curiosity currently dis-incentivized? How
chambers, but forums for actual meaningful feedback. D2C brands products provided take into consideration
can afford to be curious because they typically don’t have a market
or a brand to defend. Their curiosity is their competitive advantage.
all aspects of a consumer’s lifestyle, such
as nutrition, sleep and exercise.
can you promote curiosity within your company?
By responding to customer feedback with action, a brand’s curiosity
Using advanced skincare technology,
can be active and not passive. Large monolithic supply chains
and in-depth, scientific-based knowledge
involving numerous disconnected partners are less adapted to
of health and wellness related to skin

What steps need to be taken to make the

the curiosity that animates D2C brands because they are less able
to act on their findings. Remaining flexible and adaptable enables care and overall wellbeing, Skinsei
D2C brands to remain curious, acting on their findings and quickly adopts a holistic approach to skincare

company flexible enough to be curious...

establishing their results. by providing D2C skincare regimens
that target multiple areas of concern and
Curiosity is central to, and a product of, the cultural distinctiveness ultimately promote “healthier, glowing

76
of D2C brands. and more resilient skin in the long-term”.
and to act on its findings? 77
 5 In this fast-paced world, it’s essential that businesses are efficient,
and that they allow consumers to be as efficient as they want to be.
Being fast means keeping things simple: your BE SMART – KEEP IT SIMPLE in, so D2C brands work to address every friction point
mobile site, your brand’s mission and story, your along the whole experience journey in order to make
communications, your product and your route to Successful D2C brands simplify choices for their saying “yes” easy.
purchase. When consumer choice is unnecessary, customers. They find ways in every detail of the
take it out. There’s a difference between swift and experience to lift the burden of choice from customers, D2C brands have the advantage of having no stake in
hurried, though. One relies on structures designed and thrive on making things easy. Whether it be legacy market structures that have grown bloated by

MOVE AT SPEED AND KEEP YOUR

for agility and quick decision-making; the other is streamlining choices of mattresses or luggage down to an excess of choice and confusion. Decades of “product

promises
rushed, and that can lead to poor outcomes. a decision about size, or radically resetting expectations development and innovation” have often led to complex
when determining which vitamins to buy, D2C thrives on and confusing product lines, perhaps most glaringly
Being a business that is comfortable operating simplification. seen in the traditional mattress market, which boasted
at speed makes it more likely to be comfortable literally thousands of variants that customers couldn’t
with experimentation. This is because it becomes Often beginning with a single product or proposition, tell apart as brands focused on an ever-more esoteric
quickly evident whether something is working, and D2C brands typically make clear and easily range of features rather than delivering a clear, singular
they don’t need to stick with what turns out to be a communicable promises about their products and benefit.
bad idea for long. Experimentation is a way not just propositions. This is a necessity in a mobile world where
to develop new products but also to play around attention spans are short but demands on attention Consumers are demanding simplification, which is also
with communications, consumer engagement and are perpetual, and where choices are unlimited and a highly effective product development and marketing
other aspects of the offering. switching costs are low. Customers need to be able to strategy. Line additions and audience growth can be
make choices easily, to “get” what the brand stands for built on the equity created by the initial launch.
What must never be played around with are the and what its proposition is, and to be motivated to opt
promises made to consumers. If you say “next-day
delivery”, make it so. If you promise shinier hair, a
better night’s sleep or the freshest of flowers, do it.
78 79
 MOVE AT SPEED AND KEEP YOUR PROMISES TO APPLY ‘SIMPLER IS SMARTER’ THEORY

ASK YOURSELF THESE QUESTIONS...

Customers need to be Make it
able to make choices Which features of your prod
happen... uct experience
really increase satisfaction
easily, to ‘get’ what A great experience is one that makes decisions
simple for the customer, not more measurable for
and advocacy?
the brand stands
the brand. D2C brands seeking to develop equity
with customers must stress their simplicity by

Are there details that unnecessarily

focusing on the key product attributes and the
benefits of the end-to-end experience rather than

for and what its just the features of the product.

D2C brands are anchored on only providing the add to the burden of choice?
proposition is, and to features that increase satisfaction and promote
advocacy. Brand innovation is directed at making
the experience, quite literally, remarkable.

be motivated to opt in. How can you simplify

the decision-
making and buying
experience?
80 81
 MOVE AT SPEED AND KEEP YOUR PROMISES CASE STUDY

