In a previous Executive Insights, we discussed the importance of using marketplaces to cement online success in furniture and homeware along with balancing your brand’s approach based on its wholesale and direct-to-consumer (DTC) strategies. Now let’s turn to the question of whether — and to what degree — a DTC presence is right for your brand and business.
Digitally native DTC brands first entered the home furnishings market by disrupting the mattress category. Brands in other categories quickly followed suit. Upstarts like Burrow, Joybird and Brooklinen began taking share from traditional retail and marketplace brands even before the pandemic-fueled shift to ecommerce in 2020 and 2021. While none of these brands have run away with their respective categories, they’ve shown that consumers are willing to purchase directly from brands so long as those brands are differentiated.
DTC capabilities extend a brand’s offerings beyond wholesale and marketplace channels, potentially boosting margins and strengthening consumer relationships. But brands don’t all have to invest in DTC the same way. Neither do they have equal likelihood of DTC success. The most effective DTC strategy is one that acknowledges these realities along with the size of the opportunity for the business.
Factors driving DTC brand potential
This leaves home furnishings manufacturers and brands asking what investments they need to make in DTC capabilities. To answer this, we need to consider each brand’s DTC potential.
L.E.K. Consulting recently analyzed over 100 top furniture, furnishings and homeware brands. Our findings indicate that the DTC potential for any given brand depends on a confluence of several factors (see Figure 1). Let’s take a closer look.