7 situations in which to reposition your brand for DTC

Most traditional consumer products brands today have either launched their own DTC e-commerce business or are planning to do so. Whether they’ll be successful will depend first and foremost on having a very strong positioning, specifically for its DTC branch. This is very often different from how the product is previously positioned in retail. 

Specifically, there are seven situations in which brands need to shift their focus when looking to scale their direct online business.

Repositioning can take three different approaches:

• Product-led: change the format of the product, allow personalisation, or use a different delivery method

• Shift specific product or brand to be ‘online exclusive’

• Change marketing to reflect different positioning: different target audience and corresponding messaging

The amount of investment and risk involved in each of these varies quite considerably, and the most appropriate route depends on the specific category and market the brand is in. 

So what are the situations which signal that repositioning might be a good investment?

7 situations that suggest repositioning a brand for DTC e-commerce

1) DTC marketing function still being built

Considering DTC e-commerce requires a completely new strategy and new capabilities, if brands are new to this, they should take an incremental approach to build learnings and capabilities. This should go along with starting from a point of very narrow positioning: for example a very tightly defined target audience, or the focus on a very specific need, ideally a combination of both.

Making the most of DTC requires a data and insights driven approach, a rigorous understanding of customer journeys and a focus on direct response. It’s best to build up both the customer insights flywheel and the internal capabilities required step by step. This doesn’t necessarily mean taking a long time, but rather taking an incremental approach. Starting on a narrow positioning and cascading out to reach a larger market.

2) Scepticism about DTC internally

While most executives in traditional brands acknowledge the need to at least explore DTC today, many are very sceptical or anxious about the lack of internal experience. In most cases this means they should start with a DTC e-commerce pilot project, again focusing on a very narrow audience segment or customer need to be solved.

If brands see promising results during this pilot - which usually takes about 6-12 months, and will be much more likely to succeed with a narrow focus - they’ll be able to broaden the offering. A smaller audience segment enables building traction with a smaller overall budget, reducing both the risk of waste as well as losing support within the organisation forever.

3) A product that benefits from educating customers of its values

DTC e-commerce, and digital channels more generally, give brands much more influence to get a more complex message across, than traditional retail channels. The focus can be on building long-term customer relationships, rather than just driving the next purchase in a shop. Email marketing, digital content and social media enable brands to share with their customers how to get the most value from the product, or bring out its strong credentials (e.g. in product quality or sustainability).

For products that can address more complex needs, the DTC e-commerce business could focus on targeting the second or third best customer audiences, which likely won’t be sold by seeing the product in retail. A good example for this would be the Sugru mouldable glue which, with a bit of skill in application, can solve almost any DIY problem.

For products with a particular story to tell, they can focus targeting and messaging for their DTC business on their ethical or technical credentials. In retail, they might for example focus more on appearance, taste or convenience. This would be particularly relevant in mainstream food & drink or personal care.

4) Key USP doesn’t come across online

Especially in premium apparel or food & drink, it’s often hard to convey the premium positioning of the product online, without offering the option to feel or taste the product. There are ways to make up for this online, for example by collecting stellar customer reviews or providing external validation through influencer partnerships or even professional product reviews.

An alternative, however, could be to narrow the targeting or messaging down to one or two aspects of the product that can be described through words or visuals. For example, UBR makes premium technical outerwear and the superior quality is immediately obvious when touching it in a shop. But its singular focus on international business people allows it to speak in a very personalised way to its customer segment through online channels, too, building the trust to try the product at home.

5) (Sub-)category is new to e-commerce

If the product category (or its more specific sub-category) is relatively new to being bought in larger numbers through e-commerce, brands might be best off to focus on the early adopter audiences specifically. These tend to be the strongest fans or power users of the product, who are already convinced of its value and would either like to buy in bulk at cheaper rates, or feel more connected to the brand by buying directly. In these cases, the marketing should be targeted very specifically to them. 

A second audience group that could be relevant particularly for speciality products are those people living far away from the retailers stocking the product. Targeting them would likely benefit from marketing messaging emphasising the ‘roots’ of the brand in big, cosmopolitan cities.

6) (Sub-)category isn’t purchased on its own

Products can be commonly bought through e-commerce retailers, but not directly from the brand through DTC e-commerce. This mainly applies to grocery and mainstream personal care products, which are usually bought from supermarkets, drugstores or their online shops. In some cases it’s very doable to reposition the brand and build up a DTC customer base but it takes a specific hook to get people to ‘isolate’ this purchase from their big shop.

There are four main options to do this:

• Take the product more upmarket by changing its formulation

• Lead on price by offering bulk discounts

• Offer more product variety than in retail

• Or, for the biggest strategic opportunity, focus DTC on a bundle of the product and some value-add (for example access to a member-only content database or app that helps customers get more from the product)

7) Product suited for subscription model 

Finally, if the product fits for a subscription model, using digital channels to build this could be a much more profitable route than ‘standard’ DTC e-commerce. In some cases the overall market potential for the subscription option might be smaller than the retail opportunity. But it could be the only option to make DTC profitable despite high customer acquisition cost. It also offers invaluable customer insights and a highly engaged group of ‘brand ambassadors’.

Physical products are most suited for subscription models if all of the following apply:

1. Purchased at least monthly

2. Takes significant share of mind for consumer to order it separately (and not on Amazon Subscribe & Save)

3. Drives excitement on arrival

4. Ships easily (difficult for heavy but cheap, bulky or perishable products)

The crucial strategy to make DTC subscription models work is to fit the service neatly into people’s existing habits, make customer understand why they want the regular deliveries, and providing excitement before and with each delivery through engaging, personalised communications and potentially product variety.

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It’s worth keeping in mind that analysing, choosing and refining a brand’s positioning in DTC shouldn’t be a one-off process. So these situations shouldn’t just be considered for brands completely new to DTC. A more specific positioning can improve on customer insights, product and marketing at any point. So it’s crucial to keep analysing how the market, category and sub-category develops in DTC and make adjustments where needed.

To read more about positioning cascades and insights flywheels, have a look at our post on the state of DTC in 2022.