An Independent Site Operator's Perspective: What is DTC? What is Cross-Border E-commerce DTC? Starting from 'Roasting' NIO (Brand 23)

Preface

For some reason, I want to share some "useless cognition" again.

Content about DTC on the internet generally falls into two categories: one is from a third-party media perspective, either paid or a breakdown of giant cases; the other is brand founders telling stories, pure PR/IR perspective, showing off a success story to see which unlucky investors will buy into my bragging little story. Five years ago, you could get funding just by bragging awkwardly. Two years ago, you had to learn to package and add concepts: retail x global commerce x DTC; AI x global commerce.

And I, merely as a related former practitioner/DTC brand semi-enthusiast user/cross-border e-commerce self-media & private domain blogger/semi-owner from these perspectives, want to chat with everyone about a more comprehensive DTC, especially for cross-border and global commerce.

Hope it inspires a small portion of users.

In Plain Language, What Exactly is DTC?

DTC (Direct To Consumer), I'll try to explain it to you in plain language as quickly as possible.

DTC is considered a relatively new brand operation and marketing model in recent years. Actually, from the literal meaning, you can simply understand it: DTC aims to help enterprises or brands minimize the gap in communication or interaction with users, thereby more comprehensively mastering data or information throughout the user lifecycle, and more thoughtfully and controllably serving users throughout their lifecycle.

In simpler terms, DTC is when the official party gets involved and tries to cover the entire user process and explore more user communication touchpoints.

Don't Rush, Let's Give Some Examples 🌰

Let's give some examples from various industries:

Automotive Industry

NIO from the new forces is, in my opinion, the best (bar none) DTC automotive brand case in the world, yes, the world. (This statement is only regarding DTC practice, not evaluating whether the car products are good or bad, or whether the business operation is good or bad.)

Simply put, from customer acquisition to product delivery to comprehensive user experience and service: it's all NIO official personally getting involved in "direct operation", and actively and solidly expanding many innovative user touchpoints, especially in the automotive industry.

When you consult about buying a car, you go offline to a NIO official direct-operated offline store, and online you contact NIO official personnel. You don't need to worry about the traditional automotive dealer business model, this 4S store has high prices, that one has low prices, that one has good service, this one has bad service, etc., many bugs with poor user experience.

And then after you purchase, all kinds of user experiences and touchpoints are also officially direct-operated: online community, various activities, after-sales service, energy replenishment, information sharing, etc., etc. There are no "middlemen 4S stores (Sale, Sparepart, Service, Survey)", just you and the NIO brand. If you want, you can even go directly to NIO's regular user meetups to give feedback to Li Bin.

The benefit is that when users have any interaction with NIO official, your any words, questions, pain points, and behaviors are collected and recorded from NIO's first-person perspective. With the powerful user research and data team behind it, NIO can more comprehensively understand users' real needs and pain points, thereby thinking about countermeasures and having their own controllable employees fully implement them. Truly implementing the countermeasures.

And the downside is, as you can easily discover, everything is too heavy, too difficult to manage and operate. So you can also discover many netizens complaining: "Hehe, throwing money at useless places, losing money every year, earliest this year, latest next year."

Traditional OEMs only need to operate the brand well/develop products well, and the sales terminals can let cooperating dealers bear inventory pressure. On one hand reducing risks or achieving rapid growth, while on the other hand, they also lose user touchpoints. Most brands are caught up in the fight with dealers' interests or even threatened and constrained by dealers. How can they have time to manage how dealers serve users?

Of course, at this stage, most domestic automotive consumers don't buy it, thinking it's unnecessary: "I buy BBA for that logo, it's good enough. Who wants to go to that NIO house to drink beverages every day? Set up an APP and start making cars? Trash new forces making money, shearing sheep where the wool comes from!"

And neutrally and rationally speaking, as users, we are just forced, long-term, accepting traditional OEMs' PUA, getting used to being abused by terrible user experiences. Just as users themselves say "I just bought a logo."

And better service and experience are not the original sin. You can complain that their cars are bad, the brand has no accumulation, but it's a bit much to criticize them for providing too good service. Ten years ago, did you dare to imagine e-commerce could do "refund without return"? You didn't dare. You even until now still complain with netizens that e-commerce platforms bleed you dry with refunds without return. But in return, when you as a user have a shopping dispute, you resolutely initiate a refund without return.

This is the average real user consumer. Where you stand determines what you think. You are a user, you are not an enterprise or brand owner, you don't understand the business value, and you don't need to.

New Consumer Industry

As everyone knows, the DTC trend was stirred up by those yoga pants.

Ten or several decades ago, people were still impressed by giant sports brands like Nike and Adidas, buying a regular T-shirt for several hundred yuan. Who would have thought that today's exquisite girls and boys mostly look down on traditional sports brands.

Lululemon, from the extremely niche segment of women/yoga pants, soared all the way, even surpassing Adidas in market value at one point, and forcing Nike to urgently transform and try DTC.

Contemporary urban exquisite girls and boys are no longer interested in "traditional big brands". They wear lululemon, step in allbirds, and even domestically, many similar brands have emerged - new, but expensive, but still with die-hard fans. For underwear, choose Neiwai; for mountain outdoor, choose AnKouRou.

