The past 12 years were filled with hot takes. But one of the most egregious? “Retail is dead.” 2010—ecommerce is going to kill the storefront. 2015—customers are leaving retail captains like Gillette for DTC darling Dollar Shave Club. 2020—the pandemic is a death knell for retail. Blah. Blah. Blah.
Though the retail world may have lost some of its stalwarts, rumors of total retail demise were greatly exaggerated. The face of the sector may not look the same as it did five years ago, but some companies are making moves to bring on a golden age.
The biggest irony of this? It’s the brands that were supposed to kill the storefront who are bringing on this renaissance. Direct to consumer players are opening stores—and using them to increase sales and create unforgettable experiences.
So how did we get here? What makes for a successful DTC retail space? How can these brands make the most of their in-store initiatives? These are all questions that we’re looking to answer in the coming weeks. But today, we’re starting simple, exploring the rise of DTC and their push to open doors in the real world.
What Is Direct to Consumer and How Did It Change Ecommerce?
Perhaps one of the biggest reasons that analysts lamented the “death of retail,” direct-to-consumer (DTC/D2C) companies changed the way people shop. But they also changed the way that products move. How? It’s all in the name.
As implied, direct to consumer brands eliminate steps in the buying process.
Defining Direct to Consumer (DTC)
Direct-to-consumer is a sales model that refers to selling products directly to customers, bypassing any third-party retailers, wholesalers, or any other middlemen. Often specializing in a specific product category, these companies manufacture products and sell them online—generally through owned assets.
A (Very) Brief History of Direct-to-Consumer Selling
For centuries, DTC meant driving over to your local farmer to pick up a half cow for your family. In the mid-1800s, catalogs emerged as a way for plant nurseries to sell seeds directly to farmers and arborists. DTC spurred the rise of the infomercial in 1979, launching the careers of inventors and pitchmen alike.
The years leading up to the dot-com bubble introduced mainstream shoppers to the concept of ecommerce. But the idea wasn’t feasible for many—especially after the bubble burst. Luckily, hosting costs came down and ecommerce platforms popped up with the birth of Shopify in 2006.
The Emergence of Modern DTC
Empowered by easy access to ecommerce tools, these brands could cut out distributors and retailers, selling… directly to the consumer.
It’s the reason that you can’t go a day without hearing or seeing an ad from at least one of these companies—every dollar they formerly spent getting into a store can be spent on advertising.
Entering Impenetrable Markets
But it’s not simply a manufacturer taking their ball and going home. Often, these players are giving consumers something different. And they did it in industries that many thought were impenetrable.
A decade and a half ago, razorblades were controlled by a small and shrinking group of major players. No one thought mattresses could come in the mail. Few people even knew what luxury sheets even felt like, let alone where to buy them.
Eyeglasses, engagement rings, intimate wear and more all felt like impossible markets—whether due to production challenges, buyer expectations, or buying cycles.
Breaking the Mold
The brands that led the charge into today’s DTC weren’t just offering the same products you could buy from a traditional store, they often did things better. For example, early players set the stage for modernization.
- Harry’s and Dollar Shave Club offered similar or higher-quality products at lower prices.
- Warby Parker gave customers comfort and choice.
- Purple backed up the big game they talked.
And it only got better from there. Our friends at Brooklinen offered shoppers five-star hotel-quality sheets at an affordable price. Away solved the challenges of modern travelers with unbreakable shells, USB charging, and a big guarantee. The Sill solved problems customers didn’t even know they had—and made plant shopping human friendly. User experience was key, and customers flocked to these companies.
Guarantees, Customer Service, and Loyalty
But it wasn’t just the products that reshaped customer preferences, it was the entire business model. In selling directly to consumers, DTC brands had to stand behind their products. There was no hiding—a product came out of their factories, passed their quality checks, and went directly to the buyer.
In turn, companies stepped up their guarantees, customer service, and experience. 100-day no questions asked warranties became common. Some companies took their margins and gave back to the community.
The combination paid dividends. Customers who had a better experience told their friends. Manufacturers had the ability to control interactions and experiences. Limiting the scope of products allowed companies to be great at the things they wanted to be great at.
Though not everyone was successful—some spent their funding dollars better than others—those who focused on consistency, quality, and growth made the most of their time in the business. All this—before the pandemic even hit and kicked the ecommerce world into overdrive.
Now… They’re Taking on the Storefront.
Now, if you’ve gotten this far, you may be asking yourself, “Why the heck is a manufacturer focused on creating retail environments singing the praises of ecommerce companies?”
Well, because if you’ve been paying attention to new store openings, many are starting to bring the experience in store. Whether it’s in the form of a shop in shop or a flagship, DTC brands are bringing the same experience to guests in store that they offered online. This is with good reason.
Storefronts provide DTC brands with reduced acquisition costs, better connection with new and old shoppers, tactile experiences, and community, and shoppers are embracing the idea.
Knowing this, the path to creating a positive in-store experience at a DTC brand isn’t an easy one. Consistency is key. Expand too fast or expand in the wrong markets, and you’re setting yourself up for a negative experience. Failing to deliver a true omnichannel experience for sales and service could be deadly. Spaces need to breathe the essence of your brand.
In the coming weeks, we’re going to explore all of the challenges and opportunities that exist in taking your DTC brand in-store. Stay tuned and be sure to subscribe to our email list to learn what’s coming from Morgan Li. Or—get to know us and some of our clients below.
Be sure to check out part 2 on why DTC brands are making the leap to retail here.
Morgan Li: Helping Brands Create Unforgettable Experiences
At Morgan Li, we transform spaces into unforgettable experiences. Whether that’s in our work for traditional retailers or for our rapidly growing base of direct-to-consumer brands entering the bricks-and-mortar space, we’re putting in the legwork to ensure that your space leaves a lasting impression.
Over the past few years, Morgan Li has worked with DTC players across the nation to provide fixtures, furniture, and graphics built to provide guests with an unforgettable place to shop.
Startups and expanding brands like Brooklinen, Away, The Sill, and more have all trusted us to build unforgettable shopping experiences during their push to open physical retail spaces. Here are just some of the projects we’ve completed:
- Luggage brand Away turns to Morgan Li for Dallas, Houston, and Boston
- Brooklinen launches Manhattan flagship with help of Morgan Li
- The Sill enters Chicago and trusts Morgan Li to create the space.
- From curated delivery app to corner store, Foxtrot works with Morgan Li in rapid expansion.
Get to know more about us and reach out today!