How direct to consumer brands can compete with large retailers

It’s easy to get lost in the headlines.

Amazon and Walmart’s dramatic clash to become the cornerstone marketplace for online shoppers has sent numerous shockwaves through the industry in the past 18 months—and the clickbait-y headlines have closely followed. But for direct to consumer retailers worried about how their business fits into the future of retail, it’s important to realize the advantages of their model.

Amazon offers retailers and brands the ability to sell products via their marketplace and leverage their robust logistics infrastructure. No matter how large Amazon’s selection gets and how robust their logistics infrastructure becomes many consumers will continue to want an intimate, refined shopping experience—one that can’t be done with the disintermediation of a large marketplace.

This point has not gone unnoticed by Walmart’s increasingly savvy digital team. Their answer: develop their own Direct To Consumer brands.

The largest brick and mortar retailer in the US has recently unveiled digitally native brands they will be developing and launching direct to consumer in the next few months. Allswell, a mattress company poised to compete with Casper and the flurry of other online mattress companies, and a cosmetics line named Co Squared are both brands Walmart has developed in-house to exist outside of their marketplace.

Digitally native brands + logistics

Walmart’s competitive advantage in launching direct to consumer brands is that the fulfillment processes of each brand can benefit from having been plugged into Walmart’s refined logistics system.

Having closed some Sam’s Clubs to become distribution centers and having years of experience getting creative with same day delivery, Walmart has the infrastructure to launch dtc brands with the convenient delivery options of a national chain.

For the consumer, this is the best of both worlds. They get a curated experience of a DTC brand, with the same expedited delivery options that 80% of consumers are beginning to expect and one that smaller dtc brands may struggle to offer.

How DTC brands can continue to compete

This leads non-Walmart brands to the important question: how can they continue to compete?

Thankfully, it no longer takes a massive network of brick and mortar stores to offer the shopping experience that consumers expect. Retailers can keep a few key points in mind and continue to differentiate themselves from big box retailers.

Logistics

Warehousing solutions like Darkstore allow retailers to distribute their inventory across any number of markets in the same way that Amazon uses its fulfillment centers or Walmart uses its stores. The difference is the barrier to entry are minimal. Retailers can rent warehouse space by the square foot without having the overhead of an entire warehouses.

Whether it’s through Darkstore or a retailer’s brick and mortar stores, keeping product closer to consumers allows for convenient same day delivery options with Deliv. Amazon and Walmart may have set the standard for expedited delivery, but with logistics solutions like Darkstore and Deliv, any retailer can begin offering the same convenient shopping experience.

Personalization

Stitch Fix, the recently IPOed e-commerce brand, is a prime example of combatting sinking prices and wide selections with personalized, hand-picked items. Millions of consumers are willing to invest in quality products, but expect a shopping experience that reflects that.

Similarly, brands like Chubbies or Honest have differentiated themselves by having a clear brand message that resonates with consumers. Whether it’s a wild college lifestyle or an attention to locally sourced goods, direct to consumer brands are able to connect with customers in a way that large marketplaces will never be able to.

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