Direct-to-consumer brands are changing the way we buy — and the old dogs are nervous

Ad targeting is letting companies own the entire sales cycle, and customer loyalty.


February 14, 2018

In the past few years, we’ve seen an explosion of digital marketing-heavy companies that sell and ship their products “directly to your door.” You know, the Warby Parker’s and Blue Aprons of the world.

But, these newcomers aren’t just slick advertising and millennial-friendly branding, they’re a huge shift in the way we buy products — and big consumer packaged goods companies are sweating.

“It’s the Warby Parker of…”

First came SaaS (“the Salesforce of…”), then came the gig economy (“the Uber of…”), now it’s direct-to-consumer.

If an industry exists, chances are there’s a D2C company “disrupting” it: Gillette’s share of the US men’s razor business fell from 70% in 2010 to just 54% in 2016, thanks to the rise of competitors like Dollar Shave Club and Harry’s.

Mattress companies like Leesa, Casper, and Purple have doubled their market share in the past year, and meal kits, according to Axios, are projected to grow 10x.

Bye-bye “big box”

In the old-school model, brands design, produce, and market their products, then rely on wholesalers and big box stores like Walmart, Best Buy, Target or — more recently — Amazon, to reach the end consumer.

But these days, even fledgling brands can oversee the entire sales cycle — and, in turn, the customer experience from discovery to delivery. That means they not only own all the revenue from the products they sell, they own the customer.

Why now?

Mainly because of the rise in highly targeted advertising via Facebook and other social platforms, which make it easy for small companies to reach their perfect customer from anywhere.

According to Salesforce’s latest digital advertising report, 95% of advertisers use demographic data along with location information and interests to target prospects.

And it’s only increasing: according to the report, next year 66% of digital ad spend will go to web platforms that allow custom targeting, like YouTube, Facebook, and Instagram. Because who needs friends when you can have mattress discounts?

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Psst

How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

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