How Emerging Brands Can Build DTC Businesses

LONDON — In recent weeks, young designers in London have been hit hard by the implosion of Matches, a key stockist for many independent labels. And as confidence in other luxury e-tailers, including Farfetch-backed Browns and Net-a-Porter, continues to sink, wholesale is looking like an increasingly dangerous game.

Once upon a time, getting picked up by a store like Matches, Browns or Net-a-Porter was a critical part of a young designer’s playbook (along with other conventional strategies like courting Vogue and staging runway shows at fashion week). Now, more emerging labels are rethinking that playbook and going direct-to-consumer.

But building a direct-to-consumer channel isn’t easy. Social media and e-commerce have lowered the barriers to entry, and yet the cost and complexity of acquiring customers and managing inventory, shipping and returns make running a DTC business challenging.

Still, a handful of London upstarts have made it work.

When London-based designer Clio Peppiatt started her label in 2015, she was advised that selling directly to customers through her website would damage the perception of her brand. “I was told that it might devalue the brand in terms of it feeling like luxury,” said Peppiatt, whose intricately beaded occasionwear has been worn by the likes of Taylor Swift and Emily Ratajowski. “But I wasn’t at the stage where I could work with retail partners. I needed to sell something to be able to keep the business going at a very small level.”

Nearly a decade later, Peppiatt is seeing a payoff from early investment in her DTC channel: unlike many of her London contemporaries, direct-to-consumer sales make up 80 percent of total revenue. Peppiatt, who doesn’t show her collections at fashion week, has instead focused on building her presence online and honing the particulars of e-commerce, so that she can best capitalise when the likes of Kim Kardashian or Blackpink’s Rosé wear her designs.

Re-Evaluating Wholesale

“Wholesale is detrimental to your business in the first place,” says Susie Palmer, co-founder of e-commerce fulfilment firm The Brand Hangar, who has helped designers like Priya Ahluwalia build a DTC business, supporting on everything from shipping and customs to packaging and the unboxing experience. “I’ve got designers who are trying to recoup money or stock from retailers. You’ve got far more control if you’re selling direct.”

When Georgia Dant launched Marfa Stance in 2019, she had always intended for the brand to be DTC-first (currently, 90 percent of its sales are direct). Armed with experience at Rag & Bone and Burberry, she set about honing a seasonless, “build your coat” concept. “I want it to be zero wholesale because I really didn’t want to be beholden to a wholesale cadence. I’ve seen how damaging it can be. I wanted to start my journey with a laser-focused vision without having to worry about what this person wants and putting this on sale and basically devaluing the brand.”

Others see value in a blend of wholesale and DTC. For Anna Jewsbury, founder of jewellery and ceramics brand Completedworks, building a DTC business hasn’t meant abandoning wholesale entirely but understanding how the two channels work together.

“On the one hand, with wholesale, it’s always been great for brand visibility, especially when you’re starting out and you don’t have a platform. That kind of visibility you can get from those partners would take a huge investment to replicate independently. But it doesn’t allow you to have that direct conversation with your customer, so both have always been important to us.”

From Community to Customers

Making a direct-to-consumer channel work means cultivating real customers, not just a community of social media followers. And persuading followers to make actual purchases involves not just pushing out engaging content but listening.

“We do a lot of targeted surveys,” says Peppiatt, who has never spent money on digital marketing to acquire customers. “We offer discounts so that they will answer questions about the fit, where she is wearing it, when she is buying, how many times she is wearing the piece. We really listen to what she is telling us.”

Conversation with the customer was also critical to the growth of Marfa Stance. “I launched the brand right before Covid, so I had no choice but to develop this very personal, very natural community-led approach to running a business,” says Dant. “It was this survival mode to actually be very personal with each customer in emails and it became this grateful exchange from my side, but also for a customer to have a connection to a founder was also great.”

Offering product personalisation is a key way to engage customers in conversation. Peppiatt offers bespoke pieces with personalised embroidery; Marfa Stance offers “buildable” modular outerwear; Completedworks takes custom orders through its website.

Getting Physical

For emerging designers, a DTC strategy is typically digital-first, due to the high cost of opening retail stores, but creating physical experiences alongside a web and social media presence is key to building relationships with customers.

At the beginning of last year, Completedworks opened a showroom in Marylebone. “Ultimately, we will always be a digital-first brand but fashion is such an emotional, tactile thing and, so, opening the showroom has enabled us to talk to our customers directly. We do things like ceramic workshops and host art exhibitions. Having those touchpoints has been key.”

Marfa Stance has a pop-up currently running in Notting Hill. In the absence of traditional fashion shows, Peppiatt prefers trunk shows for VIP customers, but they are as much about engagement as sales. “You’re like a whisper in comparison to these big brands with megaphones, so we prefer to do events that are really geared for our loyal customers.”

Inventory Management

Careful inventory management is also critical to success. Here, offering personalised products that must be paid for in advance can help limit risk. So can simple pre-orders.

“Overinvesting in stock essentially is what kills businesses,” says The Brand Hangar’s Palmer. “Some of our designers will launch something, take the payments for pre-orders so they might see 200 orders and then they’ll make 200 and that works very well.”

Peppiatt makes sure to hold as little stock as possible, cautiously keeping supply below demand and being agile with re-orders when styles sell out. “Whatever is proposed on order, I will always cut down and say no, I don’t feel quite safe about that,” she says.

“You need perseverance, whilst playing things sensibly and safely, until you can get that real feedback from your customer — and be ready for when she changes her mind.”

‘A Reality Check’

As luxury sales slow sharply, now is not the time to take risky business decisions, cautions Vikram Menon, who works as a financial advisor to several London-based designers.

“This year is going to be challenging, so are you going to invest in DTC or are you going to continue down the wholesale path by doing a big show in September?” he asks. “I’ve seen mixed results when people spend lots on digital marketing, but DTC is definitely crucial right now.”

“We need a bit of a reality check at this point. You can’t keep running and pretending that everything is okay, when it’s not actually okay.”