Challenger brands are skipping traditional retail channels in favour of going it alone. Name a category, and there’s likely to be a shiny challenger, disrupting the existing model by cutting out the middleman and delivering a range of innovative goods direct-to-consumer. So what can we learn from these DTC challenger brands?

1. Challenge the way the category works, on the consumers’ behalf

“I looked at the market and I thought, why does it have to be this way?”

When interviewing founders of new DTC challengers, you will very often find some version of this sentence. Challenger brands have forever been asking similar questions of their category (and the incumbent brands that inhabit them). But with the rise of e-commerce and easier access to manufacturers across the globe, DTC challenger brands have been able to take on whole categories alone in ways that may not have been possible before.

“We thought of ourselves as a challenger brand,” says Neil Blumenthal, co-founder of Warby Parker, “as outsiders taking a fresh look at a category that needed massive change.”

At eatbigfish, we call this questioning “Intelligent Naivety” - using your naivety as an outsider but coupled with your own intelligent insight to ask the questions that no-one else is asking.

It turns out “why does it have to be this way?” has not had a good enough answer so far in categories as diverse as soap, razors, flowers, erectile dysfunction medicine, mattresses, coffee and cars. And consumers are benefiting from this new wave of DTC challengers who are finding new ways to change old and conservative categories, sometimes for the first time in decades.

“We’re here to transform this industry. We aren’t necessarily here just to sell glasses online.” says Blumenthal.

Elsewhere, Bloom & Wild proved that disrupting the florist category did not require prior experience of the industry. “We’re new to the industry, and we don’t have a background as florists, and I think that enabled us to challenge some of the preconceived ideas about how you can sell flowers, for example, through the letterbox” says Aron Gelbard, co-founder and CEO of Bloom & Wild, a DTC florists that sends flowers in packaging that can be delivered via mail.

DTC brands have been able to make real traction in offering an alternative to the mainstream offering - challenging them on a range of topics from how a product is made to the negative practises of the market leader, or just changing consumers’ relationship with the category in ways we haven’t thought about before.

“Getting ripped off sucks” says Andy Katz-Mayfield, co-founders of Harry’s Shave Club. He and his co-founder Jeff Raider believed it was their job to fix shaving, an industry dominated by “big razor” and ripping-off consumers. “We wanted to do the exact opposite of the competition. We wanted to do ‘less’ but ‘better’” says Raider.

Fundamentally, these DTC challengers are finding new and inventive ways to answer questions for certain consumers that incumbents have not been willing to.

What questions could you be asking of your category, on behalf of your consumers?

2. Focus on over-performance, not price

There are some who see the rise of DTC brands as an illustration of how brands can use the improved logistics offered by e-commerce to disrupt an existing market, offering the consumer a more affordable option than a retailer could. Classic Clayton Christensen Disruption, right?

However, when you look at some of the most successful and appealing case studies of this new wave of DTC brands, few compete on price as the main message. Instead, they speak about the over-performance of their product or service in comparison to the traditional players people are used to.

Over-performance relates to a standard of product efficacy, design, ethical standards or engineering that is not the norm. The designers have somehow, often through sheer force of will and positive energy, have taken the product – and category - to new heights. Over-performance indicates boldness, drive and generosity, both in terms of how the product functions, and the way in which it was conceived. After years of finance directors and procurement departments having their say with the products on our shelves, this generosity is hard to find in mainstream brands.

American Giant calls its signature product the “The World’s Greatest Hoodie”, after the term was coined by journalists. Bayard Winthrop, CEO, has been emphatic about their approach to overcommitting to a product that performs better.

Sustainable fashion brand Reformation says that it over-performs so well in its environmental credentials, that in fashion “Being naked is the #1 most sustainable option. We’re #2.”

While Dr Squatch says it’s creating “honest, all natural soap for dudes” and is constantly “raising the bar” (no pun intended).

Sometimes this over-performance deliberately and knowingly borders on the ridiculous. Tommy John underwear offers “the best pair you’ll ever wear guarantee” with “wedgie proofing” built in. It confidently declares it spends more time thinking about a man’s balls than anyone other than the man himself! Rockets of Awesome, the children’s fashion company, attribute its over-performance to hyperbolic “algorithms and unicorns”.

The message from the DTC challengers is that consumers can buy a product far superior to the mass- manufactured version offered by incumbents. And the product will deliver in ways the consumer never knew he or she needed.

That is not to say that price doesn’t play a part. It does, but price seems to be a secondary consideration compared to the company’s over-performing product and its vision for how the category could be better. Dollar Shave Club (DSC), bought by Unilever in 2017 for a whopping $1 billion, may be offering cheaper razor blades, but these razors were, to quote founder Michael Dubin, “F***ing great”.

Often, the money “saved” by cutting out the middleman, is poured back into the product, rather than passed onto the consumer as a whole. For Dollar Shave Club, 19 of the $20 that a customer would have spent on Gillette razors would be “going to Roger Federer”, whereas at DSC it was going directly into making a better standard product.

Everlane, a US online fashion retailer, have a policy of radical transparency, to show exactly where its money goes. You can see where it saves money and where it’s spent. Often, that spending is on higher quality or ethically sourced materials.

So while DTC products may have a cheaper price point than the rest of the category, they carry a far higher intrinsic value to the consumer, due to the over-performance baked into each and every product.

How can you as a brand owner, start talking about your own product’s over-performance, whether real or metaphorical?

