In these questions and answers, Daily DTC talks to Stephen Arstowl (pictured below), founder and CEO, The No Middleman Project, to discuss how business looks forward to advancing DTC ecosystem, the challenges facing all DTCs, and what these brands should do to stand out.
Can you explain why you launched a project not a middle man?
We started the project because we believe that the company has the power and responsibility to be a force for good.
It cost a lot to take care of and run a physical shop. With e-commerce, the brands stood up and asked him, "Why do we pay 50% for shops to sell our products when we can do it through online stores or through our own website?". Today, brands and consumers slowly wake up to the additional reality that we now pay Amazon and Google a monopolistic toll of between 30 and 40% of all online transactions. We will return to the retail department to retail markets.
Consumers will always love the brands they recognize, and these days they are just one click away from these brands. So there is no convincing reason for intermediaries if consumers only have access to reliable and high-quality information about trademarks, which are not spoiled by money.
We launched NoMiddleMan.com to provide this platform. The next stage of commercialization is underway, and the future we want to build is everything that is direct to the consumer. We collect DTC space for consumers to make one stop easy for them to shop for hundreds (and finally thousands) of DTC brands, without paying any reduction to any brokers. We are laying the foundations for a future where DTC brands can significantly reduce customer acquisition costs and operating expenses, so the entire DTC ecosystem can flourish.
What industries do you see as pushing the DTC forward?
It is not one, two or a handful of industries that drive the DTC revolution. It is a very organic revolution that began in hundreds of different industries. Sure, there are certain products more suitable for e-commerce but they really come from everywhere. In general, more B2B sectors lag behind because companies are less price-sensitive, more heavy-handed infrastructure and not consumers, so the inconvenience is less dramatic and less exciting.
We have divided the world of DTC revolution products and services into 16 categories, and our plan seems as follows:
– Sports and Recreation – 19 DTC brand
– Health and personality – 45 brands DTC
– Fashion for women – 52 Brand DTC
– Beauty – 33 DTC brand
– Home and garden – 41 Brand DTC
– Food drink – 31 DTC brand
– Men's fashion – 35 Brand DTC
– electronics – 13 Brand DTC
– Office and school – 8 brands DTC
– Games, Pets and Baby – 26 Brand DTC
– Fashion Accessories – 38 Brand DTC
– Auto industry – 8 brands DTC
– Young Fashion – 16 DTC brand
– Socks and underwear – 21 DTC brand
– Shoes, bags and watches – 16 DTC brand
– else – 42 DTC brand
How to take off the DTC revolution?
The early winners of the DTC were following the least outstanding fruit. Wherever there was a monopolistic power actually dislodged the economics of the markets, which gave a tremendous opportunity. Warby Parker is a good example because Luxottica has a monopoly position in the eyewear market. In razor blades, you had a few big brands with monopoly power, and Dollar Shave Club and Harry achieved great success there.
In almost all industries, there are shortcomings in distribution channels, production and sales. In its 2010 DTC brand, Tower Paddle Boards, there were three big brands and one factory that worked together for it Effective repair prices on paddle boards – Our involvement and we achieved great success through the DTC model in rowing boards where we became the fastest growing company in San Diego.
This DTC revolution lasts longer than people imagine. Southwest Airlines sells direct air and disrupts the aviation industry. Tesla only sells directly and it crashes the auto industry. IKEA has been operating for 75 years. There are major things happening in the fashion world with brands such as Zara that controls the world, and now online with services like Stitch Fix.
How can a direct consumer model continue to evolve?
There are three problems facing DTCs today, and if the region wants to continue to evolve, it needs to be addressed to some extent. The first is the high costs of customer acquisition. Google and Amazon dominate product search, where monopoly power is steadily increasing. In the short term, this means that customer acquisition costs for DTC brands will go up, so a better solution is to find products for consumers.
If the commercial DTC tag can not resolve the customer acquisition cost problem, it will expire. The solution is to develop the assets they can own that provide customers, such as strong branding, strong presence of social media, and ownership of their product category in the Everything Showroom, such as NoMiddleMan.com.
The second problem is Amazon, whose share of product search increases to the point where Google competes. This means that customers will not see anything except what is being sold on Amazon. It is a walled garden and must be paid to play. The larger the walls, the more pie you can take because of its monopolistic power. The other half of this problem is the Amazon brand, which most consumers do not know is owned by Amazon. These compete directly with brands and weaken them in hundreds of product categories.
Finally, there is the issue of "searchability". If Google's monopolistic power in search leads to 30-40% of all business transactions, brands will not be able to thrive or even survive using paid search ads. Then, if Amazon's monopoly power gets 30-40% of all third-party transactions on Amazon, while its brands do not pay much, DTC's commercial brands will not be able to thrive or sell on Amazon .
So the question becomes, how do people find DTC brands?
How can the DTC brands stand out from each other?
Web connectivity and transparency means that we are moving towards greater merit. Brands can no longer get the biggest marketing budget, and they no longer have competition in the early days of television. Brands can no longer own the largest company and enjoy a huge economic advantage, because smaller companies can work together, and any company can buy SaaS at a relatively cheap price. Trademarks and manufacturing partners can no longer determine the price. You should be the best to win. If you have an amazing product (think of Google, Facebook, Uber, Netflix, or AirBnB), you do not need to advertise. Do something wonderful and spread the word.
So focus on focusing on making wonderful products and creating great value propositions for consumers. This is where you should be 90% of your focus in today's world. Then keep your costs low so you can grow organically. Actually simplifies work very little.
The alternative (while VC funds continue) is to get out and collect $ 100 million and use it to manufacture traction for a brand and test the product and repeat it all the way to make something amazing.