The DTC landscape today would be unrecognizable to a time traveler from a few years ago.
In 2019, you could launch a direct-to-consumer business by opening a Shopify storefront, buying paid social ads, and — that’s it.
You barely needed a quality product, or a compelling message. Media-buying was everything — and subpar dropshippers thrived.
“A lot of businesses should not have been built in the last two to three years,” Nick Shackelford, a managing partner at Structured Social, told MarketerHire, “but because Facebook and Snapchat and Instagram were so easy to use… they were built.”
“A lot of businesses should not have been built in the last two to three years, but because Facebook and Snapchat and Instagram were so easy to use… they were built.”
In 2020, the pandemic only made life easier for DTC brands. (Unless they made office apparel.)
E-commerce revenues rose 34% YoY, according to eMarketer, and DTC revenues — unmediated by third-party retailers like Amazon — rose even more: 40%.
The situation was too good to last. In 2021, Apple’s privacy update meant DTC brands could no longer be built on Facebook Ads alone, and DTC revenue grew less than 20%, eMarketer estimated in February.
The marketing playbook that relies on “ad arbitrage” — and pandemic impulse buying — is gone for good, CEO of Sharma Brands Nik Sharma told MarketerHire.
So how are DTC brands built in 2023? We asked four leaders in the space, including Sharma, for the marketing trends they see dominating this year.
Meet the experts
- Nik Sharma, CEO of Sharma Brands
- Jason Wong, CEO of DTC lash extension company Doe
- Cody Plofker, director of e-commerce at Jones Road Beauty
- Tina Donati, content marketing lead at Alloy Automation
Mobile apps will become essential owned channels.
Mobile shopping apps let DTC brands “own direct relationships with our customers,” Wong said, “in a way that is still fun… and [gives] the sense of exclusivity.”
Just look at DTC giant Shein. It’s taking over the fast fashion market, and its comprehensive app — which includes daily games, a media section with styling tips and 10,000+ new fashions per day — is fueling that growth.
Shein once beat Amazon on the U.S. shopping app charts, and was the second-most downloaded shopping app of 2021, Apptopia reports.
A smaller DTC company making the most of an owned shopping app? DTC hair extension brand INH Hair, which uses their app to highlight “exclusive launches and discounts,” Wong said.
Apps like these are getting easier to build, too, thanks to Shopify-esque builder tools like Tapcart and Via Mobile.
Chatbot support will handle more customer service inquiries.
Sharma sees a bright future for customer service chatbots. They may not pass the Turing test, but they can protect customer service associates’ time.
In 2021, for example, Sharma worked with YouTuber Mr. Beast’s organic chocolate bar brand Feastables and conversational AI platform Certainly to build a bot named Feasty.
Aesthetically, Feast has the trifecta: horns, antennae and mitten-shaped hands! He was custom-designed for Feastables, Sharma said — that’s him on the bottom right below.
The “very robust bot” can answer questions about topics from product info to brand sweepstakes, and syncs with e-commerce help desk Gorgias, Sharma noted.
“It helps deflect hours from customer service reps,” Sharma said. “We’ve deflected 92% of tickets.”
A chatbot “helps deflect hours from customer service reps. We’ve deflected 92% of tickets.”
Clean, accessible UX will dominate in ads and e-comm stores.
“Accessibility needs to be taken more seriously by DTC brands,” Donati said.
“Accessibility needs to be taken more seriously by DTC brands.”
Globally, 2.2 billion people have vision impairments, the World Health Organization reports — and many of them navigate the internet with screen readers.
That means DTC stores and landing pages need alt-text on all images and buttons, for example, and that video ads should have closed captions.
Visuals should also involve enough black-on-white text that colorblind users can navigate seamlessly.
In 2021, more than 10 lawsuits were filed per day alleging digital violations of the Americans with Disabilities Act. About three quarters of those suits — 73% — were against e-commerce companies, according to a UsableNet report.
“Having a clean, functioning website will serve you much better anyway,” Donati advised DTC marketers.
Paid social performance will hinge on branding.
You can’t rack up paid digital conversions without a strong brand anymore.
“The best brands are not struggling with their [Facebook] ads right now,” Plofker said. “[T]he brands who have neglected things like differentiation and storytelling are.”
“The best brands are not struggling with their [Facebook] ads right now, while the brands who have neglected things like differentiation and storytelling are.”
Plofker sees DTC nutrition company Athletic Greens leading the way here, using “a great mix of studio footage and UGC” to tell their unique story on paid and organic social.
Sharma sees DTC travel capsule company Cadence as a leader when it comes to storytelling in Facebook ads.
Each one of their ads answers one of three key questions, Sharma explained:
- What is this product?
- Why was it created?
- How does it benefit customers?
For instance, this Instagram story slideshow explains why Cadence founder Steph Hon started the company:
“This helps build awareness and intent,” Sharma said — and reduces reliance on the Facebook Pixel to target prospects with the right, hyper-personalized message at the right time.
That’s a necessity in the post-iOS 14.5 landscape.
Personalization will move to owned touchpoints.
Personalized paid digital may be hard to pull off on the privacy-first web, but personalization persists! It’s just moving down-funnel, into owned touchpoints.
Think dynamic content in nurture emails, and product recommendation quizzes on company websites — like DTC makeup brand Ipsy’s quiz for assessing customers’ skin tone and preferred styles.
Making a quiz and saving the data “for later” isn’t enough, though, Donati noted. Many marketing teams have already shifted their focus from third- to first-party customer data — and now it’s time to put that first-party data to work.
Ipsy, for instance, uses quiz results to send subscribers bundles of five new products every month, tailored specifically to their tastes.
“If you can create personalized email flows, website experiences and other content, your customers will notice the effort and feel more inclined to shop with you,” Donati predicts.
“If you can create personalized email flows, website experiences and other content, your customers will notice the effort and feel more inclined to shop with you.”
DTC brands will use NFTs as loyalty rewards.
Back to Athletic Greens: The DTC nutrition company has announced it will use NFTs for retention marketing, Plofker noted — and it’s looking like a trendsetter.
Spearheaded by its COO Kat Cole, Athletic Greens’ move into Web3 will mean loyal customers get rewarded with branded NFTs.
This gives customers “more of a piece of the value they create,” Cole told Yahoo News.
Plofker foresees other DTC brands following a similar playbook, using “NFT loyalty [and] retention programs to build community.”
Added benefit: Brands can use NFT-based communities for beta testing new products, as luxury sneaker brand Cult&Rain has learned firsthand.
DTC marketers — it’s time to experiment!
Our takeaway: In 2023, you can’t build a DTC brand on a huge ad budget alone.
In the wake of Apple’s 2021 privacy updates, DTC marketers will need to lean on experimental tactics like:
- Building branded mobile apps
- Personalizing the bottom-of-funnel experience
- Integrating Web3 into their marketing strategies
DTC isn’t dead, though. It’s just changing.
“Saying DTC is dead today is like… saying ‘Cars are dead’ because there is a shift in how they are being built,” Sharma said.
“Saying DTC is dead today is like… saying ‘Cars are dead’ because there is a shift in how they are being built.”