The Complete Startup Guide for Direct to Consumer (DTC) Retailers

Women working

By Tricia McKinnon

In 2010 Emily Weiss, while working at Teen Vogue as a fashion assistant, decided to start a beauty blog called Into the Gloss. She worked on her blog part time until eventually she left her job to focus on her blog full time.  Weiss ended up becoming known as a beauty expert who had tested and reviewed hundreds of beauty products. 

Weiss then translated her dedicated millennial blog readership into a set of loyal customers when she launched millennial favourite and direct to consumer beauty company Glossier in 2014.  Fast forward to 2020 and Glossier is now valued at over $1.2 billion.  

Could you be the next Emily Weiss?  

If you are thinking about starting your own business there are many questions you need to think about. From understanding your customer’s wants and needs to how you are going to get your first set of customers.  This guide has all of the key questions you need to ask yourself to get your entrepreneurial venture off to the right start.

Once you have answered those questions I have provided you with podcasts, books and blog posts that will be useful as you create and take your business to the next level.

I hope you enjoy the content. I am excited to see you succeed!

This guide includes:

  1. 40 questions you need to answer to get your business off to the right start

  2. Three podcast recommendations to learn about the startup phase from other founders

  3. Seven books recommendations that will help you to master marketing & overall business success

  4. 10 must read blog posts for building a successful direct to consumer brand

Section One

40 questions you need to answer to get your business off to the right start

A. Refine Your Business Idea

1.   What problem does your business idea solve?  

2.   If you had to describe your business idea to a friend what would you say?  

3.   Identify three reasons why someone needs your product. 

4.  Who is working in the space you are entering or another segment of retail that you admire?  What do you like about their approach? What can you learn from them that you can apply to what you are doing?  

5. What part of your product offering is distinctive in a way that will drive demand for what you are offering?

6.  Write down your long-term vision for your business.  What are you hoping to accomplish? Visualize where you could be ten years from now.  Think big. What does that look like? 

B. Industry Dynamics

7. How large is the segment of retail (i.e. baby clothing) that you are entering?

8. How fast is that segment growing?

9. Who are your key competitors? What does each one do well? What are areas of opportunity?

10. What is the white space in the retail segment you are targeting (i.e. where are there gaps in product offerings)? How can you capitalize on this?

11. Based on your understanding of industry dynamics do you need to update or refine your business idea?

C. Understand Your Target Customer

12.  What does your target customer look like? How old are they?  Are they male or female? 

13. What do does your target customer do for a living? What industry do they work in? Do they have an entry level job or do they have an executive level position?  

14. What are your target customer’s likes and dislikes?


15. What are your target customer’s key stressors?

16.  Based on your understanding of your target customer do you need to update or refine your business idea?

D. Profit Generation 

17.  How much are you going to charge for your products?

18. What are your competitors charging? Based on an understanding of what your competitors are charging how does that impact your target prices?

19.  What will your costs look like?

20. How long do you expect it will take for your product sales to cover costs?

E. Selling and Marketing Your Product

21. Which eCommerce platform will you use to sell your products (i.e. Shopify or Amazon?)? Or will you build it in house?

22. What are the pros and cons of selling on your chosen platform? For example, if you chose Amazon are you concerned about counterfeit products?

 23.  List all of the companies that are doing something similar to what you are doing.  What can you learn from them about marketing.?

24. Think about your last five purchases. Why did you buy the brand selling them? What lessons can you learn from your own purchase habits that you can use for your own marketing efforts?

25. How will people learn about your products? Channels to consider include: your website, blog, social media, YouTube, email, networking etc.

26.  What local and national publications can you leverage to get publicity for your business?  List all below.

27. Within your network who will be most interested in your products? Write the names of those people down and reach out to them.

28.  Write down a list of potential businesses you can partner with to increase sales.

 29. What additional tactics are you going to use to find customers?

F. Managing Your Finances

30.  What kinds of startup costs do you expect to incur?  Some common ones include business registration fees, website design, branding, etc.

