Ask what women want and former fashion director Marina Larroudé might have just the glimmer of that. If anyone had to sum up the year 2020 in just one word, they would probably say, “unprecedented.” And that’s just how Marina’s year went: from finding herself unemployed for the first time in two decades, to launching her long-awaited dream of the eponymous shoe and fashion label, Larroudé.
The rise of Larroudé as a blend of DTC and partnering with big retail stores, has worked marvelously for the brand. When fashion veteran Marina, together with her Brazilian husband Ricardo Larroudé’s financial experience, built their brand, they set a mark for themselves by embracing digital innovations with QR codes and fashion tech.
How do the marketing models of retailers and DTC brands differ from one another and what does the future hold for them? Understand the new age of startups with this feature and grasp how evolving fast is the way of new businesses.
The Distinction Between Retailers And DTC Brands:
While the age-old paradox of choice between the superiority of marketing channels still lingers, some opportunities and obstacles render.
Direct-to-consumer (DTC) brands have found an ingenious way to break the customary line of distribution by selling their products exclusively on their own internet identity via websites or Instagram and luring customers by the means of affiliate marketing or paid campaigns. The online startup costs are considerably lower than for brick-and-mortar retail stores and another advantage is that there are no middlemen or markup costs. Saving costs, which can be as dense as 50 percent from the fees of third-party retailers like Target and Amazon, is a welcome addition to margins and profits.
While this model’s surety of reach cannot compete with the traditional retail stores that publicize multiple brands, DTC brands are advantageous over retailers in the aspect of customer relationships. The business model of DTC (D2C) brands conveniently helps them track their customers’ preferences and adapt to serve their patrons across their purchase journey, by utilizing the data they can access from interactions.
The Evolution & Future Of D2C Brands:
The paradigm of DTC brands emerged inevitably in the 2010s with the likes of Everlane, Casper and Away holding their ground as pioneers. Brands like Peloton, Warby Parker, Tamara Mellon and Rothy’s have parlayed their abilities across multi-channels into profitable businesses.
Between 2012 – 2021, venture capitalist funding buoyed from $60 billion to an incredible $643 billion. Investments pouring millions into E-commerce DTC brands sparked startups to use the D2C approach.
To earn the DTC title, a brand was required to earn revenue through their own e-commerce front but that had adapted into D2C brands even selling through wholesalers and marketplaces like Amazon, Sephora, Target and so on.
Emily Weiss’s beauty blog, Into the Gloss which featured recommendations and how-to tips, became a $1 billion DTC brand, Glossier, unexpectedly. Endorsed by beauty mogul Kim Kardashian, Glossier disrupted the traditional distribution chain with the base idea of 24-year-old Weiss’s model using DTC for her line of beauty products.
In the pandemic when consumers could only shop online, the E-commerce market was pushed to a major market share spike. McKinsey reported that the e-commerce market surged as much as analysts expected it to rise in a decade, in just over 90 days. This bolstered the DTC market to its continued wins, by previously already succeeding in lower overhead costs and bargaining interpersonal relationships with customers. With DTC, passive consumption was bygone.
The disruptive pandemic altered the pricing and supply of products and in changing tides, agile brands had to offer alternatives and haste the decision-making process by giving consumers confidence, in skeptical times too.
What the Future Holds:
The strategy of DTC is customarily used by startup disruptors but the consumers are a continuum that is constantly adapting and evolving. The foolproof DTC playbooks are encumbered and need to strengthen their strategies to survive. Several established brands are partnering with DTC brands, striving to acquire and engage with new customers for both sides. Social media advertising costs are surging steeply as well. 2022 saw a hike of 41 percent in social media advertising costs from 2021.
Many sources consider that DTC is dead, but that is not the case. It is just unpredictable with the logistics and widespread receptivity to omni channels. Over a third of customers prefer large online marketplaces and multi-brand stores in the want of more choice.
“After reaching a certain scale, even if the most successful DTC business wants to thrive, they have to venture into retail or marketplaces to meet the consumers just where they are.”
DTC brands and retailers need to find a balance between them. Retailers have no avenue to arm themselves with insights to make the consumer’s experience better and DTC brands need to up their game with the omnichannel approach. In the era of new startups, empowered consumers reckon to be collaborators with more reciprocal relationships with companies, rather than contributing as the obsolete anonymous economic riffraff.
The Era Of New Startups – Larroudé: A Case Study
The era of new startups is self-funded, digitally advanced and tech-savvy which are focused on becoming profitable whilst growing sustainably. Bridging the gaps in luxurious-affordable fashion, Larroudé is charting different paths for the new generation of startups, by a rebuttal of the successful marketing model of major DTC brands and forging partnerships with retailers.
Over the past two years, cordwainer Marina Larroudé has silently been taking over the fashion industry with her ‘70s-influenced footwear largely due to its luxurious appeal priced accessibly. Gaining experience in luxury fashion, Marina witnessed a blank space for high-quality shoes at affordable prices. With knee-high boots, boldly patterned silhouettes of mules, and chunky platform heels in ‘pop’ shades, Larroudé is steaming all over Instagram.
Bagging stints at Vogue Brasil as her first, Style(dot)com in the universe of publishing, Teen Vogue as a fashion director and finally at Barneys at the most sought-after position of fashion director, Marina seasoned 20 years of her experiences as an entrepreneur, editor, and product developer with the retail sector.
With the desire for her own line always lingering, what pivoted Larroudé was Marina’s astute reading of the market, which made her understand how retail sales were dependent on what captivated consumers in terms of the editorial image.