BE FAST, BUT NOT HURRIED

D2C brands are built for speed in every dimension; of a flexible culture and a flexible supply chain. Working with
Make it
happen...
however, speed, not haste, is the central dictum. urgency within a structure built for change is a discipline,
and disciplined haste is speed. This approach colors
Because D2C businesses are typically founded on flexible every business activity, from the supply chain to product
and leased supply chains and design pathways, products conception and development through communications,
can be created in small batches so they can be fast to delivery of the product, and assurance of satisfaction. Legacy brands can’t build D2C businesses on top
market and fast to elicit feedback before increasing of legacy systems. If they do, they may have the
production. The IAB’s recent “Direct Brands Report” Because these brands are mobile-centric and see outward appearance of a D2C brand but won’t have
surveyed the founders of more than 250 D2C businesses in themselves as ongoing R&D labs fueled by data and the responsiveness of one. Customers will notice,
the US and found they typically could launch a product in audience feedback, they are literally built for speed. and trust will be lost.
four months. This compares to 22 months for a packaged
goods company, McKinsey reports. They are planned and organized with speed of response It is important to assess whether business
and development in mind. Speed is also highly prized by structures and incentives enable and promote
This kind of speed takes planning, and is built into the their audience, so the brand must be intentional in creating speed to market and speed of response. The first
daily reality of an agile D2C business. When a brand structures and capabilities that enable it to move quickly thing to assess is the cost of failure. When it is too
high, either in terms of finance, effort or cultural Delivery service Deliveroo has enabled supermarkets in the UK like Co-
hatches a new idea or determines a new way to provide from end to end. To borrow basketball coaching legend John
attitudes, then the organization will slow down to Op and Spar to provide great choice, convenience, flexibility and speed
satisfaction to a customer, it does so within the construct Wooden’s aphorism, they can “be quick but don’t hurry”.
de-risk it. Brands looking to speed up must lower the to customers. This approach offers a different way to reach customers,
cost of failure and increase the speed of response. helping the retailer reach a new convenience-focused, brand-agnostic
customer base. For Co-Op, the service is in addition to its own online
store, which offers a range of around 1,500 products delivered by
e-cargobikes.com, a zero-emission electric cargo bike courier service.

82 83
 TO BE FAST

ASK YOURSELF THESE QUESTIONS...

BE AN OPPORTUNISTIC EXPERIMENTER Glossier President Henry Davis told Digiday, “If you don’t pop-up stores as a new advertising medium. They are
want to be disintermediated by a retailer, why would you negotiating new lease terms with landlords, which is
D2C brands are open to experimentation in many be disintermediated by a platform?” changing the economic model for brands to set up stores.
dimensions, and none more so than in demand generation. Entrepreneurs have responded by creating new retail
D2C brands also led the development of storyselling on concepts that support D2C brands, such as Showfields in
rder to
Because D2C brands define success in ways beyond sales,

ture s do yo u n ee d in o they are incentivized to experiment not only with new podcasts and video streaming platforms, because these New York City and Four Post in Minneapolis. D2C brands

What business struc

products, but also with their communication, to generate are better storyselling media. D2Cs are now venturing into have reimagined retail stores as a creative and customer

arket?
TV, and when their experiments pay off, they are quick to engagement solution rather than simply a distribution
m
insights and engagement.

pr om ote s pe ed to
enable, incentivize and
double down on their success. For example, ThirdLove, opportunity.
Brands are broadening their channel strategy beyond a D2C lingerie company, made its first investment in TV
Facebook and Instagram; platforms as diverse as in 2017 with an initial budget of $286,000 for the first Brands such as Bonobos menswear, with its guide shops,
Pinterest, Google, Spotify, Hearst and Hulu are working month. Within three months it had spent $3 million and it and Casper, with its Dreamery sleep stores, are rewriting
with D2C brands. In a remark that is typical of the ultimately spent over $13.2 million on TV in 2018. expectations of what a physical store does.
experimental and opportunistic attitude D2C brands have, D2C brands have also led to the development of
They’re also developing stores with the specific intent of

What do you need to stop or being “Instagrammable”, so customers don’t just become

start doing differently? buyers but also advertisers of the brand. When Kylie
Cosmetics opened a pop-up store at Westfield Topanga
near LA, its centerpiece was a replica of founder Kylie
Jenner’s bedroom. Away luggage’s “Terminal A” pop-up in
New York City’s SoHo has a travel-inspired checkout and
luggage scanners. (see reference images

th e co st of fa ilu re
er
How can you low es p on sive?
business m or e r
to ma ke the
84 85
 CASE STUDY

One of the original “pop-ups” from a D2C

company was Warby Parker’s Class Trip back
in 2012. The brand bought an old school bus
and retrofitted it to look like a professor’s
library, in keeping with the company’s
retro style. The bus traveled to nine cities,
spreading the word about Warby Parker and
assessing each as a potential future location.

The stunt was also a social event that invited

Warby Parker fans to enter an online video
contest for the chance to win free glasses –
and a party on the bus with all their friends.

Class Trip wasn’t scalable in itself, but it

gave the brand breakout media coverage and Warby Parker
acted as an inexpensive means of assessing co-founder Dave Gilboa
whether it should open stores. says, ‘It gave us the
confidence to sign
permanent leases’

86 87
 TO BE AN OPPORTUNISTIC EXPERIMENTER

ASK YOURSELF THESE QUESTIONS... Make it happen...

