Expanding Beyond the Expected - DTC Growth Moves to Engage Customers with Relentless Relevance
In this edition of DTC Moves of the Month, we’re highlighting DTC darlings, both new and old, that are making expansion plays to stretch what they’re known for today in order to scale growth and achieve relentless relevance. Most DTC companies start out by aiming to solve one problem for one group—for Peloton, that was fitness enthusiasts who wanted to stay motivated while working out at home. For Rothy’s, it was about creating sustainable shoes for women that don’t sacrifice style. Many successful DTC brands reach a point of maturity where they must expand their offerings, to enlargen their addressable market and deepen customer relevance. Even large DTC companies such as Netflix and Etsy are looking for new ways to drive greater brand relevance, but the challenge also lies in how a company must balance expanding into new audiences and business models without losing their core brand identity.
Netflix – Taking the leap from content to commerce
Content powerhouse Netflix, one of the original DTC brands, has entered the e-commerce world with Netflix.shop. While Netflix already has many licensing deals for products based on original programming, Netflix.shop is the company's first owned-and-operated DTC outlet, enabling the brand to sell exclusive, limited edition merchandising with designs inspired by popular Netflix originals. Collaborating with up-and-coming designers, the Netflix shop currently features items inspired by popular anime series, 'Yasuke' and 'Eden', with items based on 'The Witcher' and 'Stranger Things' to be launched soon. The genius behind this move is that it goes far beyond the incremental revenue, into expanding Netflix’s flywheel. Netflix.shop creates deeper engagement with fans by providing a high-end and curated shopping experience, building loyalty and cultivating super fandom. As the streaming wars continue, Netflix’s expansion to e-commerce is a smart strategic play to drive relentless relevance to the brand and its original shows, ultimately vying for cultural dominance.
Etsy – Building new relevance through unique marketplaces
Earlier in June, Etsy acquired secondhand clothing marketplace Depop for $1.6 million. This is part of the brand’s strategy to create a “tremendous ‘house of brands’ portfolio of individually distinct, and very special e-commerce brands” that cater to unique audiences, according to CEO Josh Silverman. So what's the appeal of Depop to Etsy? 90% of Depop's users are younger than 26. Depop also includes a social component to the user experience that has cultivated a passionate community of buyers and sellers. By acquiring Depop, Etsy is aiming to be relevant to the next generation of consumers and learn from the social selling strategies that has made the platform so successful. While there are certainly similarities between the marketplaces, Etsy will need to determine how to leverage their new Gen Z audience without losing the “cool factor” that’s made Depop so popular, and stay true to the brand’s mission of building a “community-powered fashion ecosystem that’s kinder on the planet and kinder to people.”
Peloton – Expanding from the home to the workplace
Peloton experienced spectacular growth in 2020 as people needed a way to stay active while at home. Now, the brand wants to grow its membership base by targeting employers, through its new Corporate Wellness program. The program lets companies offer employees subsidized access to subscriber content and high-end cycles and treadmills, with tailored features such as group exercises that foster team bonding. This move to stay relevant as employees head back to the office will help the brand reach new users and bring them into the community. And Peloton’s unique approach to content—from enlisting celebrity fitness instructors to partnering entertainment industry titans—will likely keep them there. We’re excited to see how Peloton continues to stretch their brand through key DTC pillars, commerce, content, and community, to become more relevant to more people.
Rothy’s – Bringing a brand favorite to a new audience
Rothy's, the San Francisco-based DTC shoe brand, launched their first men's shoes: the RS01 Sneaker, a low-top, lace-up sneaker, and the Driving Loafer, a slip-on shoe with a classic loafer silhouette. Made from recycled plastic bottles, Rothy’s shoes have become a cult product among eco-minded footwear fanatics. And there's demand for more men's offerings: sales of U.S. men’s footwear rose more than 32 percent during the first three months of this year, compared with the same period a year ago, according to market researcher NPD Group. But the expansion into men's also puts Rothy's in more direct competition with another DTC favorite, Allbirds. As Rothy’s expands into men’s sneakers and Allbirds tests the waters with women’s flats, the winner will be the brand that is able to understand a new audience without alienating the one that made them successful.
Sources: NBC News, Bloomberg, Vox, Variety, IndieWire, The Motley Fool, CNBC, Yahoo! Finance