Expensive lesson or valuable insight about direct-to-consumer retailing?
The Dollar Shave Club. Expensive lesson or valuable insight about direct-to-consumer (DTC) for Unilever?
The DTC channel really feels like it’s gaining some traction.
In the early days of DTC there were classic examples such as Unilever’s acquisition of The Dollar Shave Club for USD1 billion. This has recently been sold to private equity for Unilever to concentrate on its core business. Probably no surprises there. Many were sceptical of the valuation at the time, and it felt like it was Unilever’s way of testing and learning. It was never going to be central to its strategy, with the shaving market dominated by Gillette (P&G) and Schick (Energizer). Unilever will have taken a substantial write-down on the disposal, so expensive lesson of valuable insight?
Whilst DTC provides control of a brand’s relationship with the end consumer and access to customer data for greater personalisation and experience, it’s not without its risks. The cost of running a direct channel is one, and the potential alienation of the traditional retail channel upon which the vast majority of a brand’s volume is sold is another. You also have to be patient.
This presents an interesting challenge for consumer businesses in the context of executive hiring. It requires a skill that has become critical in recruitment and search processes for commercial leaders:
An omnichannel mindset.
No one can accurately predict how the consumer and retail sector will unfold. We overestimated the pandemic’s impact on grocery retail e-commerce growth, believing the trends were ‘hardwired’ only for online grocery sales to return to pre-pandemic growth rates.
Is DTC a classic case of Amara’s Law where: “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.”
I’m interested in my marketing and insight sector connections enlightening me on the prospects for the DTC channel for consumer brands in the long-term.
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