Posted on : 2023-03-03 03:12:15
Article : Good evening, Friday Management TASK 232- Today new generation of disruptive brands are shaking up retail - direct-to-consumer (D2C) e-commerce companies that build market, sell and ship their products themselves without middlemen.
This is an interesting business evolution (D2C) seen more in recent times. We can look at it as consumer convenience with cost effectiveness or effective business module with cost control. An explosion of new direct-to-consumer companies is transforming how people shop. In the process, these brands spanning everything from detergent to sneakers, are radically changing consumer preferences and expectations. They have built dominant presences in Google’s search results, turned their Instagram followers into micro-influencers, and used highly targeted Facebook ads to grow their audiences. They have shown extraordinary resilience amid the Covid-19 pandemic. Not only have these direct-to-consumer brands survived the crisis, but many also kept growing and winning new customers. But what sets these brands apart from traditional retailers?
Direct-to-consumer (or D2C) companies manufacture and ship their products directly to buyers without relying on traditional stores or other middlemen. This allows D2C companies to sell their products at lower costs than traditional consumer brands, and to maintain end-to-end control over the making, marketing, and distribution of products. Unlike their traditional retail competitors, D2C brands can experiment with distribution models, from shipping directly to consumers, to partnerships with physical retailers, to opening pop-up shops. They do not need to rely on traditional retail stores for exposure.
In recent times there are greater number of start-up products/brands as examples that have been in the direct-to-consumer marketing model satisfying the consumer with cost effectiveness and lessening burden of physical shopping particularly in the lock down periods of COVID 19. These well-positioned start-ups are competing with some of the biggest retail brands in mattresses, razors, shoes, and more by rethinking not just the product, but the entire retail model. In this space, no e-commerce company stands taller than Amazon, and every e-commerce company must factor the company into its growth strategy. These companies have figured out how to use Amazon for (partial) distribution of their products or carved out niches away from Amazon‘s marketplace.
For better connectivity and more understanding on this business model in this TASK part we discuss about a razor Harry’s as an example. Harrys started out of some kind of frustration from the retail trade physical shopping that fueled to choose D2C route. Harry’s founder Andy Katz-Mayfield went to the grocery store to stock up on blades and mulled over the absurdity of the process: He had to find the razor section in the store, and then request an employee to come and open up the locked case. From that case, he had to choose from among dozens of seemingly undifferentiated models with names like “Turbo” and “Mach”. He wound up paying a total of $25 for 4 blades and some shaving cream. With this shopping experience he called his friend Jeff Raider and they decided to start a razor company with a simple model: one great razor, with cheap blades, delivered straight to your door. They started out with an inventory of 10,000 razor handles in March 2013 and sold out within a few days. Two years later, their company was worth $750M, and in 2018 it generated about $270M in sales. And all of this was built, in large part on the idea that consumers don’t really need as much choice as they’re being offered when it comes to razors.
Post your perceptive comments on whether this D2C path of selling Harry’s is successful with the consumers to gain a decent market share? To gain consumer awareness and buying decision what could the founders have done for the brand Harry’s. Our solution part of Harry’s will be posted on our Good Morning Monday Management solution for the TASK 232 on 6th March 2023.
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