31. What types of ongoing costs do you expect to have (i.e. Facebook advertising, salaries, rent, manufacturing costs)

32.  If you need startup and ongoing capital where will you get it? Friends, family, savings, a business loan, venture capital?

G. Learning and Mentorship

33.  What are the names of people that can act as mentors as you take on this venture?

34.  Who has done something similar to what you are doing either in or outside of your network (i.e 2nd degree LinkedIn connections) that you can approach for help and advice?

35.   What news sources including industry publications are you going to read each week to ensure you are on top of the latest developments and trends in retail?

H. Selfcare and Personal Development

36.   List all of the selfcare activities you are going to undertake to ensure you are properly taking care of yourself during your entrepreneurial journey.

 37.  How are you going to motivate yourself to keep going when you face setbacks? 

38.  What is your biggest personal development area (i.e lack of confidence, patience etc.) and what steps are you going to take to overcome it (i.e read books, get a mentor)

39.   How are you going to celebrate all of the small milestones you achieve along the way?

40.   Since entrepreneurship can be lonely at times what are you going to do to stay healthy and connected with others?

Section two

Three podcast recommendations to learn about the start up phase from other founders

1. M.M.LaFleur: Sara LaFleur

M.M.LaFleur is a direct to consumer retailer that sells workwear for women. Sara LaFleur the Founder of the company discusses the early days of the company on a How I Built his podcast.

One of my favourite quotes from this podcast is when Sara is talking about how difficult it can be for consumers to find a new direct to consumer brand online. She says: “I foolishly had this notion that if you launch a website your customers come and they shop and you become millionaires, of course I think we have all learned that is not the case. But at the time there was such a media frenzy around these new dtc businesses and I just thought wow this is so easy let’s launch a site.”  

You can listen to the podcast here

2. Shopify: Tobi Lütke

This podcast is with Tobi Lütke, CEO of Shopify and Tim Ferris. The podcast discusses how Shopify went from humble beginnings to a global player.  

One of my favourite conversations during the podcast is when Lütke talks about his early days at Shopify: 

"I just did not make decisions that I had to quick enough. There was this whole thing about, 'is Shopify a lifestyle business or a growth company?' I struggled with this so much.  And it seems silly now because, obviously, we can all look at the result of it becoming a growth company at some point. But it was really unclear to me. And so I ran it cash based looking at bank accounts and making decisions based on 'hey, I need this amount of money in the bank before I can put $5,000 in cool adverts and so on.' And I just made a lot of decisions way too slow."

You can listen to the podcast here:

3. Luke's Lobster: Luke Holden and Ben Conniff

On a How I Built This podcast the story of how Luke’s Lobster, which has 40 locations in the United States and Asia came to be is told. The podcast is really funny and if you are looking for ideas for how to find a co-founder this podcast is for you. It talks about how the founders discovered each other on Craigslist!  

One of my favourite quotes from this podcast is when one of the founders says: “the strength of your network especially when resources are limited and times are challenging is so incredibly important.”

You can listen to the podcast here.

Section four

Seven book recommendations that will help you master marketing, & overall business success

 

1. Perennial Seller, The Art of Making and Marketing Work that Lasts by Ryan Holiday 

This book is about how to create perennial sellers – products and services that last forever.  The book provides a frank look into the creative process and what it really takes to create a hit. According to Holiday great creative insight does not appear like a lightning bolt, instead the creative process is non-linear with many detours along the way.

One of the key pieces of advice Holiday offers for marketing a product in a way that will guarantee its success is to invest in building an email list.  According to Holiday, what if suddenly you had no access to social media, publishers, retailers, investors or distributors.  If this were to happen the only way to survive would be to go directly to your customers.  To do this you need an email list. Holiday also provides lots of great strategies for how to build a large email list and how to successfully launch a new product or service.

My favourite quote in this book is: “building an email list is a move toward self-sufficiency for any creator. By forming a direct and regular line of communication with your supporters, you avoid ever being disintermediated.” 

Buy it here. 

2.  Contagious, Why Things Catch On by Jonah Berger

This book is about why things catch on. While advertising is still beneficial strong word of mouth is often the key to success.  One of the reasons strong word of mouth about a product or service is so effective is that it is often directed to people that are most likely to be interested in the product or service.  You are not going to recommend a product to your best friend that you do not think he or she is likely to use.  