KEEP YOUR PROMISES

D2C brands make bold, simple and explicit claims and

promises; they aren’t simply asking customers to buy
products, they are asking them to buy the brand, the

What opportunities do you have to

values they claim to represent, and the experience they
The promises brands make clarify and simplify Make promises
customers’ choices and expectations. Rethinking you can keep.
claim to offer.
the clear commitments the brand makes about its

broaden your go-to-market strategy that

products and propositions is a great way to rethink
They make clear claims about how they will support and Make promises that
customer engagement. We advise brands to:
address customers throughout their life cycle on things
matter to customers.

would create novel insight, engagement

like refunds, returns, satisfaction and communication.
Brand culture is too precious and fragile
Communications set customers’ expectations about
to be frittered away on promises that
the interactions they’re going to have with a company.

and sales opportunities for your brands?

aren’t valued by customers.
If those expectations aren’t aligned with the brand’s
ability to deliver on them, the brand and business
suffer, possibly irreparably. Don’t make too many
promises.
The ultimate test of a brand is whether and how it keeps There are only so many things a customer
the promises made to its customers. The central truth values, and they don’t value them all equally.

dig ita l a nd an alogue of D2C relationships is that they are singularly personal. Some commitments are pivotal, many

Which physical,
The modern, connected and engaged customer will are incidental. After these key elements

ways
advocate enthusiastically for the brand that surprises of the proposition are in place, the law of

o p e n u p n ew and delights them, but will feel betrayal when let down. diminishing returns rapidly reduces the value

channels would
Expectations, and hence the stakes, can be very high. of each subsequent commitment. Make your

o ld as su m ptions? promises valuable and make them count by

ge
to challen
keeping them short and to the point.

88 89
 CASE STUDY TO KEEP YOUR PROMISES

ASK YOURSELF THESE QUESTIONS...

ow ca n you cl ar ify, sim p lify and
H
Dollar Shave Club captures its whole
proposition below. All customers receive a
100 percent money back guarantee if they

d ify you r br an d’s prom ises to make it

are unsatisfied with the product or service.
co
er for cu stom ers to m ak e ch oices?
easi

Which promises does your

customer value the most?
Which commitments
are pivotal
and which are incide
ntal?
90 91
 6 In many quarters, the rise of D2C is seen as being a direct
threat to traditional brands and retailers, and rightly so.
But D2C brands don’t have to be online only, and GROW D2C THROUGH ‘DIG-ETAIL’
they don’t have to be the sworn enemy of big retail.
In fact, many of the most exciting D2C brands are Some of the most exciting D2C brands are breathing new They are showing up in numerous physical and digital
doing creative and powerful things in physical life into retail as they unite digital tools with personal environments, such as vending machines and new
BE A retail spaces, broadening their reach and making human connections. delivery partnerships, powered by data and digital
recognition of customers. A new ecosystem of
themselves a bigger part of consumers’ lives.
DIGITAL NATIVE, They are focused on expanding niches through every partnerships is being created to bridge the “dig-etail”
That move into physical retailing often involves a environment.
BUT NOT A partnership with established retailers, and that isn’t
physical and digital dimension, developing intimacy with
customers at scale, and using digital connectivity to

digital captive
the one-sided affair that one might imagine. There enable more human discovery. Digital tools complement New D2C brand curators like Showfields and Four Post
are sizable potential gains for both parties when D2C the physical world; they don’t replace it. are offering brands short- and long-term showcases
brands team up with retail giants. to create awareness and build audiences beyond
As brands embed themselves in the lives of their the web. Microsoft’s Dynamics 365 platform enables
But before a brand sets about launching or audiences, they are seeking more innovative ways to be store managers to understand the customer in real
expanding its D2C proposition, we urge them to available to them, wherever and whenever customers time and make merchandising decisions with digital
consider carefully the question: what have you got to need them. responsiveness.
lose? There are some significant risks in this game.

92 93
 BE A DIGITAL NATIVE, BUT NOT A DIGITAL CAPTIVE CASE STUDY

Online platforms like Shopify and Square are

creating ecosystems that enable web-first
brands to sell in the physical world whenever the
opportunity arises. Many D2C brands may start
online, but few seek to remain there. Glamsquad, founded in 2014 as an on-demand in-
‘When we began the partnership
with CVS, we instantly saw an
home beauty services platform, has undertaken over
The D2C paradigm has quickly transcended the 600,000 in-home makeup and hair appointments.
web, but it remains enabled by digital tools and the It also recently launched its own cosmetics brand

uplift in Glamsquad bookings

intimacy and immediacy they provide. Becoming a and an in-store experience in partnership with
true dig-etail brand should be part of any brand’s pharmacy and personal care chain CVS.
growth ambitions. Physical spaces enable brands
to go beyond the immediate reach of their core

and visits to our website, which

Glamsquad CEO Amy Shecter calls their in-home
customers and into new spaces that can educate experience “H-Commerce”. “Data is our superpower;
and inspire them to address new audiences and
an appointment is a micro lab. Beauty pros and
develop new products and propositions.

were directly attributable to

customers can test products in each appointment
and get immediate feedback, for example, on what
Digital-only spaces are great for feedback, but
can become echo chambers. Digital capabilities clients want in a hairspray.”

the visibility in stores’

married to physical properties enable brands to
tune their sensibilities to new audiences. Glamsquad has used this intelligence to
create unique products that stand out in retail
environments like CVS. Shecter believes that
collaborations with established brands and retailers
are win-win, because the retailer can provide a
new and interesting experience and the visibility to AMY SHECTER
CEO, Glamsquad
create credibility.

