Positioning your DTC e-commerce business: Only 2 viable options in 2022

A strong strategic positioning is the first important part of any company’s strategy. It defines the market a company wants to get into and its value proposition. The second part of the strategy relates to the specific resources and processes a company uses to implement the positioning. 

Without a strong positioning, a company is unlikely to generate profitable new customer growth because it won’t stand out from the competition and struggle to reach the right audiences. There are seven positioning options in total. Some of them can be combined but there will always be a primary one.

Keep in mind that positioning is not necessarily the same as differentiation. A differentiated product is one option for positioning but it needs to be relevant to the customer. It’s easy to offer something slightly or even very different, but if it’s not meaningful for the customer it won’t lead to a strong positioning.

Positioning also evolves over time, either by adding additional products or by building more awareness for one specific product. So there’s a need to continuously build customer insights and refine the positioning over time. But it’s crucial to take a firm stand on where to start.

So what are the different positioning options and when are they suitable for DTC brands?

The strongest positioning options are highly valuable and also defensible from being copied by competitors.

1) Audience niche

A very good option can be choosing to target an audience group that is narrowly defined, based on their demographic or behavioural characteristics. This could be based on a particular job (title), hobby, age group, gender ethnicity, income level or religion. For example, senior execs, amateur tennis players, digital nomads, young parents.

This can be by far the most effective way for a DTC business to build a strong, defensible positioning. The better a brand understands their customers, the more they can personalise the product, shopping experience and content/messaging. This will also make it much easier to find effective campaign targeting on ad channels and strike up high-value partnerships or influencer deals. If you get to a certain level of awareness within this audience group, word-of-mouth growth will be the biggest source of revenue.

For this option to work, members of the audience need to understand that they have something meaningful in common. Ideally it enables you to personalise the product itself rather than just the communications, but it’s still more effective to have a niche audience. This can be easily combined with the following positioning option, at least in the beginning.

2) Consumer need

If chosen well, focusing on solving one specific need of a broad consumer base can work very well. This can be combined with an audience positioning in the beginning of the journey, to then incrementally add more target audiences to solve this need for.

For example, Canada Goose started providing jackets for people needing an extreme level of warming, including park rangers and engineers. When the brand decided to scale its growth, it stuck with solving this need but started reaching out to more fashionable crowds in cold European capitals.

This option will work well if there is naturally a very strong product differentiation and it fits an underserved need of a wider range of consumers.

3) Product feature

Choosing a product feature as a positioning is similar to the previous option of a consumer need, but it’s narrower and involves choosing more product-led messaging. For example, Native introduced a deodorant that’s highly effective but doesn’t use aluminium which was still uncommon a few years ago. 

There wasn’t necessarily an existing need to avoid aluminium in deodorants, but as they started promoting it, it was compelling enough to attract a large and varied audience.

This option usually only works for technically sophisticated product innovations, and there’s often a larger risk that the differentiation isn’t meaningful enough for consumers to justify changing brand. But it’s worth keeping in mind.

4) Price range

Products can be positioned as budget, mainstream, premium or luxury. This usually only makes a strong positioning in the budget and luxury options. Take for example some Uniqlo products and Dollar Shave Club as being compelling because of their unusually low price for the product type. On the other side of the spectrum, Grey Goose vodka might be somewhat better quality than mainstream brands but is perceived as the more indulgent option.

This option works better to refine an existing positioning rather than function as a standalone.

5) Distribution

It used to be a competitive advantage to sell a product online and ship it to customers’ doors. But the recent flood of new e-commerce offerings has diluted this. In some cases, it might be effective for a product to only be available through certain sales channels. Although in most cases it’s more of a facilitator rather than a source of competitive advantage.

The exception is multi-national FMCG brands that have the advantage of highly sophisticated and volume-driven distribution networks. Also, to some extent Apple Stores have contributed to the success of some of the products, due to the unbeaten experience.

6) Location based

Choosing to only sell to customers in a certain country, region or town can be viable in many industries. In consumer products this likely only applies to highly perishable products and small local businesses, for example fishmongers and bakeries. Given how effective logistics networks have become it’s unlikely to provide any competitive advantage for a company looking to grow beyond a smaller personal business.

7) Brand

This mainly only works for the biggest brands with a lot of history. Nike and Apple can release products similar to competitors and be successful because of their existing brand. 

However, this is an increasingly risky strategy, because consumers are becoming more savvy to find the best performing product through online channels (social media and blogs for research, e-commerce businesses for buying niche products). So even for those brands it’s becoming increasingly difficult to maintain a competitive advantage over challenger brands, unless they put the effort in developing leading products and understanding their customers.

How can brands determine if the positioning they’ve chosen is strong?

• There is only a very small number of competitor products. In a winner-take-all market, it needs to be the only or best option (although this is less common in consumer products than for example tech or logistics).

• Consumers understand why they need what you’re offering - there is an existing need people are prepared to pay money to solve.

• Does it make word-of-mouth easy, by being able to summarise the proposition in a sentence?

• There is enough demand to drive minimum scale of the business. This requires some market research.

• The positioning is difficult to copy by competitors, because of advantages in product development, customer insights and supply chain.

Some indicators you’ve reached this point

• Word of mouth is the largest source of new customers

• Asking several customers and employees to describe the essence of the product will yield very similar descriptions

• Customers proactively suggesting additional products to you (for an audience-based positioning)

• Niche influencers and PR willing to offer you good deals (for an audience-based positioning)

• High conversion and low bounce rates on your website (for need-based positioning)