5 Lessons Traditional Retailers Can Learn From DTC Brands

Web Smith on In Conversation

Direct-to-consumer (DTC) brands have a lot going for them.

Fun branding! Active communities! Personalization! Convenient delivery!

Many of the most popular DTC brands today have worked hard to develop high-quality products and attract loyal consumers.

The next step is obvious: How can traditional retailers and legacy players reverse-engineer the success of DTC brands, and harness that power for their own operations?

Web Smith, founder of the go-to DTC newsletter 2PM, shared his insights with us.


1. Be authentic

    Authenticity is elusive, because it simply can’t be faked.

    You can have a million-dollar marketing department, and not be able to tap into the magic of a vision that comes from the heart.

    In the DTC world, the best brands are led by visible founders that practice what they preach.

    “The commonality that they share is that it's not contrived.”

    He describes founders who live on a farm, grow their vision, and wax poetic about their product for hours at a time. It’s not a show. It's a real passion.

    If DTC brands have the advantage of founder-product fit, traditional retail needs to leverage authenticity in other ways.

    Showcase details about production, sourcing, sustainability, and quality. Be consistent in sharing why your product is great. Say it often, with feeling, on all channels available to you.

    Many major retailers are already succeeding here.

    A lot of the incumbent companies are becoming better at DTC strategies than the actual brands that began as digitally natives,” Smith says.

    “Whether they've done so by acquisition or by bringing in talent to help them navigate a new ecosystem—a lot of these major retailers are becoming really good about either private label or building brands of their own that resemble the same spirit of the DTC industry.”

    2. Prioritize aesthetics

    Successful DTC brands recognize something important: looks matter.

    It’s not enough to have an authentic founder who truly cares. You also need a product that has an element of eye-candy appeal.

    From your website to your packaging, don’t discount the value of simple, punchy, attractive design elements.

    From Frito-Lay to Pepsi, established brands are recognizing the need for a subtle makeover.

    And if you walk through the aisles at Target, you might do a double-take.

    You see products where you have to take a second look and say, was that packaging done by Red Antler [or] Gin Lane back in the day, or is this packaging that was done internally at Target?” Smith says.

    “There's an aesthetic and there is a Gen Z/millennial appeal in some of these products. Eventually the biggest players realized that, and they became great at not imitating the style and function, but taking part.”

    If you’re not already taking part in the aesthetic revolution, analyze your budget to see where design can best fit into the overall plan.

    3. Cultivate community

    Success isn’t just about likes, impressions, or even sales.

    True success comes from loyal fans who consider your brand a part of their everyday life and routine.

    They haven’t just bought from you once. They are repeat customers who engage with you in various ways and talk about your brand to family and friends.

    In order to create this type of community, you have to provide opportunities.

    Consider a rewards program, giveaways, influencer partnerships, interacting with customers on social media, and other opportunities to increase brand awareness and engagement.

    Content is the basis of community. Whenever you are positioning your ideas and your thoughts on the web, you are galvanizing people around those ideas and those thoughts,” Smith says.

    “That is essentially the nucleus of what it takes to have people believe in your ideas, and that's the base of the community. Any other way around that, you're just selling the company short.”

    You should also think carefully about the platforms you build your community on. Are they platforms that you control natively, or could they one day be changed by the controlling entity?

    Smith recommends native blogs, Discords, and other sources to guarantee the magic of community lasts for the long term.

    4. Pursue partnerships

    If you can’t beat them, join them.

    Traditional retail and DTC aren’t always rivals at loggerheads. In fact, more and more brands are working together in exciting ways that benefit both parties.

    One reason DTC brands are drawn to partnerships is that there is value in heritage. When DTC brands combine with legacy brands, they benefit from the sense of heritage, and the legacy brand benefits from the more youthful DTC energy.

    When you see the Kith partnership with BMW or the Aimé Leon Dore partnership with Porsche, what they're doing is they're reaching back into legacy brands and saying, Please co-sign us, because we want our consumers to know that we're not going anywhere,’” Smith says.

    It’s all about consumer psychology, and it goes both ways.

    When Rowing Blazers did a deal with FILA, no one was talking about FILA online. So that provided some credence to them, while also doing a service for Rowing Blazers,” Smith says.

    “By working with these younger brands, you're almost guaranteed to have write-ups in certain publications that you wouldn't have achieved on your own, even if you paid for it. That's certainly a benefit for these legacy companies that have been around for a long time.”

    5. Make a social impact

    Finally, the loyalty many consumers feel toward DTC brands stems from a desire to make the world a better place.

    Brands like Allbirds are focused on sustainability, while Thrive Market donates groceries to families in need.

    We often think about retail in the context of just the products themselves,” Smith says. “But if you've been around it long enough, you also want to see how the products themselves can build people or community.

    This time, community means real-life community.

    Making a difference doesn’t have to be related to your product itself.

    Smith gave the example of Rogue, a company that’s made a commitment to pay every single employee a minimum of $20-25 per hour.

    Operations, partnerships within the city that you live in, manufacturing, improving the houses around the factories that you're investing in—you see the power of what the industry could do if you're successful with the products that you're marketing,” Smith says.

    “Retail is a very powerful industry that can change a lot of people's lives for the better if you let it. You just have to build something big enough for that to happen first.”

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    Traditional retailers vs DTC brands FAQ

    How are traditional retailers classified?

    Traditional retailers are typically classified into three categories: brick-and-mortar stores, catalog stores, and television stores. Brick-and-mortar stores are physical stores that customers can visit in person. Catalog stores are stores that offer products through mail-order catalogs. Television stores are stores that offer products through television commercials.

    What is the difference between DTC and retail?

    DTC (Direct to Consumer) is when a business sells their products directly to their customers, usually online. Retail is when a business sells their products through a third-party retailer. DTC eliminates the need for a middleman and allows businesses to have more control over the pricing, marketing, and overall customer experience. Retail allows businesses to reach more customers and take advantage of the retailer's existing customer base.

    Is retail considered DTC?

    Yes, retail can be considered Direct-to-Consumer (DTC) in some instances. DTC is a type of business model in which products are sold directly to consumers without the use of intermediaries or third-party distributors. Retail stores fall into this category, when producers sell their products directly to consumers from the store.

    What is a traditional retailer?

    A traditional retailer is a physical store that offers goods and services to customers. This type of retailer typically operates in a fixed location, with physical storefronts and often with a catalog or online presence. Traditional retailers include department stores, specialty stores, convenience stores, supermarkets, and drugstores.