94 95
 CASE STUDY CASE STUDY

Häagen-Dazs’ on-demand delivery solution, Häagen-

Dazs NOW, is a service linked to customers’ exact
location.
Nespresso, owned by Nestlé, was one of the first
D2C brands founded by a large packaged goods The app can locate and facilitate a delivery, even
company. Now, with the addition of vending if the customer is on the go or in a public place.
machines, Nespresso can connect with its shoppers At an individual transaction level, these kinds of
in more ways. services may not be profitable. But as food delivery
continues to experience major growth, with third-
Brands are looking for micromoments of need, party food delivery expected to rise at a rate of
getting beyond conventional retail platforms and 13 percent every year for the next five years,
touchpoints. For Nespresso, vending machines satisfying the need for speed, convenience, and
are convenient and complementary solutions to its instant gratification is becoming an important
branded flagship stores and online platforms. They element of brand marketing, customer insight and
help create an exclusive ecosystem and convenience engagement.
network. The machines stock around 24 large
coffee pods and allow users to opt between paying By providing solutions that ensure brands are
for the products on the spot or collecting products where the consumer is, not where they would prefer
pre-paid online via a subscriber “club” platform. them to be, brands are able to increase satisfaction
and sales across the entire ecosystem.
Value is delivered not only by the product, but also
the brewing system and Nespresso ecosystem.
96 97
 TO HELP GROW D2C THROUGH ‘DIG-ETAIL’

ASK YOURSELF THESE QUESTIONS...

RETHINK THE COMPETITION pockets. When a D2C brand such as Quip, Harry’s or Native
is sold in Target, for instance, it gains a wider audience and
Many D2C brands have found great allies in some of the at the same time reinforces Target’s positioning for cheap
largest retailers and packaged goods companies in the chic. The retailer-brand dynamic is now one of partnership,
world. By telling their story and developing their mission, with both parties having much to gain from and give to the

What combination of digital tools and

building their following and crafting their compelling relationship.
proposition, these brands have found an audience and
a market with the most desirable customers in retail. For this reason, retailers like Target, Walmart and

physical presence could dramatically

These discerning customers have both the means and the Nordstrom have made large investments in (or have
appetite to demand quality and value, and they’re willing bought outright) D2C brands in which they would have
to advocate for great brands and collaborate with them to had little interest only a few years ago. These investments

shape your ability to reach new continue to improve the product over time. and acquisitions are making new talent available to these
brands; people who might never have considered working

audiences and gain new insights?

Consumers of D2C brands have an emotional connection with them before. D2C brands aren’t being birthed by these
with the brands rather than a simple functional need for retailers and do not owe them their existence, but they
them. As a result, retailers and D2C brands have found can be dramatically scaled by them, giving the founders
common cause in recent years. Retailers want access to tremendous incentives to work with and for them.
these customers and the direct insights gained by working
with them, and D2C brands want to grow their audience Walmart’s strategy has been to acquire a portfolio of

ls w ou ld e nh an ce the and access a wider and more mainstream audience. D2C brands, none of which individually contributes

What digital too

huge growth to the parent, but which in aggregate are

ring,
Because D2C brands aren’t reliant on retailers to build a profitable growth engine and deep talent pool. This is

ien ce o f d isc o ve their brand, they are able to enter the mass retail domain tremendously valuable, quite apart from the access to

physical exper
on far better terms than before. They don’t have to fight customers who would not previously have shopped at

u cts?
Walmart stores.
o d
for shelf space against major legacy brands with deeper

wn in g yo u r p r
98
using or o 99
 BE A DIGITAL NATIVE, BUT NOT A DIGITAL CAPTIVE TO SEE HOW BIG RETAIL IS NOT THE ENEMY

D2C brands punch well above their weight in

terms of visibility and customer appreciation,
ASK YOURSELF THESE QUESTIONS...
but they typically struggle to grow beyond

ch retailers or other outlets (such as dentists or

$100 million in revenue because the audience
Whi
for their products in the direct arena is

coul d you pa rtne r w ith to deliver them

capped. However, they bring numerous
fitness companies )
for your brand?
benefits to retailers when they join forces,
meaning that despite their size, they can
au dien ce an d gain ex po sure
join as equals with an eye to their ongoing
mission, not simply on the exit door. Make it an engaged
This phenomenon isn’t limited to retailers
happen... who would it be
If you were to sell a portion of your brand,
looking to appeal to a younger, more affluent
audience. Packaged goods companies
have also been extremely active in buying
The “built to sell” mindset focuses D2C brands on
what wo uld the bran d ga in from the partnership?
emerging D2C brands. Native Deodorants, for
instance, was bought by P&G for $100 million
where they are going next and how to discover their to, and
next path to transformational growth.
less than three years after it was launched.
The founders of these brands see their
Legacy brands should have a founder mindset and
growth within the prism of their exit, viewing
acquisition as the next round of investment
to take the brand to new audiences. They
“always be selling” in their minds. They should always
be looking for their next path to new investment and If you had $100 million to take your brand to
brand growth. This approach births new partnership
are literally built to sell to consumers and
to legacy brands. Their existence doesn’t
opportunities and helps brands consider ways to the next level, what would you spend it on, and how
attract new talent and new customers. The emphasis
ultimately pose a threat to those brands — it
shows them a route to the future.
that D2C brands have on growing and transforming to
survive drives their creative vision for the future.
could a partner help you achieve the same thing?
100 101
 BE A DIGITAL NATIVE, BUT NOT A DIGITAL CAPTIVE CASE STUDY

