When one hears the phrase “direct to consumer brands” they often picture a glamorous start-up success story. Although many DTC brands have become successful, equally as many, if not more, have failed. Creating a DTC brand is not as easy as it may sound. Although they have great potential to save costs by controlling manufacturing and interactions without a middleman, creating a DTC also comes with high risks.
Rising Costs
One of the reasons DTC brands have become so successful is by saving costs on advertising. In the past they have relied on social media, word-of-mouth, and creative yet inexpensive advertisements. Due to the success of DTC brands, the costs of more non-traditional advertising sources such as ads on subway cars is rising. To fight theses costs, brands will have to continue to develop new, creative methods of reaching customers. For DTCs without enough funding, this could be a death sentence.
Failure to Stand Out
Creating a successful DTC brand is more difficult than it was just a few years ago. Competition is much higher, so brands have to work harder in order to stand out from the crowd. Every detail is important. They even have to create unique, branded packaging that is different from their competitors’.
DTC brands rely on being recognizable. With the recent influx of new brands, it is getting progressively more difficult for them to stand out. Brand awareness is one of their core trademarks. Without it, their brand will quickly fail.
Difficulty Convincing Clients to Get on Board
One of the other biggest challenges of DTC brands is disrupting their sector and convincing customers to switch from the product that they are already using. DTCs already have an especially difficult time when it comes to low consideration purchases. Oftentimes, it is easier to consumers to simply purchase these from a store or order them from Amazon. After all, Amazon can get it to them in only two days if they have a Prime membership!
The market is still difficult to break into when it comes to things customers need on a regular basis. The primary reason behind subscription services is that customers will never run out of a product because it will consistently be restocked. However, running out of a product is rarely a major concern. After all, people can often just visit the nearest store.
Launching a profitable DTC brand is a difficult process. The three largest barriers to success include rising costs, a saturated market, and the difficulty of convincing clients to make the switch to the DTC brand.
This article was originally published on MattNemer.net.