The Federal Trade Commission (FTC) recently sued to block Edgewell’s acquisition of shaving direct-to-consumer (DTC) company Harry’s, fearing industry consolidation since Edgewell owns the Schick and Wilkinson blade brands. It’s a disappointment to Harry’s founders and VC investors, to be sure, and perhaps even a deterrent to further VC investment in DTC disruptor companies.
But don’t mistake this for the end of the DTC challenge to legacy brands and industries. Quite the opposite. In justifying its suit, the FTC stated, “The loss of Harry’s as an independent competitor would remove a critical disruptive rival that has driven down prices and spurred innovation in an industry that was previously dominated by two main suppliers, one of whom is the acquirer.” In other words:
DTC is a big enough force that brings such benefits to consumers that it deserves federal protection.
Any chill this may put on VC investment will be short-lived as investors realize the flip side: that federal policy will likely support disruptors’ actions to take share from entrenched firms and certainly protect them from incumbents’ counterattacks aimed at stunting their growth. And in the age of the customer, the extra time this protection gives disruptors to win customers can only be good for them and bad for legacy firms unable and unwilling to innovate.
Should your brand enter the fray with its own DTC offering? If so, how do you identify the opportunity? Forrester offers three great resources:
“To Adapt To Direct-To-Consumer Trends, Use A Direct-To-Value Strategy” — There are eight core value DTC propositions. My colleague Ryan Skinner defines them and provides a “DTC canvas” to guide your DTC strategy.
“Changing Expectations Fuel Direct-To-Consumer Disruption” — There is more to DTC than simply shipping products directly to consumers. My colleague Anjali Lai and I surveyed over 1,100 DTC consumers and found that consumers have redefined core brand characteristics such as convenience, quality, and trust. Your DTC value proposition must align with these new definitions.
“Three Steps To Modernize Marketing Thinking” — Without exception, DTC companies have found some problem or annoyance that irks consumers and that traditional companies have overlooked. How do they do it? My colleague Laura Ramos and I conclude that marketing needs a new mindset, to be less brand- and technology-centric, and more rooted in empathy for consumers.
There is no reason why today’s successful brands can’t also succeed in a DTC world. But it will require brands to unlearn approaches that were successful in the mass marketing era. Ryan, Anjali, Laura, and I are here to help — please reach out to us or have your account manager set up an inquiry if you need our help!