In 2010S, Looking Back At The Ten Years, Direct Retailing Led To Industrial Upheaval.

New York, USA -- when Warby Parker began selling glasses online at a price lower than the bright spot (Lenscrafter) in 2010, it triggered a revolution.

　　 In just a few years, brands have been able to keep costs low by cutting wholesale, selling online and relying on social media marketing. "DTC (direct-to-consumer, directly facing the consumer marketing mode") has changed from industrial terminology to retail buzzwords in ten years.

It needs to be clear that brand marketing has been used for decades, and this term also applies to Gap or H&M. But when the pioneer of e-commerce, Amazon, Net-a-Porter and Zappos laid the foundation for online sales, they cleared the way for other brands to establish DTC business, especially those with reliable brand operation and Shopify accounts.

"We thought it would be a challenge... But Zappos has proved that you can buy shoes online, Blue Nile proves that you can sell engagement rings online, "Warby Parker co CEO Neil Blumenthal said:" consumer behavior is changing.

The idea of digitalization as the forerunner of DTC brand has forced the traditional businesses of large shopping malls and large chain supermarkets to completely change their business methods, otherwise they will face the risk of closing down.

Early DTC brands told consumers that they could maintain their low price advantage by cutting "middlemen". The reality is much more complicated, which is to bypass wholesalers, and many years of loss is also one of the reasons. It also reduces costs by selling online rather than opening hundreds of stores. Everlane, founded in 2011, said that no entity retailer could reduce the cost of infrastructure upgrading. Warby Parker won high profits by selling fashionable glasses without relying on wholesalers.

Online sales also allow digital brands to get unprecedented consumer information.

"Generally speaking, we are very familiar with consumers, and we can get data." Jeff Raider, co-founder of Warby Parker, said. Raider later founded the Harry, s, Edgewell, which bought the brand at the price of US $1 billion 370 million in May this year.

Some early DTC investors also have their own mission: Warby Parker has a "buy one get one" campaign, and Everlane is committed to price transparency. Nowadays, brand value is becoming more and more important to consumers. These brands make their products instantly appear.

In some cases, these start-ups are not much different from the brands they subvert, but the key difference is information.

How did they do it?

The DTC brand discovered the pain points of consumers, and through unique narrative, told consumers that only they can solve these problems. Whether these stories are true is secondary. Allbirds shoes should be more comfortable and environmentally friendly than Nike. Glossier cosmetics are more natural and elegant than MAC. Away's suitcase can take you to explore. Fashionable young men may never have thought that one day they would be associated with the Harry s of the drugstore brand.

"Ten years ago, the millennial generation entered the public eye as a core consumer. These companies said their own language," said Eurie Kim, partner of Forerunner Ventures, who invested dozens of DTC brands. "Storytelling is appealing. It's an experience, a way of life."

The rise of social media and the popularity of smart phones also promote the spread of the word "DTC". Raising millions of dollars to pay for social media advertising has become a norm. This strategy is an effective way to win a large number of customers for previously unknown brands, especially in the first five years of these ten years, when Instagram and Facebook did not yet have a large number of similar fashion start-ups.

"With social media, consumers know more about Warby Parker in ten minutes than Gap." Blumenthal said.

This is not to say that traditional retailers do not have their own stories, but most traditional shopping center brands do not put their founders in marketing centers, or advocate the subversion of products. They rely on their ubiquitous stores.

"Store brands are able to manage more stores and carry out better sales planning based on distribution advantages," said Jesse Derris, director of public relations agency, which helps Warby Parker, Everlane and Glossier brand development. "Commodity oriented companies believe that choosing colors and trends is the main strategy, but brand discourse is secondary."

After the rise of Amazon, the flow of retail outlets declined. Lifeless shops, coupled with bland products, are becoming a burden. In 2017, Amazon's revenues in North America reached $106 billion, up from $18 billion in 2010. Amazon Prime member education subscribers do not leave the sofa at home to pay endless orders. According to the Wall Street journal, the vacancy rate of stores in the United States reached 9% in 2018, the highest level in seven years.

