Direct To Consumer Trilogy: Part 2 – Marketing Game Strong
Direct to Consumer (D2C) brands have rocked the retail world, bringing new options to the consumer and a new challenge to established retailers. Investigating new consumer behaviors, though, is what the Jumpshot’s Insights tool was built for. Performance data from Insights helped us map the year-over-year growth for select categories of up-and-coming D2C brands under various retail groups; mattresses, oral hygiene, skin care and hair removal, frames, and eyewear, shoes and exercise equipment.
In Part One of this series, we focused on leading categories in the D2C market. We analyzed the mattress industry by looking at a fan favorite, Casper, and compared them with a crop of competitors. We evaluated what may be the poster child for the modern D2C brand, shoe startup Allbirds, and weighed their marketing model and success against exercise stationary bike brand, Peloton.
In Part Two of this series, we will look at personal grooming, oral hygiene, and frames and eyewear. Be sure to check out the final installment in Part Three where we examine the genealogy kit industry and the increasing demand for at home genetic testing and analyzing.
Get Your Groom On
D2C brands are feeding a need that traditional retail platforms were struggling to achieve, offering improved consumer experiences and giving companies a chance to build their brand by offering lower costs.
This seemed to be the approach for the Dollar Shave Club (DSC). The company hit the market in 2011 and quickly achieved $1B in funding. DSC is not the only razor company and they certainly aren’t the only one who ships to customers on a refill subscription model; however, they are the only one to price their product as low as $1 a month. And the price point naturally has led to name recognition. Of the 14 selected brands in this series, Dollar Shave Club represented a remarkable 22% of the share of search volume. Within the grooming category for the selected brands Gillette On Demand and Bevel, DSC has stayed above 90% YoY in search volume.
DSC has progressed into a profitable company and was acquired by Unilever in 2016, which has helped broaden their target audience by tapping into its parent company’s pockets and customer base. That’s helped them with ambitious messaging aimed at crossing product marketing barriers with inclusive ads. However, YoY the label is down in terms of web traffic, seeing visits decline 13%. Gillette On Demand, who launched in 2017 to compete and capitalize on the success of DSC, took a huge chunk of that, growing visits nearly 130% from 2017 to 2018. Of all three of the brands we looked at, Gillette also saw the most conversion rate growth growing from 142k in 2017 to 321k in 2018.
Bevel came on the scene in 2013 as a solution to skin irritation caused by shaving for men of color and customers with coarse-curly hair. The unique brand gained steam as it went after a target market that is often underrepresented by large CPG companies. However, like other players in this category, Bevel has seen a drop in domain visits YoY with negative 16% growth from 2017 to 2018. That wasn’t enough of an impediment for Procter & Gamble, who purchased the brand in December.
The decline in the momentum for D2C shave goods might be attributed to additional options for affordable razors now flooding the market. Amazon and Walmart are both now leading the eCommerce market for razors. Amazon contained 80% of the digital market share for the razor category in 2018 and Walmart represented 14%, showing 3% growth YoY.
The decline in search volume and website visits suggests that consumers believe shave clubs are not worth it and have opted to continue to shop online, but with more freedom with subscription-free advantages.
Crown the New King of Brushes
Not all subscription plans lose their drive after launch. The first electric toothbrush in the United States was the Broxodent in 1960 and since the release in the U.S., the product has seen several shapes and sizes. A new storm of electric toothbrush companies offering subscription-based plans has become the new craze including D2C new kids on the block, Goby and Quip.
Goby was founded in 2015 and has steadily advanced into one of the preeminent brands for oral hygiene supported by $2M in funding. Since its debut, Goby has stepped back from the formula for D2C and not oversaturated the market with commercials or traditional advertising, though, the startup has a presence on Facebook and Instagram using colorful images of the sleek toothbrush to gain followers and promote limited flash sales. All things considered, the efforts on social media sites have worked; Goby has seen a 12% rise in search quantity year-over-year. Goby’s success is relative of course to its competitors. Goby has approximately 15.2k followers on Instagram where its competitor Quip has 83.2k. This gap in online presence between the two brands can be attributed to the investors in Quip, who include singer Demi Lovato along with VCs. Quip is growing 57x the rate of Goby per the 2018 conversion count.
So what is the market and demand for electric toothbrushes for today’s modern consumer?
Quip and Goby have seen a large influx in the number of searches from 2017 to 2018; Quip with a 137% boost year-over-year and Goby at 142%. While visits on both brands’ domains have shown high growth, the transaction growth for Quip is almost triple Goby’s. Quip has opted to follow the contemporary D2C method to develop and emphasize their products using a mix of paid advertising, targeting users on social media like Instagram and Pinterest and leveraging traditional print media with mailers.
Sites For Sore Eyes
The frame and eyewear industry is a hot D2C field with tons of companies. It is estimated that the eyewear and frame category is going to grow globally to increase to $136B by 2021 and D2C brands will account for $2.8B of that number. This is big business and has proven successful for Warby Parker who launched in 2010 and has since branched out of the online hub and opened stores across the United States and Canada. Additional players in this division include EyeBuyDirect who has been an online retailer since 2005, Glasses USA and Felix and Iris.
We analyzed these four brands and found that Warby Parker, who has been victorious in this category, growing to over $1B in sales, has had a modest decline YoY online. Transaction growth has fallen somewhat each year with a negative 2% shift from 2017 to 2018. While visits to the website YoY are up approximately 11%, for the customers who interacted on the Warby Parker website, its conversion rate has declined, dropping 12% year-over-year. This could be attributed to the 60+ physical stores they have opened, or it could be incursions from new players.
Felix and Iris, who has a similar business model to Warby Parker but a higher price point, has seen substantial growth YoY with visits to the company website increasing 12% year-over-year and transactions rising 17% from 2017 to 2018. And they’re taking advantage of social media like Allbirds and Warby Parker, with accounts on Facebook, Instagram, and Pinterest (their Pinterest page alone has approximately 52k monthly viewers). While the growth is impressive, Felix and Iris will have to step their presence up online to even be in the same realm as Warby Parker and the other two brands; Warby Parker conversions were almost 275x that for Felix and Iris in 2018.
GlassesUSA is tapping into the social media market as well. Their appearance online has been amplified by a new, Hilary Duff-endorsed, limited-edition collection. The new endeavor has increased visits to the site; Glassesusa.com has positive website visit growth YoY at 6%. Additionally, search volume for the site is up, with a more than 180% increase YoY, a good chunk of which is likely due to increased paid search campaigns. This is the highest rate of search growth for the D2C brands in the category. GlassesUSA also saw the highest surge in conversion rate year-over-year with an increase of 16% Transactions themselves are up from 395k in 2017 to 486k in 2018.
Another winner in the online frame subset is EyeBuyDirect who has positive growth in website visits YoY at 41% and an equally impressive rise in transactions YoY at 26%. Frames on EyeBuyDirect are very modest, starting at $9 with lenses below $20. This is the discount consumers are literally searching for when trying to find a cost-effective and stylish eyewear brand.
It is noteworthy that no brand saw negative growth in domain visits indicating the frames category is strong for DTC brands.
What’s In Store For D2C Brands
While the state of the market for these select retailers is shifting, the D2C business model isn’t going anywhere. Going directly to the consumer gives brands a chance to create a digital footprint without the overhead and with more flexibility to shake things up and to be noticed by the buyer and develop a following. Marketing and advertising is a major component in the success of these brands. What they are saving in overhead needs to be filtered into their marketing budget.
In the next installment in this series, we focus on the winners in the genealogy kit industry for the D2C market.