DO NO HARM
2 If brands are to embark on creating effective D2C

4
A word of warning — D2C experiences are not experiences, they must take them seriously and
benign. Larger legacy enterprises and brands have Harm the brand support them with appropriate financial, human,
a lot to lose through the thoughtless development through poor execution and cultural resources — or they should not do it
and execution of D2C experiences that deliver no of visual design, at all. Cultural resources are often overlooked,
new value to customers and create confusion in incomplete or irregular Harm the but they are vital to ensuring that everyone in the
marketplaces. The first and best piece of advice to content management, organization organization understands the value the brand is
brands seeking to develop D2C experiences is to or through a poor endeavoring to create from the D2C experience.
by creating internal
swear a kind of Hippocratic oath: “First, do no harm.” customer experience tensions and
counter-productive
Make it
What harm can a bad experience do? There are five

3
main ways that a poorly conceived and executed incentives; and
D2C experience risks causing damage. It could:

happen...
1 5
Harm existing
By providing D2C limited-edition sets that
channel relationships
can’t be found at retailers, Lego avoids
by creating channel Our advice to any brand considering developing
new D2C experiences or overhauling existing confusing the marketplace.
Harm the customer conflict, undercutting Harm profitability
by creating confusion on price, or ones is to design them in a way that prevents
Existing supply harm at all costs. A clear-sighted appreciation of This is a smart way to differentiate the
on pricing and withholding product chain and customer the risks that a poor D2C experience will create proposition while also removing direct channel
product availability from the market experience channels leads to clarity on how to create experiences conflict. A key challenge is often to maintain
are often profitable that add value for customers, the brand, channel good working relationships with retail
only at scale partners, the organization and shareholders. partners while also providing a compelling
D2C offering. Exclusive products that can’t be
found in stores neatly solve this issue.
102 103
 CASE STUDY TO DO NO HARM

Nike has created D2C experiences that are

tangibly different and more customer-centric
than experiences the brand could co-create with
retailers, and its focus on D2C has made it one
ASK YOURSELF THESE QUESTIONS...
of the most iconic sports brands of all time. Nike
consistently continues to expand its own brand
stores, launching new locations and increasingly
compelling concepts across the globe.

Nike is investing in in-store retail experiences that

Which of these harms are you already committing?
exceed expectations, and key capabilities such as
an app to accompany shoppers in its stores. When
customers enter a Nike store, the app recognizes
they’re in a branded brick-and-mortar location and
offers personalized features and seamless payment
functions. The brand has acquired analytics firm
Zodiac, which helps Nike deepen its relationship
ost clearly run the risk of committing?
with its consumers based on offering relevant and
speedy personalized experiences, both in-store and Which do you m
online.

The digitization of the store experience provides

brands with the opportunity to deepen the
connection between digital and physical for their How can you remedy them?
shoppers and creates new loyalty touchpoints.

104 105
 By applying the principles outlined
in this report, the best equipped
and most responsive brands will
be able to develop better products,

Conclusion
more quickly, with propositions that
bring new value to the marketplace
and ultimately to themselves.

106 107
 The principles we advocate do not guarantee success, but they do neatly express promise and
potential. Brands that want to compete in the value-centric, data-enriched economy need to
sharpen their focus on these areas in order to effectively serve both their businesses and their
customers.
About Us
We hope this book, and the examples we have shared, inspire you to create new and compelling
value propositions and experiences for your customers, while at the same time developing the
corporate culture and skills that will be so vital to business success in the direct economy.

We hope to feature these new businesses in future editions of this book!

Andy Heddle
r
Ready to unlock you
own D2C success? Charlie leads VMLY&R’s Commerce practice Andy formerly headed up VMLY&R’s Direct-to-Consumer (D2C)
in New York. He has over a decade of retail practice. He currently runs a number of B2C brands and
digital and retail experience, within both remains a consultant to VMLY&R.
The team at VMLY&R works daily with the agency world and retailers. At VMLY&R
companies in every conceivable market and In this book, we brought together hundreds he works with major commerce clients, Prior to joining VMLY&R in 2016, he spent 10 years at Best Buy,
Charlie Wade delivering innovative solutions, providing founding and running internal online startup businesses,
with every imaginable digital challenge, of thousands of hours of experience spent
opportunity and imperative. They collectively in the trenches of digital strategy and thought-leadership. Prior to including Best Buy’s third-party marketplace, Best Buy Mobile
joining VMLY&R he led global menswear Online and Best Buy Everywhere — a division created to sell
craft perspectives, and advise on every business strategy and execution, and
marketing for ASOS, the leading fashion and Best Buy products on third-party websites.
element of a brand’s physical and digital distilled them into clear, actionable insights
beauty retailer, before moving to the US to
touchpoints and organizational design. for strategists and practitioners alike. If
drive ASOS’s US market growth strategy. His lived experience as an “intra-preneur” in large
They execute real-time campaigns and you would like us to work with you on your His notable digital marketing exploits corporations, an entrepreneur in his own right and as an
business operations to create compelling
propositions, all the while ensuring clients
business as you seek to develop D2C in
your business, please contact us at Charlie Wade include the a search to find the world’s best
dressed man and launching the first-ever
investor in D2C startups makes him an ideal guide to D2C
businesses beyond the headlines and the hype, enabling
are able to keep the promises they make to Charlie.Wade@vmlyr.com or by phone at +1.646.724.7494 digital house party. He writes and speaks enterprises of all types to embrace and deploy the mindsets
their customers. +1 646 724 7494. Charlie.Wade@vmlyr.com regularly on retail and D2C commerce. and practices that will shape the future direct-brand economy.
108 109
 About Us

