By Angie Hanna-Bugueiro
The Covid-19 pandemic has forced more and more of us to turn to digital channels for our shopping fix, making this a great time to be an online retailer. The consumer barriers to discovering new brands online that existed pre-pandemic now feel like things of the past.
In addition to shifting consumer tastes, a proliferation of no-code and low-code e-commerce products has also made it easier than ever to launch your first brand. But with the recent rise of direct-to-consumer (DTC) internet brands, what is the best strategy for “setting up shop” online?
In the early days of online shopping, it was pretty normal to hire an engineering team to custom build both the front-end and back-end technology needed to transact online. But today, with more and more SaaS (Software as a Service) companies focusing on building e-commerce technologies, the choices seem endless. Having the right digital strategy is critical to the success of almost any business, but it is especially important for DTC brands given their need to disrupt and differentiate. There are many benefits to selling direct to consumer versus the more traditional retail models; most importantly, having control over the customer experience, creating closer connections with customers, quickly getting to market and higher margins.
A good start to defining a digital strategy is to determine which of these benefits is a top priority. Deciding which of these three benefits is most important to the company will help DTCs define the right digital strategy that can lead to their success.
Having the right digital strategy is critical to the success of almost any business, but it is especially important for DTC brands given their need to disrupt and differentiate.
The Low or No Code Options
For startups looking to get to market quickly, Amazon or Etsy marketplaces are the easiest paths for a new company that’s ready to sell its products. The sheer amount of traffic on these platforms makes them highly attractive to potential sellers, but the DTC brand will have virtually no control over its customer experience. If the priority is higher margins, then selling on a platform like Amazon or Etsy which requires little to no technology intervention might be the best solution. Given the no-code nature of these products, a new company taking this path would not have to invest in expensive technical resources. They would also benefit from any product enhancements that are developed by these platforms with no additional cost to the seller.
Another no-code option, Instagram, has offered shopping features since 2017 that make it particularly easy to go from creator to seller. Setting up shop on this platform would most benefit a DTC that is interested in maintaining a close connection with its customers and building a community online around its brand. Instagram’s ability to keep a large number of daily active users highly engaged on its platform, as indicated by their daily active usage metrics, makes the platform an ideal place to optimize for discovery. The platform takes care to streamline many parts of the purchase funnel, making it a very attractive option to sell products online.
If a brand is looking for richer features or more control over the user experience a low-code option, like Shopify Plus’ headless commerce, could be a better product. Shopify Plus separates the back-end infrastructure from the front-end consumer product, which allows startups to focus their resources on customizing front-end experiences while benefiting from Shopify’s ever improving back-end infrastructure.
Digital brands like OurPlace, with their Instagram-famous Always Pan, have found great success with these options. A combination of Instagram shopping and driving customers to transact on their owned and operated headless Shopify site allows them to share their mission of connecting people across the kitchen table through a controlled site experience.
All of these options give startup DTC’s the benefit of a reliable platform. Along with reliable checkout flows, these low-to-no-code solutions grant access to other powerful tools that help brands manage their business, such as data analytics and some light customer relationship management capabilities.
Along with reliable checkout flows, these low-to-no-code solutions grant access to other powerful tools that help brands manage their business, such as data analytics and some light customer relationship management capabilities.
The Fully Custom Technology Stack
If a DTC prioritizes customer connections and better experiences, then the benefits of a marketplace or a low-code option won’t outweigh the need to provide unique experiences.
A part of the successful beauty startup Glossier’s mission, for example, is that they believe in the power of the individual and see beauty as an incredible conduit for connection. For that reason, Glossier has positioned itself as a technology company by investing in the team and resources needed to build the best customer experiences. Their tech stack is fully custom, with some exceptions, to control the customer experience and build those rich connections with their community. By driving customers to their owned and operated site from social channels like Instagram instead of transacting on Instagram or another marketplace, they have elevated their product to something unique and special that can only be found in one place.
If a DTC prioritizes customer connections and better experiences, then the benefits of a marketplace or a low-code option won’t outweigh the need to provide unique experiences.
Another very successful DTC, Warby Parker, has invested heavily in building custom experiences in pursuit of their mission to disrupt the traditional eyewear industry. Given the unique nature of combining health experiences (the optometrist visit) with commerce experiences (buying glasses) and the year in which Warby Parker launched, the option to implement a no-to-low-code e-commerce strategy was probably not available. However, if they were to launch that brand today, it is reasonable to assume that they would still need the flexibility of a fully custom platform in order to innovate the customer experience for both patients and eye doctors, and their own business model.
In summary, the first decision a digital leader at a DTC company needs to make is to identify what makes their model special and what technology will be needed to support that differentiation. We’ve all had online shopping experiences that felt particularly special, like Warby Parker’s virtual try-on feature. A no-code, fully out of the box solution would not have enabled that level of personalization for their customers. The brands that take the time to identify how they create value for their customers and define a digital strategy that supports their customer goals will be the brands that capture value for themselves.
There are pros and cons to all of these options, but the bottom line is that understanding your mission and then planning a tech stack around the desired customer experience is the best approach to building a successful DTC brand.
Angie Hanna-Bugueiro ('22) is completing her MBA at Columbia Business School this May. Throughout her career she has held various strategic roles with both high-growth start-ups and established companies in the DTC, Retail, E-commerce, and B2B spaces. For the last 10 years, she has successfully grown and led product teams and practices for highly recognizable brands and is currently the SVP of Product for WoodSpoon, a NYC based food delivery marketplace for home chefs.
You can follow Angie on Medium.