Like NIO, they are all new brands born in the past five years or so. But similarly, different from the conventional retail heavy channel approach, they all spent more resources on "nothingness".

(Think about it, isn't the shift in user consumption habits in the new consumer market a bit like what we said about cars? Go look at many Old School elderly people around you. Until now, they may still maintain the same attitude as looking at new forces, thinking today's young people are sick, fake exquisite! They don't wear "big brands" like Nike and Adidas, but insist on buying lululemon and On at higher premiums. This is the power of brand marketing. They can grasp the crowds they want to grasp. And if you're not their audience, they don't want to try to please you.)

Everyone Starts Bragging Awkwardly About Being User-Driven/Community Driven

This is also why in recent years, you find that regardless of domestic or foreign, regardless of industry, regardless of what brand, they all like to say they want to be a "user enterprise", focus on user value, hope to make friends with users, and like to listen to the community.

As if they are the next lululemon. But unfortunately, most so-called user-oriented enterprises just covet the benefits that user enterprises bring, but haven't truly paid for operations and execution. So it's just a shell, learning from others without understanding the essence.

They say DTC requires playing with communities? As a result, you turn around and create a WeChat group thinking it's a community, it's private domain. They say focus on user experience and make friends with users? Then you hold various brand official awkward activities, activities so awkward users are too lazy to sign up, forced to find various shills, holding your stupid sign to take official promotional photos for you.

Do you want to ask if there are any bad cases? No need to filter. Any industry, any emerging brand, almost 95% are doing similar idiotic brand/user/community operation self-indulgence.

So Is It That Difficult? What Can Small Individual Sellers Learn?

When you're not a brand owner, when you're just a user, you can't imagine the operational difficulty and specific DTC brand strategies involved.

Intuitively speaking, just look at NIO's losses to know the difficulty.

And when we as cross-border e-commerce practitioners, I've always advised everyone: small individual sellers and large sellers without firm strength don't need to consider "brand" at all, let alone DTC. It's not like you design a LOGO, register a trademark, build a site, create a social media account, write some self-moving slogans and brand stories, and then you can count as a brand.

You need to invest very, very heavy resources, capabilities, and time accumulation, making users convinced and becoming your brand followers in every possible user touchpoint with brand strategies and actions.

Aren't there few new brands born in the new consumer field domestically and internationally in recent years? Besides the impact of objective economic reasons, which ones have truly learned it well and survived?

A beautiful picture, sentences of beautiful politically correct nonsense, a sentence #LoveYourself, BeAnIndependentWoman. But who can truly invest in doing it meticulously according to DTC practices throughout the entire lifecycle: product, supply chain, brand spirit, communication, operations, employer brand, corporate social responsibility, terminal sales, user community, etc.? Very few.

Looking at the new consumer wave in China in recent years, 90% are still telling stories and relying on funding in one wave. You say you want to slow down and do long-termism, you say you don't want to do channels and just want to slowly operate your own users. Okay, you watch your neighbor Wang Laowu rise through hype, release channels and franchises nationwide, data goes up, and happily gets a new round of financing. Meanwhile, you're facing inventory pressure, partner doubts, capital chain shortages.

What DTC? Hurry up and expand channels and roll prices first, survive first.

DTC, in the end, is not testing professionalism, but testing the mentality of founders or founding teams.

Of course, with the economic downturn, the DTC trend is also declining. Brands are also starting to think about whether DTC really suits all industries and all business formats? This is worth thinking about.

So What's the Relationship Between Cross-Border E-commerce, Independent Sites, and DTC?

The reason why cross-border e-commerce, global commerce, and DTC can be closely linked is precisely because of the existence of the independent site e-commerce format.

That is to say, independent sites help brand owners solve the entire process from user acquisition to user transactions.

What is an independent site? It's a website and sales channel that belongs to the brand owner itself. Most domestic newcomers to independent sites even need a lot of time at the beginning to figure out what this thing is. Because domestically there's almost no such e-commerce format as independent sites. Any brand, even if you're a DTC-branded brand, you still have to deal with e-commerce platforms. Of course, you can have your own mini-program, but most domestic user consumption habits are still firmly controlled by platforms.

It's different abroad. Although there are e-commerce platforms like Amazon and eBay, for various reasons, these platforms cannot meet the business needs of many emerging brands. So independent sites rose, brand owners make their own websites and sell products on their own turf. They are not restricted by platforms, dealers, or other third parties. They do their own traffic generation, operations, sales, after-sales, user maintenance, etc.

For tiny individual sellers, actually DTC has nothing to do with us at all. Moreover, not only can you not fall into self-indulgence, you need to take action quickly to find every straw that can bring you actual benefits and conversions. If platforms are beneficial, hurry up and open platform stores; if agency distribution can be played? Hurry up and secretly divert traffic to find distributors.

And if you are a long-term brand supporter with extreme resource capabilities, and you must be the Owner (don't tell me you're a branding worker, then you take this thing to draw pies for your boss, don't pit your boss, please). Then you have to withstand the test of time.

There are too many excellent cases worth learning from domestically and internationally. We'll share them slowly in the future.