“At Barneys, we had 22 stores and it was very interesting to analyze how consumers in each part of the United States were interested in a certain type of product and brand.”
Marina’s first thought after losing her job to the pandemic was to design private label shoes for Barneys but her ex-colleagues suggested she start something of her own instead of reviving something. Larroudé was initiated in the lockdown by December 2020, with a capsule collection with the Californian brand CQY Jeans with shoes that were made in 45 days, and instantly ordered by the buyers.
From personal funds, the couple managed to invest $100,000 and geared up for rounds of fundraising and seed capital through friends and family. It was quite a huge investment but Marina and Ricardo had provisioned for the company to scale.
They started to sell at Revolve and ShopBop and received multiple reorders in a span of 2-3 weeks.
Developing During The Pandemic:
Marina proudly stood for heavy research to raise the standards of her shoes to comfortably fit everyone’s budgets. Most of the pre-production systems were developed in Brazil and the couple set up warehousing sites and import agencies, from scratch.
They found a QR Code developer in India, and an editor in Los Angeles and employed 10-15 people in Brazil. The utmost point that mattered to Marina was the quality of the product because she didn’t want to associate her name with anything less than top-notch.
“At a time of the pandemic when people were firing employees, we were launching a brand.”
Larroudé’s shoes, priced $150 and onwards, were designed to attain 30 percent better quality at a 30 percent lower value than a Stuart Weitzman. Marina wanted customers to buy international standards of quality without breaking the bank.
Unique Pillars Of Larroudé:
Marina always designed the brand to have its own voice and identity which was quite dormant in the shoe market of the United States. She wanted people to be a part of the story and admire the brand to be inspiring, fun, accessible and real.
While Marina is based in Manhattan, New York, her manufacturing takes place in Brazil where her label works exclusively on leather that is certified Gold, from local tanneries. Marina aspires to make a 100 percent sustainable shoe and only work with factories that feel the same way.
One of the most unique aspects of Larroudé is that every shoe carries a patented technology of QR code, which is printed on the sole. The purpose? Every customer who registers is rewarded with a $20 voucher and what’s more interesting is that when the customer shares referral codes with their friends, every purchase made after the referral gains an extra $20 credit as well as the friend receiving discounts. The constant swaps make the purchasing sentiment deliberate and memorable.
“It’s a sense of community and a win-win too.”
Their long-term vision was propelled by the aftermath of the 2008 recession when retail was in anarchy but 2010 was the best year to scale back.
The specialty of the shoes at Larroudé is comfort, influenced by timelessness and sensibility. Emblazoned with funky designs and prints of strawberries, daisies, polka dots, gingham and stripes, Larroudé’s mold for the shoes is self-designed.
“Memory foam inside the whole shoe that we’ve named ‘the Larroudé cloud.”
Self-funded Larroudé relied on word-of-mouth marketing for a short run when Marina asked her friends in the fashion industry to try her products. Now, Larroudé has expanded into handbags and clutches too, amassing celebrity following with the likes of Drew Barrymore, Alicia Keys, Mary J. Blige and First Lady Jill Biden (who carried a clutch that subsequently sold out on the website).
Within the first year, Larroudé’s major brand partnerships were on the cusp of transforming DTC models. Marina’s affinity for emerging as well as high-fashion designers included fascinating collaborations with Oscar de la Renta, Melissa, Jennifer Fisher, Barbie, and LoveShackFancy when she had dreamt of her brand gracing the racks at Nordstrom and Anthropologie.
What Can Aspiring Entrepreneurs Absorb From Larroudé:
In the post-pandemic world, investors and entrepreneurs approach DTC with more nuance. The founder of Gooselings decided to sell her products through big-named retailers like Maisonette, Bloomingdale’s and Saks because they could create awareness about the brand. Relying on social media to drive sales was like aiming an arrow at a target, with a blindfold.
“When you toss dollars into Facebook ads, you’re just playing against a casino.”
Struck by the pandemic and a cash burn rate, DTC brands like Glossier, Warby Parker, Everlance, Away, Casper and Allbirds had to furlough and downsize significantly.
But in the first two years of its pandemic running. Larroudé has sold 100,000 pairs of fashionable footwear, generated tens of millions in revenue and is expected to nail a whooping $100 million in sales by 2025.
On what’s important for DTC brands, Ricardo Larroudé said, “The one thing they have absolutely got right is their obsession with the end consumer.”
Both Ricardo and Marina fuel Larroudé with customer service as they believe it builds a strong business. But with tricks up their sleeve, Larroudé is partnering with retailers and registering users via the QR code too. If people buy from Nordstrom or Revolve, the company still has access to its consumer preferences.
On the lineups for the future, Marina remained tight-lipped although she hinted at her dream partnership with Nike. She also hopes for Larroudé to grow into a full-fledged ready-to-wear brand. The couple believes that they will be able to scale their business without outside capital, with high-quality products and good customer relationships. They’re displaying that with good business fundamentals, one can grow without an infusion of money.
“Larroudé’s future should see it become a bigger company that can host other brands, by growing beyond our own name into a multifaceted group.”
Aspiring entrepreneurs should also learn that many brands can become unicorn startups without ever having an inch of retail presence. While for some brands, omnichannel can make sense, for some it can be just retail. In today’s market, brands can stand out by getting an edge by doing things differently, just like Larroudé did. There is never one size that fits all and DTC brands need to do just what works for them.
Final Words:
Industry experts relay that bootstrapping and partnering with retailers may lead to more enduring businesses and higher-quality products for D2C brands, in the longer run.