Zac is Commerce Director at VMLY&R, consulting with clients across direct-to-consumer

and third-party commerce to identify areas of opportunity for growth and innovation
within their respective categories.
Based in London, Malcolm leads Kantar’s Market Insights practice for
Zac has spent the entirety of his career at various operating companies within WPP – Europe, where he also spearheads e-commerce and digital insights.
one of the world’s leading marketing and communications groups – using his design
background and skillsets to bring unique and innovative experiences to consumers. Prior He is responsible for helping clients validate or form their route to
to his current role, Zac assisted in running Labstore, Y&R’s worldwide retail network, consumer, e-commerce, digital, and omnichannel strategies.
providing commerce expertise and thought leadership to the group’s broad spectrum of
clients, while simultaneously working to institute best-in-class creative and design globally. Malcolm has been analyzing retail, and shopper behavior, for 15
In the past, Zac has been published in PSFK, The Journal of Brand Strategy, The Drum and years. During that time, he has worked with some of the world’s
numerous WPP-facing thought pieces on current best-in-class commerce activations. leading retailers and consumer goods manufacturers to help them
deal with the disruption caused by the ever-changing omnichannel
He has closely studied the evolution of retail trends and shopper behavior for much of the shopper. He holds a BSc in industrial systems and business
last decade – with a specific focus on Gen Z and millennial audiences – publishing a number management from the University of Westminster.
of studies including “The New Tribe of Shopper” and “Outlook: Gen Z”.

Zac Kraemer Malcolm Pinkerton

+1.920.585.0939 Vice President, Retail Insights,
zac.kraemer@vmlyr.com Europe, Kantar Consulting
110 111
 About Us After five years based in New York City in global leadership
roles for VMLY&R, Jon Bird recently returned to Sydney. Jon is
now CEO of VMLY&R across Australia and NZ, while retaining an
Starting his career at the House of Commons advisory role on retail and commerce for the agency.
working for a member of the UK Parliament, David
progressed to be a leading marketer with Bates While in the US, Jon headed up VMLY&R’s global retail and
Dorland and a career retailer for Kingfisher’s B&Q. commerce practice, working at the intersection of digital and
retail for some of the world’s best brands. He has also been
David is now at WPP as the CEO of The Store, EMEA a contributor to Forbes on retail, and a regular speaker at
and Asia – WPP’s global retail practice. He also leads events and conferences all over the world.
WPP BrandZ™, the world’s largest brand equity study.
Before relocating to the US in 2014, Jon was based in Australia
David is an acknowledged expert on China and retail and was a founding partner and ultimately Executive Chairman
and is a published author on both subjects; his of specialist retail marketing agency IdeaWorks. Separately,
published work includes “The Thoughts of Chairmen he served as Director of Retail Marketing for M&C Saatchi in
Now” and “A History of Retail in 100 Objects”. Sydney, and was Chairman of trade publication Inside Retail.

David Roth Jon Bird

CEO, The Store WPP, EMEA and Asia CEO, VMLY&R Australia & New Zealand, Senior
Chairman, BAV Group & BrandZ™ Advisor Retail & Commerce at VMLY&R Global
112 113
Behind the bamboo
curtain
HOW TO GO DIRECT TO CHINA’S
VAST MARKET OF E-SHOPPERS
 BEHIND THE BAMBOO CURTAIN

The challenges of operating in China are

significant. There’s not just a different
A big nut to crack This surge in demand has caused headaches
for Chinese authorities, who have battled
language and cultural mores to get to against smugglers seeking to fill the gaps that
Make no mistake, consumers in China are
grips with. There are also tight customs local retailers and e-commerce platforms have
spending a lot of money online. In fact,
regulations, and a retail and digital ecosystem been unable to fill.
nearly US$2 trillion is spent each year on
that’s unlike any other in the world. e-commerce around the country. That makes
That’s why in 2014, Beijing’s response was
the Chinese e-commerce market worth more
But there are, increasingly, ways for small to encourage a legitimate “Cross-Border
than twice that of the US, UK, German and
brands to succeed in this big market. And it’s E-commerce” trade to flourish — one that
Japanese e-commerce markets combined.
could be regulated and, crucially, taxed. It set
The appeal of a market simpler than you might think.
up a series of free-trade zones where products
But that’s only part of the picture. The number
with 1.4 billion consumers is of people shopping online is growing all the
in prescribed categories could be legally
imported for sale online, with reduced rates of
time. Close to half the population is still yet
obvious, but less obvious is Nearly sales tax applied.

