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DTC: A Growth Strategy for All Brands

When 22-year-old Kylie Jenner sold a stake in her makeup business for $600m last month, online debates expectedly ensued. While it's easy to ponder the meaning of "self-made" and how much Jenner's family clout played into her ability to build a billion-dollar brand, arguably the most relevant phenomenon is how quickly she did it. 

Launched in 2015, Kylie Cosmetics took off in large part thanks to Jenner's massive social media following and how she built it. Another DTC beauty brand valued at over $1.2 billion, Glossier, also rapidly accelerated after founder
Emily Weiss added products to her community-focused blog in 2014. Even more recently, men's health brand Hims (those of you in New York have likely seen their bold ads on the subway) was founded in 2017 and is already valued at more than $1 billion.

Beauty and wellness brands aren't the only companies with relatively rapid rises. New IAB
research revealed at last week's Direct Brand Summit found that 90% of surveyed DTC brands achieve profitability in an average of just three years — pretty fast considering it took companies like Facebook and Amazon five and seven years to make a profit, respectively. More than three-quarters of DTC founders also stated their company can go from idea to market in six months or less — and a third can do it in just two months.
Kylie Cosmetics, Glossier, Hims and other major DTC brands have achieved rapid profitability by leveraging new commerce platforms, data-informed product strategies as well as targeted ads on Facebook and Instagram.

Cyber Monday racked up $9.4 billion in US online sales and smartphones drove more than half of all site visits, up 19% from last year. Black Friday also pulled in a record $7.4 billion in online sales, and was the biggest day ever for mobile sales, with just shy of $3 billion coming from smartphones. This year's stats indicate that we're more comfortable buying online and on smaller screens.

Driven by these increases in mobile purchasing and programmatic technology, new business models are built on speeding products to market, improving customer services and using data to attract audiences. IAB CEO Randall Rothenberg
says agencies must act like consultancies that help traditional brands do the same. But as made clear by current leaders in the DTC game, it's hard to scale new brands without smart PR, brand publishing and active community management. Integrating innovation and creativity across all parts of new direct brand models is essential to sustain growth.

New online retailers profit at speed because of a shift in the way they're built. Their data-driven, mobile first, community-led cores indicate opportunity for all brands to take advantage of.

Chris Perry 
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Copyright © 2019 Weber Shandwick

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