This blog post analyzes the Direct-to-consumer market and how the trend that was started by Warby Parker and Dollar Shave Club may not be replicable by others. Fitness brands, private label household goods, mattresses, luggage have all go to the D2C model, with lots of funding.
Why its hot:
Brands like Away and Casper have developed a solid following and popularity amongst their customers, but are their business models sustainable. In the blog, it states that how often do people buy a mattress or a suitcase? Once every few years? sometimes 5-10 years. Is their product like Warby Parker where they found a significant savings from the incumbents and margin expansion through direct distribution? Other D2C brands were also started in down economies and they bootstrapped their businesses.
Casper, Away, Brandless (failed), Outdoor Voices (recently fired CEO) have all been well funded by the venture community and they spend heavily on customer acquisition and branding through Google and Facebook, events, pop-up stores, flag ship retail, influencers, etc.
If these D2C brands cannot reduce their CAC and increase retention rates or broaden their category, could there be industry impact of reduced digital media spending that flows through the whole system?
Keep an eye out!