Does anyone buy Tide, Crest, or Pampers anymore? If you're among the 41 percent of Millennials who buy most or all of their products directly from brands (rather than retailers), it might not seem like it.
The fact is, plenty of people still do buy traditional brands, but that number is shrinking as every major product category--home goods, luggage, oral care, baby care, beauty, fashion, prescription drugs--is being disrupted by startups aiming to build a better, prettier mousetrap (or home security system, or cleaning product) and deliver it directly to your door. Many of these brands sell direct-to-consumer, or DTC, which means they can cut out the middle man (retailer) and invest the profits into growing the company.
How big is the DTC market, anyway?
While DTC still represents only 9.4 percent of the retail economy. That's out of a 5.3 trillion dollar pie. There are plenty of companies who want to get (or hang onto) their slice of that $498 billion.
That number is only growing, thanks in part to some headline-grabbing early innovators. Casper, Allbirds, Warby Parker, and Glossier have all become multimillion and billion dollar companies in less than a decade. Some companies, like Dollar Shave Club and Bonobos, have even been acquired by Fortune 500 companies.
While it might seem like launching a DTC company is a surefire way to mint money, the competition has gotten a lot tougher. Many brands, both new and established, are competing to acquire the same customers in the same ways (namely, paid social media), so in order to get in--and grow like crazy--you need to have an exceptional product with a compelling and highly marketable story.
Compared with traditional brands, "challenger brands are investing more heavily in digital solutions that help them acquire new customers and retain the ones they have," explains Scott Silverman, co-founder of the CommerceNext e-commerce conference. "These solutions include AI for personalization and chatbots, customer data platforms, and programmatic television advertising."
Who are the DTC brands to watch?
As someone who's in the business of storytelling, I'm personally obsessed with discovering new DTC brands while they're still small, and you can actually hear the founder story from the founders themselves. To me, there's no better place to do this than at Foundermade, which hosts a single-day annual event for brands, buyers, investors, influencers, and the press in New York (May 15, 2020) and Santa Monica (October 14, 2020).
This year's NYC event featured dozens of startups in the arenas of beauty, F&B, health, and wellness--but with the notable addition of several small to mid-size CBD brands that are trying to establish a market within each subcategory. Where there were several fascinating brands, here are the three that stood out.
The average household contains dozens of toxic chemicals--many of which we're bringing in ourselves through the products we're using to keep our homes clean. The idea that we're spraying ingredients linked with asthma, allergies, and cancer onto our countertops made no sense to Jayna Crittenden, a North Carolina-based mother of three. Determined to help others go non-toxic, Crittenden launched SQUEAK by posting blogs and videos, telling people how to make their own safe DIY cleansers. It quickly turned into a full-blown business when people began clamoring to buy her own tried-and-true formulas. SQUEAK was relaunched as a line of 22 all-organic products (ranging from $6-14) designed to make cleaning safe, simple, and chemical-free. You can get SQUEAK products or bundles directly online, or at 25 small retailers across the country.
2. Dr. Kerklaan Therapeutics
While cannabidiol, a.k.a. CBD, only became legal here in the U.S. last year, Canada-based chiropractor Dr. Andrew Kerklaan, DC, has known about its potential health benefits for years. In 2017, he launched his eponymous wellness line of hemp-derived CBD-based products as a way of addressing his patients' search for natural, plant-based solutions that address specific concerns such as dry, irritated skin, tension, stiffness, and sleeplessness. The topical line consists of products for Relief, Sleep, PMS, and Skin and combine premium essential oils with Oregon-grown hemp extracts. Together, they function as a natural, plant-based approach to support people's well-being and improve their health. As interest in CBD and its benefits continues to take off, Dr. Kerklaan is becoming the go-to expert on the emerging science and potential health benefits of cannabidiol. Although Dr. Kerklaan Therapeutics is primarily a DTC brand, you can now purchase the products at Dillard's, Lord & Taylor, and at duty-free locations in major airports.
We all know we shouldn't be using plastic straws (they're a massive contributor to marine pollution) but many of us don't have a clean and convenient way to bring a metal version everywhere we go. Enter FinalStraw, a colorful sipper that collapses down and fits in a tiny case that can attach to your keychain (ensuring you actually use it). FinalStraw seems like one of those ingeniously simple ideas that anyone could come up with, but founder Emma Rose Cohen actually did with the support of a $1.8 million kickstarter campaign (her original goal? $12,500). It's $25 per straw (plus a cleaning wand), but it's a small price to pay for keeping sea life safe.
Correction: An earlier version of this post misstated the dates of Foundermade's annual brand events in New York City and Santa Monica, California. Respectively, they're on May 15, 2020 and October 14, 2020. It also added an unnecessary space to FinalStraw's name.