“Most of my work has been with big brands, and everyone keeps saying that these direct brands have changed the nature of business,” he tells Marketing D2C Weekly. “My sense is that there is something bigger happening, and something more fundamental, a change in what I think of as the essence—or maybe the soul—of branding itself.”
The surprise? Evidence that D2C success is perhaps less about products and business models, and more about a fundamentally different consumer. They don’t just care about equality, for example, but are so committed to fairness that “they’re turned off by anything that seems binary–in race, in gender.”
Honesty is essential. New consumers look for transparency everywhere, at a level that is often impossible for legacy brands to fathom. And they have equally high expectations about intelligence: Brands must know not just what customers want, but when and how they want it.
The D2C brands they love “have created a new normal. They have come to expect these things, so it is inexcusable when brands don’t deliver,” says Chatterjee, who is vice president and principal analyst serving CMO professionals.
Legacy brands that can’t find this kind of cultural relevance are being squeezed out of the conversation. Entrepreneur-led Anastasia Beverly Hills’ 19 million Instagram followers dwarf traditional brands. Gillette’s share of the men’s razor market sank from 70% in 2010 to 54% in 2016.
Companies like Roman, melding telemedicine with direct access, are threatening the prescription drug process and pharmaceutical category.
The shift is most significant online. While the top 20 cosmetics brands capture 90% of dollars spent at brick-and-mortar retailers, outsiders capture 86% of the online share.
The study looked closely at 38 health and beauty brands selling everything from razors to vitamins to tampons. Forrester reviewed positioning and analyzed communication, running textual sentiment analytics on ways companies describe themselves. It also did consumer research, including focus groups and an online survey of 1,000 U.S. adults.
Traditional companies put brands on top, and built on an “industrious dedication to creating products,” the report says, quoting Jim Stengel, P&G’s former CMO. Insurgent brands “reverse that process, starting with personality, then tribe, and then brand and product.”
And yes, legacy brands are striking back, with acquisitions and their own direct offers. And surely, Chatterjee says, many of these D2C brands won’t survive, even as they grow bigger and start to emulate older brands’ mass advertising and retail footprints.
But that still won’t change the demands of these consumers. They don’t want to be told what to do, or what is beautiful. They want to buy products that let them invent beauty and health on their own terms. They want to know more about the people behind their brands. Passionate, opinionated founders are more believable to them than armies of nameless, faceless product-pushers at big brands.
Whether traditional companies survive this shift doesn’t have much to do with whether they go direct or not. “It’s about serious cracks in your relationship with your customers, who have put you on notice,” he writes. “People want change. And they want you to be the brand you say you are.”