How DTC Is Helping To Change Retail — Perhaps Even On Amazon

Brands are helping to drive changes in retail — and one big recent example could come from the world of Amazon even as other shifts are taking place.

Recently, Nike announced it will no longer sell its wares on Amazon, instead opting to follow a growing trend in eCommerce where companies sell directly to consumers (DTC). Late last week, internet entrepreneur Tim Armstrong said Nike’s move was the “tip of the iceberg,” and that an increasing number of companies will opt to ditch Amazon and sell their products themselves, according to a report by CNBC.

DTC Relationships

“The direct-to-consumer movement will be the replacement for the retail issues and commerce issues that are going on because of the platforms,” said Armstrong, who founded a DTC company with the aim of changing how people shop online.

Armstrong is the former CEO of AOL and used to run Google ads. He said many brands don’t want to team up with Amazon because they’re worried they won’t have control of how they will be positioned on the site. “If they have the option to go direct, they are going to go direct,” he said, referring to DTC as “another megatrend starting.”

Nike launched a limited program to sell with Amazon in 2017, but the company confirmed the program will end. Nike will now focus on its DTC business, which it said pulls in about 30 percent of its yearly sales, totaling about $11.8 billion.

Armstrong appeared on CNBC to announce a shopping event called DTC Friday, which “celebrates and empowers the DTC movement by connecting shoppers with direct-to-consumer brands and with their favorite charities.” Because of new technologies surrounding payments and social media, Armstrong predicts a fundamental shift in the economy, one that will move away from a “one-way, wholesale distributor relationship.”

DTC Showcases

That’s not all that’s happening with DTC brands in retail. They are also trying to make a splash in physical retail. In a recent PYMNTS interview, Co-Founder Katie Hunt of SHOWFIELDS — best described as a physical space in New York City for retail experiences — spoke about how at least part of in-person commerce will look, and even feel, in the 2020s. The story she told was about the importance of the consumer experience, and the benefits of direct-to-consumer (DTC) brands reaching out to consumers via physical retail offerings.

“It should almost feel like you are walking in a live Instagram account,” she said when describing the ideal SHOWFIELDS experience. “You really want to experience a moment of time with the brand and their story. It should feel [like] you are just in their moment.”

The SHOWFIELDS experience was designed to offer customers a new way to both find what they want and discover what they didn’t know they needed. The department store is something of a modern bazaar, where DTC brands pay SHOWFIELDS a $6,000 to $12,000 a month subscription fee for placement within the four-story department store. In return for that fee, SHOWFIELDS manages the entire retail process of each small storefront within the larger store, and provides data for merchants about what products are drawing interest. All revenue from sales earned within SHOWFIELDS is the merchant’s to keep.

“We do a different curation every six months,” Hunt said. “We switch over every September and March. We close the store for four days, and then open with a brand new curation.”

The brands chosen for SHOWFIELDS tend to be brands of which the store’s employees are fans, and which are then invited in, she explained.

How to tell that story — how to build that consumer experience — is largely a matter of data collected by those DTC brands, and their expertise in reaching consumers. That all serves as the foundation for the experience SHOWFIELDS creates. What the company offers, when it comes down to it, she said, is a “flexible white box” that can be built out with different experiences, instead of using the same general template every time.

Brands are a big part of retail, and promise to play an even bigger part in the new year.