The Direct to Consumer (DTC) model can be a powerful engine of business growth for new brands.

The logic for the model may seem obvious: not having intermediaries that stand between suppliers and consumers helps to keep prices competitive.  When combined with the convenience of ecommerce, the DTC model sounds increasingly appealing.

Pragma has recently worked with successful DTC brands. We have found that the critical insight many brands across different channels fail to capitalise on is the consumer desire for greater transparency.  Consumers want to know more about the cultural and ethical identity of the brand they are purchasing. DTC businesses are well-placed to respond to this challenge given the control they have over their supply chain.

Even for existing brands distributed through third party channels, a recent study by Digital River found that 89% of those shopping online visit the website of the brand before buying.  No matter what the channel, consumers clearly want to dig deeper, beyond the level of information that is typically available via online marketplaces or third party sites, for example.  They also want to experience the brand and the best way to do this is to get as close to the “creator” of the brand as possible.

Boohoo.com is a good example of this. It sells own brand, trend-led fashions direct to younger consumers with limited finances.  Boohoo knows it needs to offer more than low prices if it is to compete successfully with the likes of Primark.   Many products are accompanied with short videos for easier visualisation and they have an ‘Inspire Me’ section that covers music, fashion and general lifestyle trends.  Their website also outlines their work ethos and emphasises their charity strategy.  The company achieved £140m of sales in 2015 and EBITDA of £14m.

The DTC model also goes beyond the fashion industry.  Eve Mattress, an online supplier of mattresses selling directly to consumers, uses simple language to explain how their business model lowers the price tag.  Simple product descriptions are accompanied by a commitment to selling mattresses that have been “shaped by people, families and real experiences”.

Increasingly innovative bricks and mortar propositions continue to raise the bar through the use of physical space, allowing them to become powerful and effective “narrators” of a brand’s story.  If they are to succeed, online DTC businesses need to tick both boxes: they need to blend the already established benefits of ecommerce with a compelling brand experience.

Demetris Demetriou