The boom in direct-to-consumer (DTC) brand growth during Covid-19 has inspired several prospective DTC founders to ask, how difficult is it to successfully launch a new DTC brand? Many founders expressed concerns that launching a new product is too difficult, time-consuming, and expensive. Fear of the unknown can cause leaders to get stuck in the early ideation or research phases, waiting for the "perfect" conditions to launch their new brand. 

Making the Most of the E-Commerce Boom 

The effects of Covid-19 have forced a shift in consumer purchasing behavior and many traditional brick-and-mortar stores have had to quickly develop e-commerce strategies, offer more flexible return policies, and focus on delivering high-quality customer experiences. This year, e-commerce sales in the U.S. will reach $794.5 billion--14.4 percent of all retail spending--an increase of 32.4 percent year-over-year. According to an Adobe report released this summer, the pandemic accelerated e-commerce growth by approximately four to six years. 

DTC brands in particular have a unique opportunity to establish themselves during this e-commerce boom. DTC sales in the U.S. are projected to reach $17.75 billion this year, up from $14.28 billion in 2019. 

To understand what it takes to successfully launch a new brand in today's environment, I interviewed our founder and CEO at Anvyl, Rodney Manzo, who has helped more than 30 brands launch new products as an adviser to other founders. Before founding Anvyl, Manzo gained first-hand launch experience from his time in the supply chain group at Apple, and later leading supply chain at Harry's Grooming.  

Here are the five basic steps that Rodney recommends for a successful DTC product launch. 

1. Collect inspiration.  

This first phase can be the most fun, as you brainstorm a wide range of concepts and weigh different possibilities. It can also be where you run into trouble, so be careful not to get caught in an endless research cycle. 

"Remember that you don't need to come up with a groundbreaking innovation to create a profitable product," said Manzo. "Many successful products build on, adapt, tweak, or reimagine existing products. Where do you see potential to iterate on something already in the marketplace? How could you improve or change it to address the pain points of a specific audience? Is there a niche that's being neglected?" 

Gathering inspiration may be as simple as walking into a store and taking pictures of other products you like. This was one of the first steps Manzo's team took when determining the direction for their hand sanitizer line. They evaluated what was already available and looked for gaps they could fill.

2. Develop your branding. 

Once you have a broad vision for your product, you can start fine-tuning the details of the design and messaging. Who are you targeting? What are they looking for in this product? What message or feeling do you want to convey to them? 

Imagine your customer is browsing the aisles in a store--what would they be drawn to? Use these insights to inform your decisions as you create artwork, copy, and packaging to differentiate your product from those of competitors. Packaging details, including color and shape, have a big influence on consumer purchasing decisions. 

3. Research suppliers.

When you have a clear idea of what will go into your product, it's time to find the right partners to build your supply chain. Make a list of the various components you need to construct the finished product; for example, to produce our hand sanitizer, we need bottles, bottle caps, labels, alcohol and a contract manufacturer. 

Search online, ask for recommendations or use sourcing and procurement platforms to discover vendors for each element. Submit RFQs and collect pricing estimates to compare suppliers. Ask suppliers on your shortlist questions to gauge their capabilities, such as: How many units can you produce? How many production lines do you have? How many days a week does your team work? 

Take steps to ensure your supply chain can withstand increased e-commerce demand and potential supply chain interruptions related to Covid-19. Recent research suggests that the pandemic has encouraged 64 percent of U.S. consumers to shop online, when they wouldn't have considered it before. But their expectations from online retailers are high; 71 percent of shoppers expect their purchases to be delivered in a week or less. 

"Be intentional about diversifying your supply chain from the beginning to protect against delays and disruption," said Manzo. "Can you find multiple suppliers for each of the essential materials in your product? If one location suddenly becomes unavailable, be sure to have a series of contingency plans."

4. Refine costs.

You should now have all the information you need to calculate how much it will cost to produce your product. Finalize prices and contracts with your selected suppliers, and use a spreadsheet or supply chain software to break your expenses down into individual line items. For example: raw materials, manufacturing, shipping, taxes, duties or other fees. This information will help you set a retail price and estimate future profits. 

Manzo offered this advice on how to refine costs: "The most critical focus for supply chain leaders should be to understand all aspects of costs. In order to do this you need to understand both 'bottoms up cost' and 'should cost' to make the very best business decisions. Without this it is hard to efficiently scale the business."

5. Start production.

Your product is almost ready to hit the shelves. Consider a test production run for quality control and scalability while making necessary adjustments with suppliers. Determine how much inventory you will need to launch, and map out your estimated production timeline for the next two quarters. Focus on finding the right balance of inventory so that you don't run out of stock, but be sure you don't have to tie up excess working capital.

Creating a new product doesn't have to be complicated, and in the growing DTC market, you have more opportunities than ever to reach your target audience. If you have a good idea, don't let it stall in the brainstorming phase. Follow these simple steps to overcome common roadblocks and bring your amazing DTC product to market.