What makes a good DTC marketplace?

The business model of direct-to-consumer brands is clear: they sell direct to a consumer via the brand's online channels. Yet the model, which bypasses bricks-and-mortar shops and third-party middlemen, has become increasingly blurry.
DTC marketplace hero 16x9

Direct-to-consumer (DTC) brands now operate physical stores and, with online sales competition heating up during the pandemic, they’re also increasingly turning to aggregated marketplaces to stand out even more.

A DTC marketplace generally charges a commission for sales made through its platform – usually anywhere from 10% to 35%. But, unlike traditional online shops, the marketplace doesn’t hold any inventory – it’s down to the brand to fulfil any orders that come through. So what’s the upside?

‘Brands typically use a marketplace as another means of exposure while they focus on other parts of their business, like product development,’ say Monica Kras and Chloe Cronyn, co-founders of Charrli, a marketplace that curates refill businesses, from pantry food to cleaning supplies. 

Discoverability and being featured alongside companies with shared values is another reason for brands to sign up – 83% of consumers are more likely to buy from a brand that aligns with their values, and marketplaces often curate on that basis. Rize, for instance, exclusively lists sustainable DTC fashion brands. 

Choose well 

Brands can apply to list on most marketplaces, and platforms also actively search for the right brands. Here’s what to look out for when choosing a platform.

• Global reach. Some marketplaces could help expand your brand internationally, such as Curated Crowd, which open doors to the Chinese market for independent designers. 

• Scan the extras. Marketplaces are adding more fee-based, add-on features. Brands selling on the food-and-drink market Bubble, for instance, can pay a little extra to up their social and email campaigns. 

• Curation strategy. ‘I prefer marketplaces with fewer brands on them,’ says Hendrik van Benthem, co-founder of rainwear brand Maium, as opposed to platforms with huge directories. ‘You need to question how they steer the customer towards your brand.’  

• Giving back. The Fascination, a marketplace launched in January for emerging DTC brands, allocates a part of every purchase to its fund that champions women and minority founders. 

Looking ahead

Over time, DTC brands might find that they’ve narrowed themselves into a product niche, like office furniture or condiments. But, by bringing tons of different products together, marketplaces can help shift a brand’s positioning while providing the end-consumer with a more holistic shopping experience. More than 90% of brands that started selling through marketplaces have seen some growth – and, for half of them, their sales even increased fourfold.

This article was first published in the Courier Weekly newsletter. For more insights, analysis and inspiration, sign up here.

You might like these, too