"Consumers used to go shopping centers for entertainment, but digital products replaced this experience," Sarah Willersdorf, managing director of Boston Consulting Group, said: "the journey of discovery has changed." Consulting

The electricity revolution also exposed "dirty little secrets of retail business", as Mark Cohen, director of retail research at Columbia Business School, said: there are too many stores in the United States. From 1970 to 2015, the number of shopping centers in the United States increased by 300%. As more and more consumers shop at home, clothing brands once run thousands of stores and are regarded as successful.

Like Gap, J.Crew, JCPenney, Messi general merchandise and Sears closed hundreds of stores and mass layoffs. Payless, Gymboree, Nine West, Claire 's, Wet Seal, BCBG, A e ropostale, ropostale, and 21 apply for bankruptcy. Some shops of The Limited, Sports Authority and American Apparel have completely disappeared.

According to Coresight research, a retail research firm, 5500 stores closed in 2018, and nearly 1 stores closed in 2019.

"With DTC, the retail industry has become a tragedy," Cohen said.

Difficult transformation of traditional retail industry

The mall brand operates its own e-commerce business, but in the early years of these ten years, some brands have difficulty in running a huge network of stores at the same time, and developing online businesses.

"DTC brand is mobile first, based on data and analysis, while traditional brands are less flexible." "Brand development is easier from scratch," said Willersdorf, a Boston consulting firm.

Many veteran brands do not know how to operate in the two world at the same time, said Steve Dennis, a retail analyst, Sears and Neiman Marcus former executive.

"They see physical stores and e-commerce as two different channels and do not understand cross integration shopping," he said. "They are competing with themselves rather than letting consumers stay away from competition."

Steve Sadove, the former chairman and chief executive of Saks, points out that traditional retailers are also having a hard time, because they separate the supply chain from the retail business.

"The company has not invested funds to single stock assessment and transfer it to other channels, which is more difficult to adapt," he said. "WAL-MART, Target and Nordstrom have been successful because they invest in all channels."

At the same time, Amazon continues to invest more in expanding its storage network. Free return has also become the standard of digital shopping. The huge cost has caused a heavy blow to the brand.

DTC moves towards the lower line.

The ten years are coming to an end. Digital brands have gradually accepted some characteristics of traditional retail mode, which is what they spend most of their time trying to subvert since 2010.

Companies like Everlane, Away, Allbirds, Outdoor Voices and Glossier have opened dozens of stores. They now regard retail stores as a key strategy for growth.

"We find that many consumers like to interact with people." Warby Parker co CEO Dave Gilboa said. (in the past two years, the brand has expanded to 115 stores). "They value the sense of participation in shopping experience and bring family and friends. Shops are therefore an important part of the shopping process.

Many DTC brands have also established partnerships with wholesalers.

"We realize that there are many other places outside the Internet that consumers want to know about us," says Raider of Harry s. The brand has now entered WAL-MART, Target and other shopping malls. "We are expanding our sales channels and serving more people. This is a better opportunity."

Large supermarket chains such as WAL-MART and Target also seize the opportunity to transform their stores into small distribution centers where employees can complete online orders.

Amazon even set up a physical store. It recognizes offline passenger flow and further promotes online sales. (it also wants to get offline consumer data).

Online brands and traditional retailers share a lot in common. Experts who have witnessed the changes over the past ten years believe that brands need to take both online and offline strategies when they want to thrive.

But like many of the "waves" that have now been closed down, not all online brands can survive the storm. "95% of the brands will fail." Derris forecast. The liquidation of DTC has already begun. Many brands have raised millions of dollars, hoping to become 5% lucky. They try all possibilities, from experiential retail to stock free stores.

The recession is still continuing. Some people think that the electricity supplier revolution has been exaggerated: according to data from A.T. Kearney, 81% of Z generation prefer shopping in stores. 73% of respondents prefer to visit physical stores. Another data from Boston consulting firm showed that 55% of the Z generation saw store employees as the source of inspiration for shopping.

The key is to resist complacency.

"We know that the journey of consumption is far more complicated than people realize," Blumenthal said. "Most people do not shop only through one website, or just go to stores, so it is necessary to create a better experience with consumers."