As DTC brands expand into new channels and pursue growth opportunities, the next place they may want to consider is big-box retail. This may come as a surprise, as the DTC model was inherently made to avoid using a middle-man to sell products. However, there are a lot of benefits if you find the right retail partner for your DTC brand. In this article, we’ll talk about how DTC brands are selling in Target and what opportunities that kind of relationship can bring.
DTC Brands Are Selling in Target
Target is making a push to get DTC brands in their stores. You may have already come across a few of their partners if you’ve visited a Target in recent years. Traditionally online-only brands like Harry’s, BarkBox, Quip, and more can be found on Target shelves. But why the push? What does Target have to gain from this?
DTC brands that are successful enough to be considered for a Target partnership have a few things in common – they’re culturally relevant, they appeal to a younger audience, and they sell well. Retail brands like Target need to bring in fresh brands and perspectives to make sure they continue to appeal to new markets in an age where eCommerce is often more relevant than retail. In addition to getting Target more foot traffic and revenue, these brands help Target continue to be a viable place to shop for a larger segment of the market.
Of course, this is far from a one-way street. It wouldn’t make sense for DTC brands to enter this type of relationship if there weren’t any benefits. The key is to create a partnership with Target that still makes sense for your DTC model. Take Quip, for example. Quip sells sleek, affordable electric toothbrushes with subscriptions for brush heads and other dental products. However, for their Target deal, they only sell the electric toothbrush. The box comes with a code for the customer to register their brush with Quip and sign up for an account. This is a win-win for Quip and Target. Quip gets more subscriptions and Target gets a piece of the pie along with a well-known brand on their shelves.
Benefits of Launching Retail for DTC Brands
Quip isn’t the only brand that is making the most of its retail relationship with Target. These other DTC brands are finding that there are a lot of benefits to having a product in a retail environment like Target. Here are some of the biggest benefits of selling in Target:
First and foremost, having your brand exist in a retail space like Target is going to help with customer acquisition. As customer acquisition becomes more and more expensive and competitive online, finding new avenues is always going to be a benefit. As with the Quip example, if a customer buys your product from Target, that consumer has a good chance of becoming a subscriber and a loyal customer.
Additionally, having your product in Target will cast a wide net for customer acquisition. When you market your product online, you need to make sure your ad spend is targeted and hits the demographics most likely to convert. When your product is in a retail environment, there are no optimizations or keywords to worry about. Millions of people are going to have eyes on your products every day, regardless of the demographic they occupy.
According to QuerySprout, 75% of US residents have a Target within 10 miles of them. Target also welcomes approximately 2 million visitors per day. Again, whether these visitors buy your product or not during your Target trip, there’s a good chance they’ll see your product or retail display. This increases brand awareness and word-of-mouth marketing. Plus, there is always the chance that they will buy your product, which leads us to our next benefit.
No matter how you look at it, being in Target can lead to more revenue for your brand. While DTC brands might be hesitant to enter the brick-and-mortar world, a huge brand like Target can make the prospect much more palatable. Target has continued to thrive in the retail industry, reporting hundreds of billions in revenue and over 35% in revenue growth over the past two years. These are serious numbers and with the right partnership, DTC brands can get their share.
Being in a retail environment allows you to get more consumer data. Let’s look at Quip again. When someone signs up for Quip after buying their toothbrush from Target, you can track the code and see that it’s from your Target partnership. This gives you insight into who is signing up after buying from Target and how many of your Target sales lead to subscriptions. This can help you optimize and fine-tune your retail strategy, as well as identify new demographics to target through online ad campaigns.
Having your brand in Target gives you access to the retail channel without having to invest inordinate amounts of money in retail. You don’t have to open your own brick-and-mortar stores, go through the testing and market research, pay for retail space, or deal with any of the major costs that are typically associated with entering the retail arena. Instead, you simply provide and ship the product. Target does get a percentage of the revenue, but only what you put in their stores.
How To Start Selling in Target
If you’ve decided that you want to scale your DTC brand and bring it into Target, there are some steps you’ll need to take to start selling in their locations. Before your pitch, you need to make sure you ask yourself if the relationship is going to be a good fit for your brand. Make sure that Target is somewhere your product makes sense and would sell. Ensure that you have the right profit margins in mind so that selling in Target will be profitable for you. Make sure you can handle the increase in inventory demand. Finally, think about what a retail partnership might look like for your business. How could it be the most beneficial? With these questions in mind, you’re ready to build your pitch and submit your application. If launching in Target is the next goal for your brand, we can help.
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