Is creating a direct-to-consumer brand in 2019 still a viable option? This is a question many ask themselves as they see constant influencer advertisements, countless new products without anything that sets them apart from the rest, and an oversaturated market. If your dream is to start another DTC brand, consider the following first.
At this point, it seems that there is a DTC company for everything. This does not mean that there are no longer any new opportunities. However, it is important to focus on the competition, not just opportunity. After all, every category is highly competitive, and will require an in-depth analysis if you hope to break in. Don’t allow yourself to get carried away with the speed and excitement that comes with the ability to create a DTC brand.
There is no set-in-stone or foolproof formula budding entrepreneurs can use to calculate whether or not they should create their brand. One way, however, opportunity can be calculated is by determining funding, acquisition and market size.
Other industries, such as the tech industry, have hundreds of funds available to entrepreneurs. For those who want to start a DTC, there is only a handful of such funds, making it highly competitive. In this sense, you are already at a disadvantage. Most of the time, raising money from family and friends simply is not enough. Successfully getting money from venture capital funds will require you to share a story and both an in-depth and detailed plan.
If your goal is to sell your company in the future, you will also have a few hurdles to clear. Your options will be limited. Few consumer giants have gone after DTC brands, which means you will either have to hope such a purchase happens in the future, make enough cash to pay back your investors, or go public.
Summarize Your Brand
To combat these opportunity challenges, you will need to determine the purpose of your brand, as well as what sets it apart from all of the others out there. What industry does your brand fit into? Does it have the potential for rapid growth?
You will have to somehow find a customer acquisition channel to bypass your competitors. Another thing to consider is how you can leverage infrastructure to rapidly build your brand.