Photo: DTC Friday
Are Americans ready for a DTC shopping holiday?
On November 15, a new shopping holiday, DTC Friday, quietly launched with 120 direct-to-consumer brands and a give-back message. The day’s creator, Tim Armstrong, however, has big future plans for the day and the overall DTC opportunity.
Mr. Armstrong, the ex-CEO of AOL and Oath as well as Google’s former marketing chief, in February 2019 founded dtx company, which invests in and creates experiences and platforms in the DTC space.
When launching the business, he wrote that retail is still largely made up of analog-driven “one-way distribution and relationship systems” and that digital is helping DTC brands create a “two-way, relationship based system.”
When on CNBC last week announcing DTC Friday, Mr. Armstrong described DTC as a “another megatrend starting” and cited Nike’s decision to end selling to Amazon as the “tip of the iceberg” in a DTC shift. Said Mr. Armstrong, “If they have the option to go direct, they are going to go direct.”
Dtx company has so far made six DTC investments, including in beverage company Dirty Lemon and lingerie upstart Third Love. The company also creates experiences, such as product catalogs and events, designs platforms and invests in talent to support the DTC space.
DTC Friday, which promises to be held annually two weeks before Black Friday, offered some examples in how dtx company is helping DTC brands deliver experiences to directly engage consumers. Beyond any deals on the day, shoppers were given a chance to donate $5.00 to a charity of their choice through Givz, a platform that aggregates hundreds of charities.
Under dtx company’s guidance, DTC brands are also being encouraged to expand beyond platforms such as Facebook and Instagram that have driven much of their outreach to TV, branded videos and other media. The brands used QR codes and NFC tags during DTC Friday to track how ads drive sales.
“We want to essentially help these brands move from a platform-structured internet into an ecosystem-driven internet,” Mr. Armstrong told Business Insider. “Instead of the data and value being accrued at the center to these platforms, it moves toward the edges to benefit the brands and their consumers.”
- DTC Friday
- DTC Friday provides a chance to give back while shopping some of the coolest brands – New York Post
- Tim Armstrong is launching a new company to bring products and experiences directly to consumers, no retailer required – CNBC
- Former AOL and Google exec Tim Armstrong is pronouncing a day for direct-to-consumer brands to rival Black Friday and promising them an audience of at least 100 million – Business Insider
Discussion Questions
DISCUSSION QUESTIONS: Do you see an opportunity for DTC brands to have their own shopping holiday? Do you agree with Tim Armstrong that DTC is “another megatrend starting” as well as the need to diversify away from platforms such as Facebook and Instagram?
Poll
BrainTrust
Brandon Rael
Strategy & Operations Transformation Leader
Mark Price
Adjunct Professor of AI and Analytics, University of St. Thomas
From the customer’s perspective it’s simply shopping or commerce as usual, whether or not it’s from a retailer or DTC brand. We are witnessing the rise of the DTC movement, especially with global iconic brands such as Nike, Adidas, and others taking control of their brand, their messaging, their go-to-market strategies, and driving the customer experience instead of depending on a third party. DTC brands are in the game, quickly gaining momentum and starting to compete very seriously with the retail establishment.
DTC brands do not necessarily need a special holiday or shopping event. Customers appreciate choice, and if DTC brands such as Away, Casper, and Harry’s along with the older guard including Nike and Adidas can drive a better overall experience and competitive pricing, along with quality, they can disrupt the model and take back some of the market share from the retailers.
I agree that DTC is growing and that it is taking share and capturing the interest of consumers. I am not entirely sure that a DTC shopping holiday will gain much traction as a concept. For a start, I think there are already too many shopping holidays. Second, do consumers really differentiate between DTC and buying from a retailer? Not really, such a distinction is technical.
I also find some of the quotes such as: “We want to essentially help these brands move from a platform-structured internet into an ecosystem-driven internet” very vague and woolly. I can decipher a meaning if I think about it, but I wish people would write plainly and meaningfully.
DTC is absolutely a legitimate disruptive trend. Enabled by digital technology and distribution flows combining with the ability to create and direct consumer relationships, brands are discovering a new and effective selling paradigm.
While I have doubts that a new DTC holiday has legs, it can definitely raise awareness and create momentum for other brands to pursue. Consumers should welcome additional shopping options while brands need to carefully manage their retail ecosystem relationships as they pursue growth and brand integrity.
At the end of the day, a brand-loyal online shopper is likely to visit the brand for a purchase rather than via a shopping platform – as long as that online experience is easy, frictionless, and rewards such loyalty. For those consumers shopping on price and less sensitive to brands the whole DTC element is an afterthought.
With the growth of online shopping, it has spurred the growth of direct-to-consumer. While many of these brands also have physical stores, it isn’t a requirement. This trend will continue to grow as manufacturers/brands have the opportunity to increase margins by cutting out the middleman – retailers.
