EVER heard of brands like Dollar Shave Club, Glossier & Gymshark? These are all direct-to-consumer (DTC) brands from the West that have achieved the unicorn status (valued at more than US$1 bil) by selling everyday products directly to consumers.
Some of the brands that utilises the DTC concept are even listed in the US stock exchange such as Warby Parker & FIGS.
Taking a closer look at the Southeast Asian (SEA) scene, you may have come across brands that are mainly digitally native with minimal offline presence.
To name a few, these folks are Oxwhite (premium quality daily wears), Secretlab (gaming chairs), Zenyum (dental braces), Love Bonito (fast fashion) or Thousand Miles (performance wear) who have employed various e-commerce strategies to reach the digital-first consumers in SEA.
Rise of DTC retail
While DTC retail is not a new concept in the West, it is still in its nascent days in SEA.
Having said that, the number of DTC players have been mushrooming, catalysed by the COVID-19 pandemic, the improving e-commerce infrastructure and the growing affinity towards digitally native brands among Southeast Asians.
Here comes the billion-dollar question: Why does DTC matter?
Well, the DTC model is gaining traction as brands are moving towards embracing cost-effective business strategies and safer modes of distribution to the consumers.
DTC retail is essentially a fast-track method of reaching consumers, allowing them to make purchase through exclusive channels (ie official website), by way of eliminating middlemen involved in the distribution process.
This helps the retailers reduce hefty mark-ups from wholesalers and save logistical costs in the secondary mile delivery.
These DTC brands often focus on niche audience via heavy investing in online marketing, thus enabling them to provide them a better quality and greater end-to-end customer buying experience, with very competitive pricing.
Directly owning the customer relationship also allows brands to offer them personalised product options, resolve issues quicker, and ensure a pleasant fulfillment experience.
By selling directly to consumers, brands find it easier to build a deeper customer relationship and establish a stronger brand in its product category.
The DTC model help companies to build a sustainable business model by offering control over its community building. It can be done in a structured way with a community-building strategy.
Moreover, DTC brands have an edge in this aspect as they are known to be masters at giving power back to the consumer. – Oct 21, 2021
Yeann Tan is the co-founder of Mates Food Store (widely known as MATES). She oversees business strategy, finance, PR and partnerships.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