2 trillion
to get connected to the internet, and those
who are already shopping online are spending
the route to reaching this vast more money — in more categories — each
The move chimed with a national strategy to
have the economy evolve away from a reliance
audience for international US dollars spent each year on e-commerce around the country
year. There remains huge untapped potential.
on “Made in China” towards being fueled by
“Bought in China”.
brands — particularly As more consumers have more money
available to spend, they’re also broadening
Cross-border e-commerce now accounts for
smaller brands that lack the their horizons when it comes to what they buy

144 billion
between 15 and 20 percent of total online sales
and from where. Increasingly, they’re looking
resources to open stores internationally for new products and brands.
in China. In turn, online sales are around 25 to
30 percent of all retail sales. To put a dollar
in China, or to find a local US dollars cross-border e-commerce sales in 2019
figure on that, cross-border e-commerce sales
in 2019 were worth around $144 billion, and
partner to do it for them. are forecast to rise to $164 billion in 2020.

116 117
 BEHIND THE BAMBOO CURTAIN

They want it all, But Chinese consumers are increasingly

and they want it now looking for exactly that: small and foreign, a place or time that just can’t be replicated
according to Sam Deacon, Chief Commercial in China. Think of century-old French brands,
China is home to some of the most Officer at Samarkand, a WPP business or brands associated with 1960s London.
extensive and dynamic online shopping helping international brands reach Chinese
platforms in the world; Alibaba has a whole audiences. There are also key product categories in
suite of business and consumer-facing which people are willing to pay a premium
platforms, then there’s JD.com, group He says that as disposable incomes rise, so and wait longer for delivery, because they
buying site Pinduoduo, recommendation too do aspirations and the ability to pursue believe foreign brands offer superior quality
site Xiaohongshu (Little Red Book), and them. There’s still badge value in wearing or and more dependable standards of product
buying options through the one-stop- carrying an item from a universally known safety. This is important to consumers who
does-everything app WeChat. Between luxury brand, but being “in the know” about have seen several product safety scandals,
them, these digital giants have loyal users a more niche brand increasingly carries including one in 2008 involving tainted infant
in the hundreds of millions. cachet, particularly if you can be the first to milk formula that led to the deaths of six
share it with friends on social media. babies and the hospitalization of thousands.
These platforms offer seemingly
endless listings, and use cutting-edge Deacon explains that “hero” products from Mother and baby items, food and drink,
technology to make sharply personalized global brands — things like a Burberry coat personal care, health, luxury and skincare
recommendations. So, you might or Louis Vuitton handbag — are always going products from international brands are
reasonably wonder what else consumers to be desirable, but the strongest growth is therefore all highly prized. Deacon says this
there could possibly want, especially from coming from a appetite for brands that tell a can even apply to brands whose products
a fairly small foreign brand. rich and meaningful story, often one linked to are manufactured in China.

118 119
 BEHIND THE BAMBOO CURTAIN

The brakes are coming off

‘There’s a perception that
Growth in cross-border e-commerce is being
supercharged by changes to the regulations
The government has also provided a catalyst for
growth in demand for international goods, by raising
international brands will hold
manufacturers to a higher
around it, making it easier for customers to buy the annual spending limit for individual consumers
and international brands to sell into China. via cross-border e-commerce. The previous limit
was RMB2,000 (about US$280), and in 2019 was
The number of Cross Border E-Commerce zones is raised to RMB5,000 ($700), providing higher-end
rising; the first was launched in Shanghai in 2014,
and they now number over 30 around the country.
brands with a greater opportunity to sell in China.

The cross-border e-commerce market is tipped to

standard; that they’ve been made
to comply with international
In 2019, Beijing lowered some key barriers to entry approach the $200 billion a year mark by 2022.
for international brands. While before, products
sold via e-commerce had to comply with all This a world away from the way international brands
Chinese consumer regulations — which in the case used to have to approach the Chinese market, which
of cosmetics included testing on animals — this no
longer applies. Products simply have to comply
with the consumer safety regulations in force in
were complex, expensive and potentially risky, given
that they required a partnership with a Chinese
service provider whose priorities might not always
regulations, and that’s reassuring’
their country of origin. have been aligned with their own.

SAM DEACON
Chief Commercial Officer at Samarkand

120 121
 BEHIND THE BAMBOO CURTAIN

Pop it in the post?