A lot of the statements being made about DTC and its advantages are just the industry talking to itself. Most consumers neither know nor care what is DTC and what is retail – they just want easy, fast and cheap. Trying to create yet another November shopping holiday is adding a bucket of water to a swimming pool; it’s become Black November, and there is no single day of savings any longer. I suspect the DTC message will get lost with consumers and, while DTC activity with major brands will grow, it won’t be a game-changer for consumers.
I think we all knew that DTC was coming around the corner. Another option in a collision of consumer options. But another holiday shopping day for this? I really don’t think so. We’re entering a “claustrophobia of abundance” in options, special days and platforms, which make decisions difficult.
There are two separate questions here. Is direct-to-consumer (DTC), as Armstrong envisions it, a step up from traditional internet commerce? Without a doubt. Do consumers need another holiday-season shopping holiday? Hard to imagine. The more “special shopping days” we create, the less “special” they become, their image fading into the exploding landscape of what has now become a non-stop period of July through January “holiday” discounting. As to the second question Armstrong clearly has several dogs in this fight, so he’s hardly an objective observer, but he is absolutely correct that a more dynamic DTC platform is long overdue.
Why not? Works for Alibaba. We like the idea of targeted internet shopping. It lets content be more directed and makes it easier for convenience-focused consumption. The only reservation is the 20th century lesson that sales are like heroin – used selectively it is a real high, used too often they become increasingly less effective and end up in costly addiction.
No, we certainly did not need another shopping holiday. But since it looks like we are getting one, I’ll think of it this way. 11/11 will be the giant monolithic “department store” event and DTC Friday will be the “specialty store” event. Black Friday isn’t an event any longer. It’s a season within a season. 11/11 will dwarf DTC Friday, but maybe there are brands that don’t want to get lost in that maelstrom.
I agree we don’t need another day, but it looks like we’re getting one. I’m interested to see if this impacts Giving Tuesday. DTC Friday combines elements from Black Friday, Cyber Monday, and Giving Tuesday. With so many days, it would be a shame if the day that comes last and does the most to positively impact charities during the holidays season were to be negatively impacted. Also, Jeff – “It’s a season within a season.” Yes.
There are so many special shopping days now that even we industry insiders can’t keep track of them. It boggles the mind that anyone expects that consumers are caring about these shopping days.
U.S. shoppers are now faced with a Macy’s-like situation (at least in the PNW): Every weekend is a sale weekend. And that means sales lose their effectiveness yet we can’t give them up, because we’ve set consumer expectations that they’re always going to be able to get a deal.
Fortunately, DTC with extensive over-spending behind it is a short-lived trend. Soon the market will adjust and go back to normal with some smart DTC companies who then shift to retail for scale.
While I applaud this initiative to increase the direct connection between brands and their customers, I am not sure that America needs another shopping holiday.
In order for this effort to succeed, there must be a clear benefit to customers for working directly with manufacturers. It’s clear that the price must be consistent with the price offered by intermediaries for comparable products, and in addition there must be some level of access or rewards to distinguish the direct-to-customer relationship from other alternatives.
The direct-to-customer initiative is also very consistent with the needs of Millennials, who as a group tend to want to work directly with authentic, value-driven organizations.
At the same time, I am not sure about the piece about moving away from Facebook and Instagram. It seems to me that the communication channel plan should exist separately from the overall strategy of going direct to customers. All in all, it will be exciting to see how this plays out over the next couple years.
DTC companies usually have a few things in common (caveat: often, not always). They may be trying to disrupt the convention in their spaces (think ThirdLove for underwear fitting and shopping), they recognize that protecting value is important and do not over-promote and finally, they likely target a different consumer type, specifically Gen Z and Millennials, that shop differently often using social media as an omnichannel.
That said, traditional brick-and-mortar have often used promotions and when used effectively, can be powerful tools to drive traffic, increase spend in terms of dollars and average basket size through cross-selling.
Black Friday is a huge sales day for many retailers so it’s no surprise that DTC companies are leveraging best practices from the psychology of sales.
The average consumer does not know what DTC means — at this point, it’s an industry term only. Therefore, I don’t know how much this is going to resonate with the customer. The other concern I have is that the whole “getting rid of the middleman” was to offer the customer the best price up front. By offering a discount on DTC Friday, will this hurt the brand’s credibility? And also their margins?
I agree with Brandon Rael that the shopper doesn’t see nor care about the fact that they’re buying DTC. Focusing on one “holiday” for this group of merchants may actually limit their audience and addressable markets. There are great examples of DTC Brands that have been successfully selling for 15+ years, and they should leverage the innovative retailers’ techniques for driving profitable growth.
From the customers’ viewpoint, DTC is not anything unusual and a special shopping holiday to promote direct-to-consumer is not likely to gain much traction. I think the “mega trend” idea comes from within the industry as we see more brands expand their DTC opportunities, but a holiday promoting DTC is not going to be a major sales driver, overall convenience and assortment will be.
I agree with everyone. My only question is, do we have to call it DTC Friday? Worst name ever.
Any brand can have their own holiday. They just have to announce and promote it. As for DTC being another mega trend, consider that the retail world is changing and anyone that wants to succeed will have to change, too.