Direct-to-consumer brands continue to boom. Here, WGSN’s Laura Saunter selects 10 brands that we think will define the space in 2019 and beyond.
The demand for direct-to-consumer (D2C) brands continues to boom and shows no signs of abating. According to a study from Diffusion, 33% of US consumers plan to do at least 40% of their shopping from direct brands within the next five years.
At last year’s Interactive Advertising Bureau’s (IAB) Direct Brand Summit, brands discussed their failures and successes on the journey to disruption across nearly every industry imaginable – from grooming to sleep to eye contacts. Direct brands create hero products, carve out community and deliver hyper-focused offerings that meet consumer needs. By cutting out the middle man, brands are getting closer than ever to consumers.
1. Hims
Launched by 29-year-old Andrew Dudum in November 2017, US men’s wellness brand Hims started out selling preventative remedies for hair-loss and erectile dysfunction at prices below current retail market value. It has since expanded into vitamins and treatments for adult acne and cold sores. Targeting young men who are embarrassed to talk about erectile dysfunction at the doctor’s office or ask about beauty products at a store, Hims has achieved rapid success to become the fastest-growing US men’s wellness brand, raising $50m in Series B funding in June 2018, taking its value to $200m.
The brand aims is to de-stigmatise issues around men’s health, inspiring consumers to buy into the brand for its discretion and ability to normalise these issues with tongue-in-cheek messaging and Millennial-friendly humour throughout its packaging and marketing. Hims also recently introduced its own line of branded sweatshirts and candles, readying itself to become a fully-fledged lifestyle entity. The site also employs 124 doctors performing one-time virtual health assessments of patients before filling or denying a request.
In January this year the company launched in the UK market, with a presence on London’s Liverpool Street. A partnership with an unnamed national high street pharmacy will enable Hims to support the delivery of prescription medication.
2. Eaze
As states across the US and Canada legalise the medical and recreational use of marijuana, the category is becoming ripe with on-demand retail opportunities. San Francisco-based weed delivery company Eaze is changing shopping for cannabis in California with its on-demand delivery app. Known as the “Uber of weed”, it allows customers to order using their smartphone, connecting them with a nearby driver who is able to get there quickly, sometimes within minutes. As the drug evolves into a mainstream wellness product, we can expect the company to expand into more states across the US and Canada to give people quick and convenient access to high quality marijuana products.
3. Buffy
New York-based duvet brand Buffy is the latest start-up to enter the competitive bedding space. The brand offers a down-alternative duvet constructed with a mix of microfibre and eucalyptus fibre for the affordable price of $120. One of the key selling points is that the company lets you try out the goods for 30 days before being charged: if you decide not to keep it, you can return it for free. Buffy sets itself apart from other DTC bedding brands by putting sustainability at the heart of its operations: the interior of each comforter is filled with 50 recycled bottles, which have been spun into soft polyester. Buffy has so far reclaimed over 750,000 plastic bottles from entering the oceans and landfills, and saved over 15 million gallons of water by using eucalyptus rather than cotton.
4. Dirty Lemon
Beverage brand Dirty Lemon was born online and has since developed a cult-like following with US Millennials, offering wellness drinks formulated to trigger new collagen production, or containing amino acids and antioxidants to elevate metabolism. With charcoal, matcha, rose, turmeric and ginseng-flavoured drinks all under 15 calories, the brand’s business was built with mobile in mind. Shoppers sign up online to make purchases, linking their credit card numbers to their phones. From there, customers are able to order six-packs of Dirty Lemon beverages by simply texting a special order number to the company.
The brand recently opened its first retail store in New York’s TriBeCa, a completely cashless and staff-free zone that brings the text-to-order system to life within a physical space. Customers can walk into the store, take a product from the fridge and send a text message to Dirty Lemon letting them know what they have taken. A 24-hour customer service team then charges the credit card linked to the customer’s mobile number, and then texts back a confirmation of the sale. The aim is to enable a seamless and quick experience for consumers, while at the same time providing the company with instant insight into purchasing behaviour trends.
