What is DTC (Direct-to-consumer) and why it’s changing every industries?

Have you ever heard of brands like EverlaneBrandlessDollar Shave Club before? Or thought about some brands that are only sold online in Malaysia. Are you thinking OxwhiteKiper Signature Market? Or the latest DTC condom brand called Psang.co by Malaysia DJ, Jeff Chin.

So, who they are?

Direct-to-consumer companies were born online and selling directly to consumers through their official websites, without selling their products through any distributors, retailers or agents.

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Credit: Everlane / Website

These companies are cutting out any middleman and their prices are always lower than the market price.

While the price is cheaper than the market price, direct to consumer brands innovate and improve their products, where the quality is still equal or greater than the products that already exist in the market.

Oxwhite mentions about their dream, “The World Without Overpriced Item”. But how they make it?

“Oxwhite operate on a 100% e-commerce, pre-order only model, allowing us to remove the middlemen and unnecessary inventory costs”, according to them.

This model allow them to priced luxury products at only 1/3 of the current market price. It works? Yes. Oxwhite sold over 10,000 pieces of their white shirt and Malaysian are adapting to “Transparent Pricing” and “Pre-Order only Model”.

Direct-to-consumer brands are attractive because they focus on niche and provide them a Better Quality and Greater Experience products, with very competitive price.

Marketing Strategy — Go viral or go home

Talking about marketing strategy, direct to consumer brands invest heavily in social media, encouraging influencers and consumers to share their testimonials and reviews, in order to promote through word-of-mouth marketing and make the brand successful.

One of the strategies of DTC brands is the referral program which lets you refer your friends through email and by achieving a successful amount of referrals you will be entitled to benefits from them.

Oxwhite made this campaign successful and I would say this is a textbook example of referral marketing in 2018.

The Direct-to-consumer business model is not e-commerce, DTC brands sell online because they want to get closer and instant feedback from their consumers.

Why DTC is rising in Malaysia?

DTC brands are born because there are too many traditional retail products that have many problems, such as bad user experience, monopoly by giant players or products that are profiteering.

Oxwhite solves one of these problems by letting consumers be able to purchase shirts that are made by the same factory as Hugo Boss and Calvin Klein, at only RM69.

This is not a secret that many fashion brands are profiteering; same products, same factory, but the prices are several times differentjust because of sticking on a different logo.

According to Oxwhite, “Luxury products aren’t all that expensive to make; they’re expensive to sell. Buying through OXWHITE means you’ll enjoy the same quality of materials and craftsmanship, without the brand-name markup.”

Oxwhite was born and succeeded because they simply solved a consumer pain point, “A RM400 luxury non-iron dress shirt for just RM69. Made for office workers.” It’s cheaper than retail stores and the quality is even better.

Another case study, Signature Market, an online healthy snacks marketplace was funded RM 1.5 million stated: We buy direct from manufacturer and pass the savings to you — no brand owner, no retail markups.

Their goal is simple. Healthy snacks, reasonable price, deliver straight to your door.

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Credit: Signature Market / Website

Direct to consumer companies has one key focus: Build an end-to-end product with cheaper price but better quality.

Brand story telling — the reason of success or failure

Asa marketer, I notice that successful direct to consumer brands tell a good story.

The video cost $4,500 to make and it was shot entirely in one day

I bet that you watched Dollar Shave Club viral marketing advertisement before. Micheal, the founder and CEO of Dollar Shave Club only spent 4,500 US dollar and finished the shoot in 1 day. After 3 hours, they received 12,000 order from their website.

Re-directing your audience to go to your website and watch your brand story help direct to consumer brands to generate a higher conversion rate.

Inshort, I summarize that there are 3 reasons that make Direct-to-consumer brands possible in Malaysia:

  1. The DTC business model was born because they are solving physical product pain points such as products being less innovative, bad user experience or the market share is monopolized by big players.
  2. Digital marketing play a big part when it comes to a successful DTC company as they invest every cent in paid ads. Understand how these channel work and create a viral-ready or story telling content can help you gain more organic traffic.
  3. If you know how to tell a story, you win the game.

Leave a comment down below which industries would you love to apply the direct-to-consumer model too!

Check Cereal Digital Marketing for building an E-Commerce like this!

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