How Dollar Shave Club, Warby Parker, and Other Disruptors Are Remaking What We Buya
Principle #1 – Sell direct to consumers
Principle #2 – Find stale categories
Principle #3 – Use data to learn
Principle #4 – Never lose sight of the customer
The success of Dollar Shave Club showed that by targeting a corporate giant's weakness, a start-up with the right product, the right amount of added value, and the right message can create a new brand almost overnight. You don't even have to invent a better product or have lots of money for advertising to succeed. You just have to align with what customers are thinking.
Warby Parker is a great example of what direct-to-consumer brands offer. It succeeded because the usual category leaders sell largely through retailers and depend on broadcast advertising. That means they don't have a direct connection with customers. Furthermore, if the category leader enjoys large profit margins, they will be less likely to cannibalize their own business model and compete. These are the sweet spots for new DTC brands.
Most people assume direct-to-consumer brands are all about the digital distribution channel, but that's not actually correct. These brands use data to connect and listen to their customers, to bond with them, to learn what they want, and then to find ways to work with customers going forward. "The algorithm is alwaysright" is the mantra of billion-dollar brand builders.
In what is almost a classic Back to the Future moment, many direct-to-consumer brands are now opening physical retail stores, despite them proclaiming physical retail is so last century. The difference is these stores are now used to gather customer data which is then applied to increasing online direct-to-consumer sales. It's about making connections rather than sales. The legacy retailers were sitting on a goldmine of customer data they never took advantage of.