After analyzing hundreds of contagious products the author outlines six principles that cause products and services to be talked about, shared and initiated.  One of those principles is using stories in your marketing messages.  People tend to tell stories instead of sharing facts and figures.  Therefore it is important to embed products and ideas in stories that people want to tell.
 
One of my favourite quotes from this book is: "word of mouth is the primary factor behind 20% to 50% of all purchasing decisions."  

Buy it here. 

3. Blue Ocean Shift by W. Chan Kim and Renee Mauborgne

This is one of the best strategy books I have read.  It is the follow up book to the author’s widely popular book Blue Ocean Strategy. The book provides useful insight into how organizations have created new markets even when the opportunities were not readily apparent. For example, the authors recommend targeting "non customers". These are customers that your organization turns away for a variety of reasons (i.e they are too expensive to serve).

Square, which was founded by Jack Dorsey is a company that is profiled in this book. Before Square there was an entire market of small businesses and entrepreneurs that did not allow customers to pay by debit or credit card. Square comes along and starts offering an inexpensive way for individuals, small businesses and even large organizations to accept credit and debit card payments on their iPhones, Android phones, or iPads simply by adding a Square reader.  

One of my favourite quotes from the book is: a “blue ocean shift is a systematic process to move your organization from cutthroat markets with bloody competition…red oceans full of sharks – to wide open blue oceans, or new markets devoid of competition”.

Buy it here.

4.  The Go-Giver by John David Mann and Bob Burg

This book is about the 5 key laws for success and it’s my favourite book on the list. My favourite law discussed in the book is the Law of Compensation which states that you are compensated in life based on the number of people you impact. This is one of the reasons companies like Facebook are so successful, it reaches billions of people.

It’s a short book, I read it in only two hours but it has had a lasting impact on me.

One of my favourite quotes from the book is: "if you want more success, find a way to serve more people."  

Buy it here

5.  15 Secrets Successful People Know About Time Management by Kevin Kruse

This book is a comprehensive guide to managing your time better. It covers many areas including how to efficiently manage your inbox, reduce time in meetings and how to create a morning routine that will help you to get a great start to a more productive day.
 
Some of Kruse's email best practices involve setting up a few times during the day when you process email and those are the only times during the  day when you attend to email.  He is also an advocate for turning off all email notifications and sending less email if you want to receive less email. 

One of my favourite quotes from this book is: “if a task can be done in five minutes do it immediately”.  You lose a lot of time if you return to the same item (i.e. an email) over and over without taking action.

Buy it here.

6.  Mindset, The New Psychology of Success by Carol Dweck 

Dweck writes about the two types of mindsets that exist within people: the fixed mindset and the growth mindset. People with a fixed mindset believe that if they have failed at something (i.e. a project at work or they didn’t get a job they wanted) they will never achieve their goals. With a growth mindset failure doesn’t define you. It’s a problem to be faced, dealt with, and learned from. If you are struggling to achieve a personal or professional goal or learn something new this book can get you moving in the right direction.
 
One of my favourite quotes from the book is: "in the fixed mindset, everything is about the outcome. If you fail – or if you’re not the best – it’s all been wasted. The growth mindset allows people to value what they’re doing regardless of the outcome. They’re tackling problems, charting new courses, working on important issues."

Buy it here.

7.  Influence, The Psychology of Persuasion by Robert B. Cialdini

This is a book about human behaviour.  It discusses six principles that provide great insight into what motivates us to make the decisions we make on a daily basis.  One of the six principles the author discusses is the principle of liking. Not surprisingly we prefer to say yes to requests from people we know and like. 

One of my favourite quotes from this book is when the author says: “the strength of..[the] social bond is twice as likely to determine product purchase as is preference for the product itself”.  The author provides this insight as he discusses the success of Tupperware parties.  Tupperware parties became extremely successful by arranging for a friend to introduce the product to potential customers rather than using an unknown salesperson. 

Buy it here. 

Section five