DTC Web Businesses.

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There’s a new class of company out there which uses ecommerce to provide higher value products at lower prices.  The entrepreneurs behind this phenomenon believe by producing products in China and distributing them directly via the web, they remove the middle man/middle men from the equation, thereby charging less and making greater margin.  The problem is, they are also responsible for developing their own brands. (Another middleman cost.) And as we’ve seen with tech companies, where the brand building is often left to the chief technology officer or VC partner, it’s done poorly. For every Facebook, there are sixty Zudes.

Another problem with this DTC (direct to consumer) start-up brand approach is that they ascribe part of brand value to cost – one of the key benefits of the new model. We get it.  A no middle man, ecomm product ordered from the web is cheaper (plus delivery). But price, as a brand cornerstone is not a great long-term play. It’s a promotional play. And while this landscape is developing they are parity plays.

The web has changed retail forever. And its brilliant. Eight years ago I blogged about how a good business to be in would be the secure oversized mail box business.  Members of this new class of ecomm businesses needs to spend a couple two tree dollars on their brand plan.  Even before the go to China. Peace!