3. See drama as a strategic imperative

Successful DTC challenger brands have a dramatic streak running through them which helps break through the noise and clutter.

In a world of constant partial attention (how many screens have you got on while reading this?) and where much of retail, both online and traditional, has become mundane, DTC challenger brands see the opportunity to overcommit to moments of heightened emotional connection.

Marketing is an obvious place for drama. “Listen up! The soap you shower with? It’s sh*t.” So starts a viral ad for Dr Squatch, which has now been viewed by more than 2.5million people in 6 months, immediately setting out its stall. Feminine hygiene brand Thinx’s famously provocative ads were originally banned by the New York MTA (metro) for featuring the word “period”. The PR campaign that followed the ban helped secure national attention for the DTC challenger in menstrual health.

But it’s not just marketing. There is opportunity for drama everywhere.

Receiving a box from Glossier, the DTC beauty brand, is an experience in and of itself. The plain brown package opens up to reveal a hot pink interior, with a motivational slogan. The products are carefully packaged, often in a little washbag, with stickers and samples and other things to enjoy. A marked difference from an Amazon box, or a trip to CVS or Boots... this is an experience that is designed to be joyful.

Cotopaxi creates drama around its community, with the DTC outdoor equipment company holding the “Questival” race event in cities around the US, bringing fans together in a race against the clock to discover hidden experiences within their own city.

Where could you add drama to your brand experience?

4. Traditional retail matters, but not in the traditional way

For a while, there were many who said the DTC online boom would further cement the death of the bricks and mortar retail experience. But more and more, we see DTC challengers bringing their brands to the high street.

Where traditional retailers have seen stores as the opportunity for expansion and reach, DTC challengers put a different emphasis on retail spaces. While of course, you are able to browse and buy the products they have on offer, the primary emphasis is on creating a branded experience.

Premium exercise brand Peloton, uses its retail spaces to help people try before they buy. A $2000 exercise bike is a big purchase to make blind, but with dozens of retail spaces in premium malls around the US and Europe, customers can get a feel for the bike as well as take one of their live classes, streamed from their studio in NYC - which in itself is another bricks and mortar experience.

It’s not just Peloton that offer test drives - Casper mattresses do to, and use their retail stores as a way to overcommit to sampling their products. You can book a free nap at any of their 19 stores around the US, each of them a temple to the power of good sleep, with comfortable and private hidey-holes that allow you the chance to drift off for a few minutes.

Carvana, the used car retailer, maybe stretching the definition of DTC, however, it demonstrates exactly what a challenger retail experience can be in a category that is bogged down with stuffiness and complexity. Carvana offers to sell a car entirely online (delivered to the customer’s driveway, with a seven-day “test own”), however, some people will want to see the car close up before they buy. For them, there’s the Carvana vending machine, an eight-storey high glass and steel construction, visible for miles around, with a dramatic means of buying your car.

How could you build your brand through retail, or give consumers a chance to get under the skin of your product?

5. Appeal to peoples’ unreasonable nature

We are all Uber’s Children now. In other words, people have been trained by a range of brands like Uber and Amazon to expect high-quality goods or services, at a discount, delivered without hassle or distraction. Consumers have been spoiled, and they’re not going back.

We classically think of disruption as being a business-led idea... but what if it is people - the next generation of consumers - who are the real disruptors now?

Today, products have to be excellent, affordable and sustainable and delivered as close to immediately as possible. For companies that can’t deliver this, consumers will seek, and find it, with another brand.

It is these DTC challenger brands who are really indulging people in their unreasonableness. They are progressing categories by meeting consumers’ inflated expectations in price, convenience and performance. They are showing consumers that it is possible to have everything they want and to expect... magic.

Rent-the-runway means people don’t need to pay for luxury, designer clothes – they can simply borrow them and return them to their cloud wardrobe when done. DTC mattress companies will give a 100 day test run... if a customer doesn’t like the product, they’ll get a refund and the mattress collected, no questions asked.

While traditional retailers and brands would balk at these services, DTC challenger brands are embracing them wholesale - in fact, their greatest competitive advantage is their ability to meet our disruptive demands where others won’t.

How can marketers rise to meet the needs of Uber’s Children, this next-generation consumer with their unreasonable demands?

Key learnings:

• Challenge the assumptions of the category on behalf of your customers. Question the status quo via “Intelligent Naivety” i.e. using your naivety as an outsider but coupled with your own intelligent insight to ask the questions that no-one else is asking

• Focus on Over-performance, not on price. Consider how your brand can deliver over-performance in either the standard of product efficacy, design, ethical standards or engineering that is above and beyond the norm. This requires boldness, drive and generosity. DTC products may have a cheaper price point than the rest of the category, but it’s the over-performance that’s baked into each and every product that has a far higher intrinsic value to the consumer

• See Drama as a strategic imperative. A dramatic streak running through them which helps break through the noise and clutter

• Use retail as a point of experience as well as a point of sale. Traditional retailers have seen stores as the opportunity for expansion and reach, DTC challengers put a different emphasis on retail spaces – they focus on creating a branded experience

• Be the brand for the disruptive consumer, Uber’s Children. DTC challenger brands who are really indulging people in their unreasonableness. They are progressing categories by meeting consumers’ inflated expectations in price, convenience and performance

Nick Geoghegan is a Strategy Director at eatbigfish – a strategic brand consultancy specialising in challenger thinking and behaviour.

This Admap article first appeared on WARC.