Written by Sven Van Hoorebeeck
“Hope for the best and prepare for the worst.” D2C is not easy; it comes with challenges and learning new capabilities. Therefore, analyzing others’ successes and failures shows the best while preparing for the worst. In this article, we will review what made the success and the failure of four D2C initiatives.
Let us start with the success stories!
Casper – Smoothing the mattresses purchasing process through D2C
Purchasing a mattress in a regular store is inconvenient because of (i) getting the right mattress fit, (ii) deciding among many choices, and (iii) transporting the mattress back home. Casper addressed this problem by (i) guaranteeing money-back if customers were not satisfied, (ii) providing a unique solution, and (iii) delivering the mattress directly to consumers' houses in a few days. Casper managed to ease the purchasing process of mattresses with those three characteristics – a key customer pain point - which made customers massively follow the offer. Casper reached $400M of sales in 2018.
BarkBox - A personalized offer for your dog
BarkBox is a company selling gift boxes for dogs in the United States. The gift box is a subscription model in which customers’ dogs receive toys and treats every month. To personalize the box of each dog, BarkBox collects data in the subscription process. The website asks about the dog’s name, sex, size, birthdate, toy preferences, etc. Thanks to this data, BarkBox adapts its boxes to each dog and changes the content monthly according to feedback received. By gathering customer data and adjusting its solution accordingly in a seamless way, BarkBox gets closer to its customers and gives the feeling of a unique personalized offer. It has proved successful, as Bark Box sales raised to $400M in 2020.
Learn from failures
The loser forgets the risks associated with D2C activities when not paying enough attention to all aspects of it. Let’s take a closer look at some remarkable failures.
Eleven James - Luxury watch rental without enough working capital
Eleven James was a company that let its customers lend a watch over a certain number of months. The company was born in 2013 and stopped in 2018 because it could not extend its credit line. The management underestimated the amount of cash necessary to keep operations running while spending enough marketing to attract new customers. A substantial amount of cash is needed to purchase luxury watches, and it takes a few years before the watch is amortized through a monthly subscription. Without an extended credit line, Eleven James could not secure enough capital until the business became profitable.
Cocodune – A swimwear to try at home too costly for the company
Cocodune allowed its customer to try their swimwear outfits at home and send them back if they did not want to purchase them. The convenience of trying it before buying drew a lot of interest from customers; however, the “free home try-on platform” was a double-edged sword. Providing such an experience came with extensive shipping, return costs, and cleaning costs. Cocodune did not accurately forecast the costs associated with the “free home try-on platform," leading to bankruptcy in 2016.
Prepare well to succeed
Success stories, as much as failures, are a source of learning. Here above, the failures illustrate the D2C common pitfall of not planning for all eventualities; and the success stories show how a customer-centric approach can capitalize on the amazing opportunities D2C provides.
If you want to engage in D2C, make sure you are well prepared. Reach out to us, we are happy to share our experiences!