5 Key Value Proposition for a Direct-To-Consumer Business

The number of emerging direct-to-consumer (DTC) brands have multiplied over the last decade in various categories. For companies considering a DTC operation, you should always ask yourself, why would a customer come specifically to your brand site instead of going to their local store or Amazon.com?

Free Consultation

Blog

The number of emerging direct-to-consumer (DTC) brands have multiplied over the last decade in various categories. For companies considering a DTC operation, you should always ask yourself, why would a customer come specifically to your brand site instead of going to their local store or Amazon.com? To stand out against the status quo, we have identified five key value propositions in the current DTC landscape that have helped existing DTC brands succeed as a differentiated retail model.  

1. Offering Expertise through exclusive content and partnering with accredited sources  

One way for DTC platforms to stand out is by offering unique expertise around their category to consumers, whether it be with educational articles or opinions from accredited professionals in the space. Consumers increasingly value trusted recommendations when making purchasing decisions, especially online.  

This is especially relevant for the health & wellness space, and successful DTC companies in the health vertical like Care/Of and Ritual have effectively leveraged professional opinions, transparent sourcing information, and medical research to support their product offerings. 

Screenshot of three doctors on the Scientific Advisory Board for Ritual

Direct-to-consumer platforms can also provide expertise with accurate and relevant recommendations. Often, DTC sites will require customers to fill an initial quiz or profile to get to know them better. Using that information, DTC brands can offer personalized recommendations tailored to consumers. Apparel subscription brand Stitch Fix takes that one step further by using data algorithms to combine user information as well as historical product feedback to provide the most relevant products as possible in consumers’ monthly subscription boxes.

Data algorithm from Stitch Fix to personalize recommendations

2. Providing Solutions to fill a whitespace in the industry or address current consumer pain points   

Direct-to-consumer platforms have a unique opportunity to provide exclusive products, variations, or pack sizes to differentiate from its mass offerings. Exclusive products give shoppers a reason to specifically visit a brand’s DTC site rather than going to mass retailers. DTCs can also provide a solution through the services it offers like customizing products or bundles on the site, or providing logistical solutions for products that are challenging for mainstream retailers to ship like ice cream or chocolate in the summer.

Photo of female customer customizing her M&M purchase

M&M’s My M&M DTC platform allows customers to customize their purchase with their choice of color, photo, and text on the M&M’s, as well as picking the type of packaging they want from tins to bags. M&M also offers cold shipping and free expedited shipping during the summer months to prevent the M&M’s from melting.  

3. DTC investing in subscription and auto-replenishment for Convenience

Many DTC companies offer subscription programs to increase retention and lifetime value of their consumers. Subscription programs or auto-replenishment capability offer consumers the convenience of having their essentials ordered for them on a scheduled frequency or automatically with connected devices. Consumers never have to worry about running out of items they need or having to store unnecessary inventory in their homes. DTCs who can offer a more convenient purchasing experience have the opportunity to win over consumers who currently shop through other channels.

A color and black HP ink cartridges next to a HP Instant Ink box

4. Winning over shoppers with special deals on Price or value-based rewards 

While competing with mainstream retailers like Amazon or Walmart on price can be challenging for DTC brands, these companies can offer other unique value propositions around price. Current DTC companies in the landscape turn to features like special pricing through memberships or exclusive deals. For example, Nespresso offer perks such as a free coffee machine with a subscription to their DTC site. Meanwhile, Brandless launched its DTC business model around the proposition of selling the majority of their assortment for $3.  

Nespresso advertisement offering a free coffee machine with a subscription

5. DTC brands go above and beyond in their offering with “X-Factor” features like charitable donations or social events  

Beyond expertise, solutions, convenience, and price, some brands go beyond those differentiators to add even more value to their DTC offering. The “X-Factor” is a catch-all for the many innovative features made available through DTC from philanthropy schemes to exclusive community events. With the advancement of technology, some direct-to-consumer platforms even offer voice skills or gamification of their product to increase engagement with consumers. 

Children in school uniform playing and holding up a TOMS banner

Regardless of what value proposition DTC brands decide to lean into, it’s crucial that these brands find a sufficient differentiator that is relevant for consumers and better than the status quo. Especially for existing brands who already sell through mainstream retailers, they will need a compelling reason to convince shoppers of buying directly through a DTC platform and forgoing the convenience of getting the same product at their local store or online retailer. Operating a DTC business can provide valuable learnings and lucrative first party data, but with the high cost and investment required, brands need to ensure that their DTC offering is primed for long-term success.

Sign up for our free weekly newsletter and get more retail and ecommerce insights delivered to your inbox. 

Mod Boon-Long
Article by:
Mod Boon-Long
Analyst
Facebook
LinkedIn
Facebook Share
LinkedIn Share