How Brands Are Reinventing the Direct-to-Consumer Model

The hybridization of brick-and-mortar, e-commerce and pop-up retail is creating some interesting new business practices. In some cases, what’s old is new again.

By Lindsay Warner August 29, 2016

Close to 30 years ago, Mark Paigen started making custom-built sandals that suited his needs as a fly-fishing and white-water rafting guide on the Colorado River. As demand for the sturdy webbed sandals grew, he gave them a name—“Geckos”—and started selling them out of the back of his car to fellow guides and their clients.

Eighteen years later, Tripp Frey, another young, outdoorsy entrepreneur, had a similar idea, but for backcountry ski bibs that kept the stoke high and the snow out. Like Paigen, he started by selling prototypes out of the back of a van. After an extended ski-season RV tour that included friends, plenty of beers, and respectable sales metrics, Frey and his company, Trew Gear, were ready for the big time: retail partnerships.

Courtesy of Chaco (Instagram)

Courtesy of Chaco (Instagram)

Both brands evolved along the way; Paigen’s “Geckos” became “Chacos,” hitting their stride in partnership with nationwide retailers, then selling direct-to-consumer via e-commerce. Frey’s ski bibs evolved into a four-season product line catering to outdoor explorers of all stripes, and Frey (more or less) moved his product out of an RV and into retail stores around the country.

And yet, as Frey transitioned into the traditional retail model, attending trade shows and meeting with sales reps instead of ski bums, he began to miss the RV-enabled rapport he used to have with his fellow skiers—not to mention the cost benefits. So in 2015, he pulled his SKUs from shops around the country and went back to his roots: direct-to-consumer sales.  Today you can buy Trew gear via trewgear.com, over the phone, from the RV (yup, still going!), and soon, from a brick-and-mortar store in Portland, Oregon. But you won’t find it anywhere else.

In 2014, Trew Gear won OIA’s Retail Innovation award. Read more about it here.

Selling direct-to-consumer isn’t a new concept—but it is one that more and more brands are starting to consider as part of their sales strategy. According to Oracle Labs research, more than 40 percent of manufacturers will sell directly to consumers this year. Only a few of that number can—or should—be on the road with RVs, but almost any brand can benefit from integrating some aspect of the direct-to-consumer model.

Model #1: The Branded Boutique

stio studio_DTC story

Courtesy of Stio (Instagram)

When Steve Sullivan founded Stio Mountain Studio, an outdoor-lifestyle brand based in Jackson Hole, he had no intention of doing anything but direct-to-consumer sales. He’d already done his research on wholesale during his 13 years as founder and CEO of Cloudveil, and was no longer interested in dealing with a middleman.

“At Cloudveil, we really struggled when we put out our most creative, interesting stuff,” Sullivan says. “A jacket might sell like gangbusters in direct-to-consumer, but I couldn’t place it in a retailers’ for the life of me. When I started Stio, I wanted to let the consumer decide if it was going to sell, not a sales rep or a retailer. With this model, you get immediate feedback on whether a product is cool or not.”

He cites the men’s “Crester” blazer as one example: it’s a soft-shell that breathes, stretches and is wind- and water-resistant. It also happens to be cut like a men’s sportsjacket. “We actually made it as a joke at Cloudveil eight years ago,” Sullivan says. “We would have been laughed out of the store by our reps if we’d brought it to them, but consumers actually liked it. So we kept the silhouette for Stio, and it’s still going strong today.”

Stio has two existing brick-and-mortar stores (Jackson Hole and Chicago), and Sullivan plans to open several more in the next few years. Sullivan doesn’t rule out the possibility of some kind of hybrid direct-to-consumer/retailer model in the future. But he’s not talking about it yet.

Model #2: The Direct-to-Consumer-Only Model

Tripp Frey knows he’s burned some bridges with wholesalers, but doesn’t really mind. “We’ve made our bed and we’re committed to it,” says the Trew Gear founder. Case in point: when you go to Trew’s website, you see two prices on every product: the price you’re paying, and what it would cost to sell the same product in a traditional retail store. It’s not hard to guess which is lower.

“The outdoor industry is rife for disruption right now,” Frey says. “Direct-to-consumer gives us the flexibility to make premium products and sell them for the price we want to get. Plus, you can be quicker to market when you’re not beholden to the traditional retail calendar.”

This fall, Trew will open its first brick-and-mortar shop in Portland. The square footage will be small—it’s essentially carved out of the new office space—but having spent several years selling out of an RV, Frey knows how to make a mini shop work to maximum effect.

Model #3: Direct-to-Consumer Stores in Addition to Retail

Arc’teryx launched its first brick-and-mortar store in the U.S. in 2013. Its seventh opens in New York City this summer.

arcteryx_soho_store_5

Courtesy of Arc’teryx

“Retail is changing—and changing fast—as consumer shopping patterns change, but people do still crave human interaction and want to touch the product, try things on and look in the mirror,” says Adam Ketch

eson, vice president of retail and marketing at Arc’teryx. “They may not be transacting in that store, but it’s still a huge part of the process. At the end of the day, people want to talk to otherpeople, not chat bots.”

Launching the brick-and-mortar stores has been good for Arc’teryx as a company, too, says Ketcheson, by forcing the brand to learn more about the retail business.

“By becoming retailers and merchants ourselves, we’ve become a stronger partner for our wholesale accounts,” he says. “Now we come to the table as peers, and can be fully transparent about our business. That knowledge helps us present a much sharper brand image to our retails, which in turn helps them transmit that to our consumers.”

Model #4: Direct-to-Consumer E-Commerce, Pop-Ups and Festival Shops

The Chacos e-commerce site is a classic example of the “content is king” premise. Go to chacos.com to buy a new pair of Z-strap sandals, and you might emerge hours later, having browsed look books, taken a virtual road trip to Baja, or designed your very own custom Chacos.

“We want the experience to be like getting a digital high-five,” says Josh Weichhand, brand marketing manager. “Yes, you can access the full range of SKUs there, but we also use the site to tell aspirational stories about travel, outdoor adventure and community.”

Chaco owns its website and sells direct-to-consumer, making the site a kind of de-facto flagship store for the brand, supplemented by a series of nomadic pop-up shops in cities, at music festivals and in tandem with last year’s Grateful Dead farewell tour.

“We’re only investing more and more in experiential programming,” says Weichhand. “Maybe that will involve a brick-and-mortar presence, but for the short term, we’re trying to explore new geographies via pop-ups. Maybe next year we’ll set one up on a beach on the West Coast, or on a river bank, where we can really tap into the value of direct interactions with our consumers.”

Kind of like Mark Paigen on a riverbank, 27 years ago?

Weichhand pauses, then laughs. “Yep. Exactly like that. Those kinds of word-of-mouth, personal relationships kept Chacos going and let Mark continue to pursue a dream. I guess there’s nothing that can top a face-to-face interaction.”

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