Not so fast Is it all too hard?
While aspects of cross-border trade Now, every parcel needs to be labeled Even before the entry regulations for There’s also an entirely different commerce,
into China have become simpler and with three key pieces of data: details international parcels changed, doing communications and payment infrastructure
more appealing, there remain some of the e-commerce platform on which business in China already seemed like to understand. So, while it’s relatively easy
significant challenges, not least in goods have been purchased; details hard work to many brands outside the for a brand to expand from the UK to
relation to actually getting parcels into of the payment platform being used, country. Europe, or from Europe to the US and vice
the country. such as Alipay; and details of the versa, China is a whole different ball game.
logistics partner that will be handling A survey by Frost & Sullivan in 2019 found
Sending parcels into China has always local delivery. These need to be that despite the evident scale of the It’s not simply a matter of switching from
been something of a hit-and-miss presented in a standard format that is opportunity, many international brands Google, Amazon, Facebook and Instagram
affair; plenty seemed to go astray, integrated with the IT systems of the have been hesitant to attempt to sell in to the local Chinese equivalents — because
and, anecdotally, it seemed that about local Customs department at the point China, fearing they will struggle to be there are no equivalents.
1 percent were held up in Customs for of entry. profitable and may lose control of their
checks. brand. And it’s not just that people shop online from
The result is that when parcels haven’t different sites, it’s that customer acquisition
In 2019, under a new national had these procedures lined up in Around 30 percent of businesses is completely different, too. Key Opinion
e-commerce law, it has become more advance, they are far more likely to be surveyed said they were deterred by the Leaders (online influencers), hold huge sway
complicated to get parcels into the stopped and checked — and therefore apparent complexity of regulations they here, and it’s not uncommon for shoppers
country. This arose due to government delayed — than before. Around 10 faced, and 21 percent said the level of to buy direct via a video livestream. Social
concerns that so many products were percent are now being intercepted, investment required to get started was networking and shopping are far more
being imported without the relevant prompting some international brands prohibitively high. closely linked than they are in the West.
taxes being paid, and that counterfeit to simply stop allowing buyers in China
goods were too easily slipping in. to make a purchase on their websites.

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New silk road? An easier Its Nomad technology enables brands to list on any
or all of the major Chinese e-commerce platforms, to
Sellers see a sales dashboard of the style they’re
familiar with, a little like Google Analytics, enabling
be strong and consistent, brands can ship bigger
volumes to warehouses in a free-trade zone, so
route to Chinese customers promote themselves in ways they can see are working,
and to make logistics hassle-free.
them to see where demand is and, crucially, what kind
of activity triggers sales, from a price adjustment to
delivery times are reduced by several days.

Navigating the lucrative but challenging China promotional online video or WeChat article. Samarkand became part of the WPP family in
e-commerce market — and getting parcels to the Partner brands ship to a Samarkand fulfilment center in 2019, when retail solutions provider Smollan
people expecting them — is a complex business. But the UK with plans to open more in continental Europe Samarkand CEO David Hampstead says the system became an investor in the business. It has offices
there are ways in which the process can be simplified. and the US – and parcels are re-labeled with Chinese gives international brands the transparency and in London, Hong Kong and Shanghai, and handles
Customs requirements and customers’ addresses. control over their China operations that many have over 10,000 parcels a month destined for China.
Samarkand is a business established to give Parcels are usually in the hands of their Chinese buyers felt is lacking if they simply ship inventory to a Chinese Clients include Zita West, BarryM, Probio7,
international brands a simple way of tapping into in between five and eight days — usually seven. partner who then promotes and sells as they wish. Tateossian, Shay & Blue and Temple Spa.
Chinese consumer demand, without having to take big
risks or recruit staff with local market knowledge. Shipping can be by the pallet to a B2B seller such This way, they can use real-time data to inform For brands that aren’t yet ready for the full Nomad
as JD.com, or individual units can be sent direct to their communications strategy and new product service, starting in Q1 2020 it will be possible to
The business, named after the Uzbek city that was a individual Chinese consumers. development. add a “checkout for China” function to an existing
major trading post along the ancient Silk Road linking brand.com, so that if a shopper logs on from
Europe and China, serves as a gateway between He says that even though consumers are growing China, Chinese payment and logistics solutions
Western brands and Chinese e-commerce. used to same-day delivery from local selling platforms, are automatically offered. The checkout plugin
when they are buying from overseas brands, they feel will be integrated with all major website platforms
it’s worth the extra wait. And, if demand proves to including Shopify, Magento and WooCommerce.

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Case Study 1
About Us

Theory
A premium skincare brand that in 2018 was David began his career in software
selling only via its own website and the engineering at large blue-chip
Harrods store in central London is now also firms such as Hewlett Packard
a hit in China. The brand started out in early and Vodafone before moving to a
2019 selling via specialty skincare retailers on mobile technology startup leading a
Taobao, one of Alibaba’s platforms, and has team of engineers building software

in
Samarkand Global provides the
since expanded into channels led by KOLs (key for mobile phone companies gateway connecting Western brands
opinion leaders) such as BuyBuyBuy. There across EMEA and Asia. In 2008 he and retailers with the enormous
are plans to develop four direct-to-consumer founded QuickThink Media, a digital and rapidly growing Chinese
stores for the China market. Sales have gone marketing company focused on e-commerce market. A solution
from £3,000 in 2018 to over £250,000 in 2019. Facebook which later listed on AIM. to fit businesses of any size and at

Action
In 2016 combining his experience in any point of their journey in China.
digital marketing and background We work closely with our clients to
in software and technology he co- create the right solution based on
founded Samarkand Global to give their needs and ambitions in China.
Western brands a new route to the
Case Study 2 Chinese e-commerce market not
previously available. Based in the
A natural and organic retailer specializing
UK David splits his time between
in food and wellbeing products has
Europe and China.
successfully made the leap from its London
base, where it has several shops, into China,
where it served over 34,000 customers in
2019. In the two years since it launched in
China, starting on the e-commerce platform
OMall and managed by Samarkand, sales
revenue has soared from £3,000 in the first
David Hampstead
CEO, Samarkand Global
year to around £550,000 in 2019.
david@samarkand.global
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