
Direct-to-consumer companies bypass traditional retailers via online stores - prostoalex
https://www.economist.com/news/business/21731429-direct-consumer-revolution-bedroom-and-bathroom-new-class-startup-upending
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adventured
If you're a clothing company, the margins you can reclaim if you're able to
pull off direct to consumer, are astounding.

That $60 shirt you make that is getting sold in a store like Neiman Marcus or
Macy's, you're getting $12.75 for it as the maker. Stores charge obscenely for
their distribution access (and for the most part they have to, their costs are
very high; a higher margin store like Macy's, in good times, only has a 6% net
income margin).

Ten years from now the direct to consumer segment is going to be massive. The
online platforms that can generate sales referrals (distribution), are going
to become the new margin-eating department stores, the middlemen providing
access to the buyers. That's eg: Instagram, Pinterest, Facebook, et al. There
will be dozens of more specialized players as well. Right now businesses are
commonly selling (leads &or transacting) across two dozen platforms (from eBay
to craigslist, from YouTube to Poshmark, from Instagram to Etsy or Shopify),
ten years from now that'll be four or five dozen. Sometimes you'll get lucky
and get quasi-free distribution on them virally; most of the time you'll have
to pay up for reliable distribution. There will be the occasional rare direct
to consumer success story that has truly crazy margins because they spread
entirely virally, they'll be the magic unicorn story that gets frequently
written up as the trend gets larger and larger.

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pkaye
All these DTC clothing stores I've seen only tend to target the high end
crowd. I don't want to pay $100 for a basic t-shirt or jeans. If someone can
get good fitting t-shirt and jeans for the prices at Target but online, I'd be
happy to buy.

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gumby
For many products, the store is simply an artifact of a technical limitation,
one that is now going away. Record shops, electronics shops and the like at
best add little value and often (in the case of Best Buy/Frys/Circuit City
etc) remove value.

Bookstores are a funny one: I miss the days when there were 7 bookshops in
Palo Alto an still refuse to buy books from Amazon. But in other places books
are sold sealed in shrink wrap, I see no reason to go to a physical shop
rather than buying online.

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nudiustertian
Even though i purchase nearly everything online these days, record stores are
a nice experience. hunting in amoeba bins just cant be replaced even if it
isnt the cheapest way by far.

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teh_klev
I'm with you on the record shop experience. You can't beat digging about
shelves and boxes of vinyl. I don't mean the big high street chains like HMV
or Virgin (bleh), but the small to medium size store (unfortunately killed off
by the likes of HMV/Virgin) where the owner and staff had truly amazing
knowledge about what they were stocking.

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KamelAufAbwegen
For clothing I don't like the online trend much. But already today a lot of
stores have a much smaller choice than years ago. So sometimes customers are
forced to buy online, because stores just don't have it anymore.

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mjmahone17
I really like mixed-mode stores for clothing: try things on in person, and
order online. Bonobos follows this model, and it’s great: they can have one
article in store in every size for every line, and one of each color or
pattern. But they don’t need both: I can see what fits the best, they can keep
their store well organized and easy to find what I want, and I know what I’m
getting is what I wanted, without wasting a ton of time trying to find the
exact size/color matches in a giant pile of clothes.

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hiram112
Hopefully this trend continues. Every mile of my overcrowded and high COL city
dedicates a few square blocks to huge retail outlets - Office Max, Kohl's,
Best Buy, etc. Besides the stores themselves, they all include huge parking
lots which are often completely empty.

Though I've made purchases from these companies regularly, I probably step
inside the physical stores no more than once every six months.

Knock em down, build more smaller residential neighborhoods, and maybe those
of us under 40 can begin setting down roots, buying affordable homes, starting
families.

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techsupporter
Seattle has a lot of land-use faults but I actually kind of like the recent
"shopping center" trend here. Next to Northgate Mall (a traditional,
sprawling, flat mall with huge parking areas) are two multi-story retail
buildings. All of the usual chain stores, save Barnes and Noble, are in them.
Target, Best Buy, a movie theater, Petco, a sporting goods store, and so on.
If we build more like that and less like Northgate or Westwood Village, I'd be
happy.

(As for actually going into the stores, I do rather often mostly because
ordering online has turned into such a mess for me. Having the stores
"stacked" like that makes them a lot more convenient to manage.)

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joejerryronnie
I wonder if we'll start seeing small, modernist physical stores pop up with
nothing in them but kiosks linked to all these DTC startups (maybe offering
high end coffee or booze to differentiate the experience from your couch)

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adamqureshi
It would be like a "Virtual" mall. A site with "all" these DTC companies? Wait
like does amazon do this already?

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dsr_
That was the big thing that Yahoo used to offer -- easy store setup. They did
it by buying Viaweb, which was founded by some guy named Paul Graham...

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zeronight
There is something to be said for physically holding an item. Recently I was
on the fence about getting some Lifx light bulbs, but I was in Best Buy
holding the box and found myself at the registrar before I knew what happened.

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Feniks
Amazon itself is a middle man these days.

With technology I forsee a future were people directly order from the factory
line. But today we already see the rise of Chinese websites undercutting
Western webshops. And in my own country it is quite popular to buy mobile
phones straight from Samsung and others bypassing telecom operators and
retail.

The internet has really slaughtered traditional retail space.

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tanilama
How are they going to deal with logistics then? Or inventory management? I see
that is the essential reason why Amazon will be relevant for a very long time.

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claudiulodro
Seems like that would be easier for DTC companies than for Amazon. The
companies just have a handful of different SKUs and therefore can probably fit
everything into one warehouse (where they also make the products).

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kevan
If you have everything in one warehouse you can't do fast delivery that
customers demand now. A lot of the big retailers have started leveraging their
store networks to do same-day pickup and delivery.

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hrasyid
> A .. startup is upending ... industry

Of course it is.

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dang
Please don't post unsubstantive comments here.

