How to Expand Beyond a Direct-to-Consumer Strategy
Oct 11, 2023
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This podcast explores how SmileDirectClub moved beyond direct-to-consumer channels to thrive. It discusses the challenges and evolution of the DTC model, disruption in the orthodontics industry, expanding product offerings, and the importance of an omni-channel strategy. The hosts provide unique insights and call for a shift in perspective on DTC products.
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Quick takeaways
DTC businesses need to go beyond a single product or channel to achieve long-term success.
Successful DTC disruption requires continuous innovation, vertical integration, and expansion into new markets.
Deep dives
Smile Direct Club: Disrupting the Dental Care Industry
Smile Direct Club is a direct-to-consumer (DTC) company that offers orthodontic products, aiming to provide affordable solutions for people seeking better smiles. Started by two entrepreneurs, the company began by allowing customers to do their own teeth impressions at home and sending them in for evaluation by a dentist. They utilized aligner technology and tele-dentistry to provide effective treatment at a significantly lower cost compared to traditional orthodontic options. The disruptions caused by Smile Direct Club, however, led to opposition from the orthodontic industry and regulatory agencies. Despite challenges, Smile Direct Club continued to innovate by establishing "SmileShops" and partnering with retailers like CVS, expanding its product line, and moving towards vertical integration. The company's approach illustrates the complex issues faced by DTC businesses and the need to go beyond a single product or channel to achieve long-term success.
The DTC Landscape: Challenges and Strategies
The rise of direct-to-consumer (DTC) businesses has brought about new opportunities and challenges. Many DTC companies start with a single product or vertical, leveraging the power of digital marketing and e-commerce to quickly acquire customers. However, as customer acquisition costs rise and markets become more competitive, these companies need to consider expanding beyond DTC and developing omni-channel strategies to enhance customer experiences. They must also address regulatory barriers and entrenched industry opposition. DTC businesses that successfully navigate these challenges often look to own a category rather than just a single product, aiming to create lifelong customer relationships and increase their overall market share. The evolution of Smile Direct Club and other DTC success stories demonstrate the importance of adapting and scaling beyond the initial disruptive launch.
The Power and Limitations of DTC Disruption
Direct-to-consumer (DTC) disruption has transformed various industries, offering consumers more accessible and affordable alternatives. However, DTC companies face resistance from established players and regulatory bodies. Smile Direct Club's case exemplifies the classic pattern of disruption, where a disruptive innovator enters the market by solving a specific problem and offering a product at a lower cost. This disrupts the traditional value chain and challenges entrenched industries. Regulators, orthodontists, and critics question Smile Direct Club's legality and quality. Nonetheless, the company's continued innovation, vertical integration, and expansion into new markets demonstrate the potential for successful DTC disruption. The case of Smile Direct Club raises broader questions about the scalability, global expansion, and future challenges for DTC businesses.
Moving Beyond DTC: The Quest for Growth and Sustainability
For direct-to-consumer (DTC) businesses like Smile Direct Club, the next stage involves moving beyond the initial DTC model to ensure sustainable growth and market domination. This often includes embracing omni-channel strategies, seeking partnerships with established retailers, and expanding product lines to create a broader customer experience and increase customer lifetime value. Additionally, Smile Direct Club's focus on vertical integration, technological advancements in aligners, and the introduction of additional dental care products demonstrate the importance of continuous innovation and addressing customer pain points. To address challenges and stay competitive, DTC companies must evolve, leverage real-world presence, and adapt to local market dynamics while retaining their core value proposition of affordable and convenient solutions.
Direct-to-consumer (DTC) businesses play an outsize role in disrupting industries. Think of eyeglasses and Warby Parker or mattresses and Casper. But after that initial disruption, industry competitors often adapt.
Harvard Business School professor Len Schlesinger and Matt Higgins, the co-founder and CEO of private investment firm RSE Ventures, studied the teledentistry company SmileDirectClub and wrote a case study about its challenges as it scaled.
In this episode, they break down how SmileDirectClub invested in strategic innovation and ultimately moved beyond DTC channels in order to thrive.
Key episode topics include: strategy, business models, entrepreneurs and founder, strategy execution, scaling, direct-to-consumer, DTC, innovation, dental care, disruption, retail strategy, growth strategy.
HBR On Strategy curates the best case studies and conversations with the world’s top business and management experts, to help you unlock new ways of doing business. New episodes every week.