A year ago, we weren’t worried about the coronavirus pandemic, or the status of our democracy. Instead, fresh-faced and innocent, we worried about the future of the direct-to-consumer business model.
Had VCs oversaturated the market with disruptive, digitally-native brands? Was the DTC space poised to hit a “revenue wall” that not even podcast ads — so, so many podcast ads — could help it scale?
Even insiders like Neil Blumenthal, co-founder of pioneering DTC eyewear brand Warby Parker, seemed to think so.
“It’s never been cheaper to start a business,” he told the New York Times. “[A]lthough I think it’s never been harder to scale a business.”
"It's never been cheaper to start a business... [and] it's never been harder to scale a business."
He said that in January of 2020. In March, the pandemic transformed the American economy.
E-commerce became the new commerce, and the internet became the new mall. Instagram replaced it’s activity tab with a shopping tab. Fast launched a new one-click checkout tool. Shopping online had never been easier, or more of a public health necessity.
This shoved DTC brands into the spotlight, for better or for worse. Some floundered in the new pandemic market, swamped by demand or internal issues. Others thrived. One even earned Kim Kardashian and Chrissy Teigen’s seals of approval.
Now, with vaccines and some semblance of normalcy on the horizon — what’s next for DTC brands? “Decline” no longer seems like the right answer.
Below, we rounded up eight predictions from three experts in the space.
Meet the Experts
Personalized marketing will win the day.
In 2021, Sharma foresees DTC marketing remaining “very story-focused,” he told MarketerHire. But brands may ditch one-size-fits-all storytelling.
That doesn’t necessarily mean a personalized marketing narrative for each and every client. (Some marketers have tried that, but Gartner research casts doubts on the final ROI.)
Instead, Sharma foresees marketing messages and landing pages tailored to certain market segments, defined by demographic and location data.
For example: One DTC company Sharma works with, disaster preparedness startup Judy, recently ran an advertising campaign that sent viewers to a smart landing page. There, they saw disaster preparedness content tailored to their location. Californians might see a free wildfire preparedness guide, whereas Midwestrners might see free guides to tornado preparedness.
“I think personalization is probably going to get real in 2021,” Sharma said.
The brand aesthetic will change.
In 2020, Ben Schott wrote a piece for Bloomberg on DTC brands — or as he called them, “blands.” He argued that DTC brands all had the same look: “simple, neutral and flat.”
Think pastels, cartoons or Noun Project icons, and, as Stout highlighted with a grid of 20 side-by-side logos, largely sans serif fonts.
Exhibit A: DTC electric toothbrush brand Quip.
That was “a popular aesthetic” last year, Sharma agreed — but by the end of 2020, it was losing ground. Men’s skin care brand Black Wolf Nation is “going against the traditional look” of DTC, Sharma said, with a black-and-white brand palette.
Judy also has a distinctly non-pastel brand color: traffic-cone orange.
Sharma foresees the look of the DTC space diversifying even more in 2021.
Livestreaming will take off.
At Outer, Liu and his team held three livestreamed events in 2020, and each time, hundreds of people tuned in.
What does a livestream from an outdoor furniture brand look like, exactly? Liu was quick to explain that it’s not a QVC-style hard sell — more a product demo with personality, like this:
Hosts like Outer’s co-founder and chief design officer, Terry Lin, talked through the outdoor furniture’s features — the design process behind the wicker, say, or the stain resistance of the upholstery.
It’s been a hit for the company so far, and Outer is currently working with Facebook and YouTube to ramp up its live streaming capabilities.
“We're proving over and over again that it’s a 10x-ROI kind of activity,” Liu said.
“We're proving over and over again that it’s a 10x-ROI kind of activity.”
Live streaming is already hugely popular in China, he noted, and he sees it taking off in the U.S., especially among e-commerce companies, in 2021.
“Reskinning” won’t be enough.
“Gone are the days of just repackaging a product and putting up a shiny website,” Liu said.
By his estimate, 80% of DTC brands say they have “revolutionary” products, but really just make minor tweaks to mass-produced Chinese products.
Ultimately, they’re selling “the same fundamental product you can get from any factory from China,” Liu said.
Perhaps not coincidentally, a lot of these companies were founded by former marketers, who are great at understanding demand and crafting messaging — but not so strong when it comes to product development.
In 2021, marketing will be as relevant as ever, but Liu thinks DTC companies will shift their focus towards product development, for longevity’s sake.
“At the end of the day, consistent consumers pay for differentiated products,” Liu said.
Marketers will think globally.
In 2021, Liu sees DTC brands — Outer included — looking for customers outside the U.S.’s borders.
“A lot of companies that have been really just focused on the domestic market,” he said. “I think they will start looking at international markets.” That could mean expanding into Europe, southeast Asia, the Middle East and beyond.
It’s obvious, but weirdly worth saying: most people in the world don’t live in the U.S.
Influencers will become DTC brands in their own right.
It’s nothing new for influencers to promote DTC brands; in fact, it’s hard to open Instagram without seeing promo for FabFitFun to Quip.
In 2021, though, Armstrong foresees influencers launching their own DTC brands. Think a “proliferation” of influencer-owned brands, like Emma Chamberlain’s DTC coffee brand, Chamberlain Coffee, or former Bachelor star Nick Viall’s essential oils line, Natural Habits.
There’s less and less reason for influencers to restrict themselves to affiliate partnerships, Armstrong noted. Shopify, BigCommerce, and third-party logistics firms like Armstrong’s ShipBob provide easy-to-access, scalable DTC infrastructure.
Why shouldn’t influencers use it themselves?
Though as Liu noted — if they don’t invest in product development, their DTC dalliances may not last.
Facebook will bring social commerce Stateside.
Facebook is already huge by most standards — so huge that it’s embroiled in multiple anti-trust lawsuits. But in 2021, Armstrong sees Facebook taking on a newly-huge role in e-commerce transactions.
It could “massively accelerate how social commerce is done,” he said.
Already popular in China, where it makes up more than 11% of e-commerce sales, social commerce — or e-commerce transactions conducted within social media apps — hasn’t made a similar splash in the U.S.
But Armstrong noted that in 2020, Facebook expanded Facebook Shops functionality; on Instagram, it’s also famously (and controversially) rolled out a shopping tab where the activity tab used to be.
Facebook also launched a “universal product recognition model,” AI-powered GrokNet, that could one day make any media posted to Facebook’s platforms shoppable. Think of it as photo (and video) tagging — but now for inanimate objects you can buy.
In other words — the company has already laid the groundwork for social commerce growth. This could be the year it finally happens.
More companies will enable payment via text.
You’ve heard of SMS marketing — but what about SMS payments? Armstrong thinks this could be a major trend this year.
On a personal level, Armstrong enjoys Verb Energy’s caffeinated energy bars. To restock his supply, “I literally just text them and say, ‘Can I get another box?’” he marveled.
They have his information on file, so he doesn’t have to provide his mailing address, visit a landing page, or really do much of anything. His box arrives within a few days.
Armstrong sees this boosting lifetime customer value, and customer longevity, for any companies that try it out in 2021.
“It’s like just texting a buddy,” he said. “The ease of purchase is off the charts.”