5. Flamingo
Leading DTC men’s razor brand Harry’s has entered the booming women’s self-care market with a new, female-focused upstart called Flamingo. The brand offers handy, streamlined shaving sets for women at affordable prices. The sets include a razor, two removable blade cartridges, foaming shave gel, body lotion, a suction razor holder that will stick to your shower wall and a travel bag. The brand also offers two waxing kits, one for face and one for body, each coming with wax strips, post-wax cloths and a calming serum. Razors come in muted pastel colours with metal accents so that they blend into modern-looking Millennial bathrooms, and feature specially-shaped handles to help women navigate hard-to-reach body parts from awkward angles. Flamingo’s tongue-in-cheek messaging and light-hearted instructions around hair removal, sophisticated design and packaging (strictly no pink) and no-nonsense branding aims to win consumers who may or may not already be familiar with the Harry’s brand.
6. The Inside
Home décor brand The Inside launched in 2017 with $1.5 million in seed funding, aiming to shake up the homeware industry with a fresh outlook and unique strategy. The Inside’s premise is simple: direct-to-consumer designer patterns and capsule collections on affordably priced furniture, with zero inventory or footprint. Shoppers can customise furniture pieces from start to finish: they choose an item, then pick one of hundreds of fashion-forward fabrics, wood, metals and finishes. Crucially, since products are all made in the USA, pieces can be shipped to your doorstep in just six to nine days from UPS – an impressively short lead-time compared to traditional custom furniture, which can take up to 12 weeks. The Inside has also collaborated with designers including Clare V. and Peter Som to create exclusive capsule collections, with more designer collaborations in the pipeline.
7. M. Gemi
Boston- and Florence-based M. Gemi delivers handmade, luxury Italian footwear at a fraction of the price of traditional luxury brands (current styles run from $128 to $498), embodying a philosophy co-founder Ben Fischman calls “post-luxury”. Powered by 15 Italian factories, and $32m in venture capital funding, new products drop every week in small limited editions. The brand almost never discounts, claiming the small batches ensure each style will sell out. The brand is focused on building relationships with customers via try-on stores that integrate seamlessly with its online store. It said customers who shopped at its pop-up in Los Angeles bought a second pair online 50% faster than online shoppers only, and their return rates were 50% lower. For customers who prefer to buy online only, the brand touts a manufacturing process that ensures the fit of each shoe style is consistent, making it easier to purchase without trying on.
8. Allbirds
Trendy, Instagrammable footwear brand Allbirds has successfully carved out a niche in the sneaker market, offering just two models in a variety of on-trend colourways. The brand has quickly become a Millennial favourite with its core product that aims to be the “comfiest” shoes on the market, which are made from natural materials including merino wool, eucalyptus tree fibre and sugar cane. The San Francisco-based brand recently opened a new store in New York’s SoHo, offering curious consumers a chance to try on and test the sneakers, which were previously only available online. A human-sized hamster wheel allows customers to walk or jog in the shoes without leaving the store for an enhanced try-before-you-buy experience. Allbirds has raised a total of $77.45 million in VC funding to date, including a recent $50 million in a Series C round. That now crosses it into unicorn territory, according to The Wall Street Journal, which reported the company is now valued at $1.4 billion,
9. Naadam
This D2C, sustainable cashmere brand is expected to hit $50m in sales in 2019, having launched in 2015. Founded on the premise that “everything else costs too much”, Naadam reaches young consumers by providing a luxury product at a fair price, selling its quality cashmere sweaters at $75 – a fraction of the average retail cost for a similar item. Naadam was founded on a whim after CEO Matt Scanlan found himself stuck in the Gobi desert with a group of sheep herders. He decided to invest in the local community and purchase cashmere at market value. The brand’s commitment to transparency in the supply chain further amplifies the item’s success among its community, who demand to know the origin of its products. Naadam has since monopolised the trade in the region, and the story serves as the crux of the brand across all consumer touch points.
10. Peloton
New York-founded Peloton sells high-end, internet-connected indoor cycling bikes to consumers looking for a convenient, effective workout at home. Providing a scalable service to on-the-go professionals and parents seeking group fitness in the comfort of their own space, Peloton aims to change where exercise happens and how consumers think about it. Bikes are equipped with a screen to stream recorded and live classes which are filmed from its New York-based studio, making it an easy and attractive choice for busy individuals, homebodies, or those who simply don’t want to go to the gym. With an upfront cost of nearly $2000 for the bike itself, and a required monthly subscription fee of $39 per month for the exercise videos, the strategy has been successful so far, as 96% of every bike ever purchased still has a paid subscription attached to it. The brand is reportedly set to IPO in 2019, with its latest $550 million Series F funding round brings the total equity raised by Peloton to nearly $1 billion for a reported valuation of $4.15 billion.
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This article first appeared in www.warc.com
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