DTC may be the hot buzzword right now, but don’t expect that to last forever.
It’s not that the selling method will change, rather our perception and description of what defines direct-to-consumer. Much in the way that e-commerce has become nearly synonymous with retailing, DTC as a designation will be rendered unnecessary over the next 10 years.
That’s at least according to Anthony Choe, founder of Provenance, a growth-stage investor in DTC brands. “It’s going to be so standard that even calling [a company] DTC is going to be redundant,” he told Sourcing Journal.
As a growth-stage investor, Provenance works with the “gangly adolescent” companies that are between the start-up and full mature stages. As part of this, the firm prefers omnichannel brands—whether that’s e-commerce, retail, catalog or wholesale—and, ideally, the brands will have potential in multiple channels.
At Sourcing Summit New York on Oct. 17, Choe will share expectations on what the next generation of brands is going to look like and how Provenance uses data to optimize the DTC brands it invests in. As a participant in “What You Don’t Know About How DTCs Are Doing What They’re Doing,” Choe will join Ryan Babenzien, co-founder and CEO of GREATS; Taylor Shupe, co-founder and CEO of FutureStitch; and Kyle McClure, co-founder and chief product officer of Rhone to shed light on how these new companies are pulling off this unprecedented disruption.
While there’s still some confusion surrounding the DTC channel, what it actually means and how the brands are seeing such success, direct-to-consumer selling will continue to be a focus regardless.
“I think [the industry is] now realizing DTC doesn’t mean online-only. It doesn’t mean that you shouldn’t be thinking about other channels, including wholesale,” Choe said. “I think the way we’re looking at it is that it’s not all-or-nothing online. You may start your journey online, but that’s just the beginning.”
To help these companies reach their full potential on that journey, Provenance takes a highly analytical approach from the outset. “When we start a conversation, we ask for access to their entire transaction log and customer file,” Choe said. Provenance then layers on third-party demographic information to create a quantitative and qualitative picture of the business; if that data picture shows alignment between the two firms, it then completes the rest of its due diligence.
By aggregating all of this data, one thing Provenance is able to quantify is the company’s customer loyalty and how valuable it is to that company. And when it comes to DTCs, it’s that consumer connection that’s making new, young digitally native brands triumph over traditional ones.
For legacy brands, there’s really little that should be stopping them from forging that same connection with their customers.
“Older brands, bigger brands that have scale from a product-capability perspective, can do a lot of what DTC brands are doing—if not…better,” Choe said. “It’s not about product capability; it’s really about the brand having an emotional connection with the end consumer and having a stronger relationship that way.”
Hear Choe speak on the Sourcing Summit New York panel, “What You Don’t Know About How DTCs Are Doing What They’re Doing.” Visit our event page for more info and to buy tickets.