Amazon brand turns into a DTC powerhouse
Overview
A premium consumer brand, initially thriving on a major online marketplace with its flagship product, faced escalating challenges:
- Overreliance on a single sales channel: 90% of revenue stemmed from the marketplace.
- Rising advertising costs: Pay-per-click (PPC) expenses surged, diminishing profitability.
- Limited customer data: The platform restricted access to customer information, hindering remarketing efforts.
- Brand dilution: Product listings were lost among generic competitors, making differentiation difficult.
In early 2023, the company partnered with our growth marketing agency to pivot towards a Direct-to-Consumer (DTC) model. Within 12 months, the brand achieved:
- 42% higher DTC revenue compared to marketplace sales.
- 28% increase in profit margins.
- 3x growth in customer lifetime value (LTV).
Our DTC strategy and execution
- Brand repositioning and product enhancement:
- Target Audience Refinement: Focused on a niche market segment to align with specific customer needs
- Packaging Redesign: Adopted a premium, minimalist aesthetic to stand out
- Product Bundling: Introduced curated bundles to increase average order value (AOV) and offer differentiated options
- DTC website development
- Platform Selection: Launched a custom Shopify site optimized for conversions, achieving a 3.6% conversion rate within 60 days
- Enhanced User Experience: Integrated features like one-click upsells, cross-sells, and subscription options
- Content Strategy: Added blogs, customer reviews, and video testimonials to build trust and authority
- Paid media and customer acquisition
- Social Media Advertising: Deployed targeted ads on Facebook and Instagram, appealing to specific customer segments
- Creative Assets: Utilized user-generated content (UGC), expert insights, and animations for engaging advertisements
- Search Engine Marketing: Ran Google Ads focusing on branded keywords and high-intent search terms
- Affiliate Program: Collaborated with influencers in relevant niches to expand reach
- Email and SMS marketing
- Welcome Flows: Implemented email sequences with a 24% conversion rate
- Cart Abandonment Campaigns: Recovered 12% of potential lost sales
- Content Distribution: Sent monthly educational content and product launch announcements, achieving 40% open rates
- SMS Alerts: Notified subscribers about restocks and flash sales, boosting sell-through rates
- Marketplace to DTC migration
- In-Package Promotions: Included inserts with QR codes in marketplace shipments, offering incentives for direct purchases
- Retargeting Campaigns: Used tracking pixels and customer profiles to retarget marketplace visitors on social platforms
- Community Building: Established a VIP community to encourage word-of-mouth referrals and gather customer feedback
Results
- Revenue Shift: DTC sales surpassed marketplace revenue by 42%.
- Profitability Increase: Profit margins improved by 28%.
- Customer Value Growth: Customer lifetime value tripled, indicating stronger brand loyalty and repeat purchases
Key takeaways
- Diversification is Crucial: Relying solely on marketplaces can be risky; establishing a DTC channel provides greater control and resilience.
- Customer Ownership Enhances Marketing: Access to customer data enables personalized marketing strategies, improving retention and LTV.
- Integrated Marketing Strategies Drive Growth: Combining paid media, content marketing, and community engagement fosters sustainable growth.
Challenges
- Marketplace dependency: The brand’s heavy reliance on a single platform made it vulnerable to policy changes and competitive pressures.
- Escalating advertising costs: Increased competition led to higher advertising costs, with Advertising Cost of Sales (ACoS) exceeding 40%.
- Lack of customer ownership: The marketplace’s limitations on customer data restricted personalized marketing and loyalty-building initiatives.
- Brand visibility issues: The product’s unique value proposition was overshadowed by similar offerings, leading to reduced brand recognition
Grow your business outside the limits of Amazon. Connect with a DTC experts to get started.
