Inside Trends 2019: Digital disruption is being driven by DTC brands

Inside Trends examines the five key trends affecting the digital marketing industry in 2019. We provide an insight on each trend from spokespeople across our agency globally.

In discussion with James Shepherd, Managing Partner – Growth

Watch the full interview with James Shepherd, Managing Partner – Growth, here

Direct to consumer brands have been disrupting retail for several years. Brands like Dollar Shave Club, with their tongue-in-cheek ad campaign in 2012, launched themselves into the public consciousness and started rapidly taking market share from established brands. Dollar Shave Club, alongside brands such as Harry’s, have helped reduce Gillette’s market share from 70% in 2010 to 54% in 2016. Since then, we have seen DTC brands grow year-on-year, with an estimated 400 brands currently active in the space. Their impact has been significant, having captured significant market share in categories including mattresses (20%), shoes (15%) and razors (12%). With DTC brands becoming one of the fastest growing areas of new commerce, 2019 will see them make an even greater impact on traditional retail.

The rise of DTC brands is down to the capabilities afforded by the growing digital economy. Low barriers to entry mean anyone who can identify a significant pain point for the consumer, or can see unnecessarily inflated prices, is able to compete in the market where previously the start-up-cost would have been too high. Facilitating the purchase directly from manufacturer to consumer removes the rigorous costs of the supply chain. Having owned and operated channels means DTC brands are able to invest their money elsewhere, ultimately bringing down the cost for consumers and undercutting legacy brands.

With the entire purchase journey taking place online, DTC brands have the advantage of knowing more about their target audience than traditional retail brands. Having a detailed picture of the consumers digital footprint allows for hypertargeting and helps inform future marketing strategies. In 2019, the information available about the digital consumer is more complex than ever before and marketers need to effectively harness this data to better resonate with the consumer.

These factors position DTC brands to make a greater impact in 2019. The success of disrupters such as Simba, Dollar Shave Club and Harvey’s have caused headlines across the globe and will encourage more investment from Venture Capitalists in the year ahead. As DTC brands continue to take a chunk of the market share from traditional brands, it is likely we’ll see those traditional brands attempt to make a stronger play for the digital economy. As the threat of DTC brands further infiltrates the traditional retail make up, we can expect to see more buy outs such as P&G purchasing DTC health and beauty outfit Walker & Company. Beyond that, we can expect more success stories, as digital brands provide consumers better value, offer a better customer experience, and fulfil niche consumer desires traditional brands have overlooked.

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M&C Saatchi Performance is an award-winning, full-service performance marketing agency focused on driving measurable results for organisations in all industries.