The D2C market is projected to maintain 19.2% growth in 2021. And within the next 5 years, more than 80% of end consumers are expected to make at least one purchase through a D2C brand, according to the Direct-to-Consumer Purchase Intent Index. 

Today, we unpack our recent conversation with Ning Li, the founder of MADE.com and Typology, a new D2C brand for natural beauty products manufactured in France. 

Excerpted below, Ning offers practical advice for first-time startup founders, and shares the top five lessons he learned while building two of Europe’s most coveted online D2C brands, including:

1. Why being an industry “outsider” can be your biggest asset

2. Prioritising your long-term brand over short-term growth

3. Hiring the right people can change the game

4. How to acquire customers whilst staying true to your brand

5. Strategies to help cope with doubt and uncertainty

Whether you’re entering the D2C market, or you’re just looking for advice on how to disrupt your competition, you can read on to discover how to launch and scale a successful digital startup. 

We also recommend watching the full interview with Ning, which is an incredible resource for early-stage startup founders.

Learning 2

Prioritise your long-term brand over short-term growth

Your brand, mission, and long-term vision need to drive everything you do. After all, your brand is your ultimate equity; it’s what people are paying for.

At MADE.com, we built a brand by delivering consistency of a quality product. Our brand stands for design and value – and we have invested in those two attributes over and over again for the past 10 years. We’ve eventually become quite good at those two things, and I think our customers recognise us for that.

In the case of Typology, our physical product is our differentiator: we wanted to use the most concentrated and efficient ingredients to create the safest beauty products on the planet – and that’s where we invest all our money, internal resources, and time. 

We decided to take a “product first” approach, initially launching 100 products. I thought to myself: “If I’m good, ten products might work; if I’m really bad, at least one product should work; if nothing works, we should close the company.” So that’s what we did: we launched 100 products, and once we found our best-sellers, we continued in that direction. A large FMCG brand simply couldn’t do this.

A word to the wise: if you have to choose between quality and speed, you should always prioritise quality. You really don’t want to churn out products too quickly, only to disappoint your customers— ultimately, that’s what will damage your brand the most.

Learning 4

How to acquire customers whilst staying true to your brand

I’m sure there are a lot of founders and marketers who want to hear about customer acquisition in the D2C space. 

Speaking from my own experience, acquisition strategies can vary a lot: selling a £15 face cream is very different to marketing a £1500 sofa. It’s hard to give one answer – but there’s lots of insights to share.

• Paid acquisition vs. organic word-of-mouth

  
  
  MADE.com was really built on aggressive acquisition marketing spend. Our budget was huge: we spent tens of millions on acquisition last year alone. 

  With Typology, things are very different. Skincare is such an intimate product: customers aren’t likely to try out a face cream they’ve never used before, despite very heavy marketing. Because of this, only 20% of Typology’s growth comes from paid channels. 

  Meanwhile, 80% of our customers come from organic channels, word-of-mouth, and press. The good thing about an organic growth strategy is that, obviously, it costs much less. The bad thing is that you can’t control your growth trajectory – we can’t say “this month, we want to double our revenue”, and then adjust the levers to acquire more customers. In other words, our growth engine isn’t paid marketing – it’s our product.

• Don’t rely on one single channel for growth

  
  
  Paid marketing still plays a role for Typology, accounting for 20% of our growth. We’ve tried a couple of channels, for instance Facebook and Instagram marketing; we spend money on Google; we even tried some influencer marketing (at great cost, and with a lot of disappointment). 

  We can’t rely one one single channel for our growth – instead, we have hedged our bets, adopting a strategy which splits our focus across different channels. In my opinion, it’s much better to focus on the brand experience, and creating a product that can go viral, rather than trying to artificially create a viral campaign.

• Physical/offline experiences vs. online experiences

  
  
  My belief is that you should really focus your limited efforts on one channel where you can be best-in-class – or at least better than anyone else. 

  In the case of Typology, digital is our differentiating factor. Plenty of companies have built their brands through physical presence, and have had success with selling their products on Amazon and through physical retail stores like Target. So rather than investing in physical retail spaces, we’ve focused all our efforts on digital, which is where I believe we can outperform our competitors. 

  We hope to replicate offline experiences – and enhance the traditional online purchasing experience – by investing heavily into digital products. One example is Typology’s new diagnostic tool, which can identify specifically which products will work best for each customer’s skin type. We’ve already seen that customers who go through the diagnostic test and purchase a personalised routine have higher NET promoter scores – simply because the products work better for them. 

  With MADE.com, however, we took more of a “hybrid” approach: we introduced physical showrooms in key cities, which enables customers to try products, see our furniture in real life, and pick up fabric swatches. In other words: offline strategies can make sense for some D2C brands. There is no right or wrong way to launch your business. It’s just about picking your battlefield. 

• Discounting as part of a wider acquisition strategy

  The incentive for discounting is inherently embedded in retail environments, or what I call “the middle-men industry”. For instance, if L’Oreal sells their products to Sephora, Sephora has incentive to discount L’Oreal’s products, because it will give them an edge over other retailers. 

  Because D2C is such a new thing, we can afford to change the game a bit – or at least to try. For example, the only way for people to purchase Typology products is to go to our website. We’re not in direct competition with retailers — in other words, we don’t have to engage with discounting. 

  The question, for many, is whether discounting is “bad” for your brand. Firstly, I would say that it depends on what kind of brand you’re building: if you’re building an aspirational brand, I would argue that discounting is bad for the brand. At Typology, we never do discounts. But at MADE.com, we tolerate discounts, because that brand stands for value, and we want to bring value to our customers. 

  Second, you have to ask yourself what kind of customers you want to attract. If you ask consumers, they’re always looking for a cheaper deal – as is their right. It’s also true that almost every single brand out there offers some kind of discount, especially in the “Black Friday” environment. But remember: there are some types of customers that will only come to you when you’re discounting – and whilst those customers are important, and you want to provide them with an equally great brand experience, they're probably not the customers that you want to build your brand with long term.

  The good thing about being a founder-led business is that you’re able to make those decisions: you might lose some revenue in the short term, but it protects the brand in the long-term.