Endear
blog post hero image

Nov 2, 2020

The ABC's of DTC (in Order of Relevance)

Every acronym you've ever encountered related to retail & the rise of DTC

By Leigh Sevin, Co-Founder @ Endear

DTC: Direct-to-Consumer

Refers to a method of selling where a brand or designer sells their products to consumers through their own channels, typically in the form of their own branded websites and stores. While "DTC" is typically associated with brands like Everlane and Warby Parker, high-end fashion houses like Chanel, Chanel and Gucci are also DTC (even if their e-commerce game isn't that strong).

The term was also meant to indicate that these kinds of brands were offering their customers better value by eliminating unnecessary mark-ups on wholesale pricing - usually referred to as "cutting out the middle man". Nevertheless, many brands that started off by selling exclusively DTC (and often, online) eventually also started selling through wholesale channels like department stores and e-tailers.

DNVB: Digitally-Native Vertical Brands

If we break this term down, "digitally-native" refers to the fact that the brand launched online first through its own dedicated e-commerce site and owns its entire production and sales process. Many brands that started online have since opened their own stores, and added on more traditional channels like wholesale distribution to increase their reach. Popular DNVB examples include Glossier, Bonobos, and Allbirds (all three of which now have their own physical retail locations). You can read more about what Bonobos founder Andy Dunn has to say about the trend in his famous 2016 Medium post here.

CRM: Customer Relationship Management

A CRM is a database of all your customers that you can easily manipulate and segment in order to efficiently market your products and services. Endear is the first and only CRM that enables you to track how customer outreach converts into sales in-store and online.

POS: Point-of-Sale

The software that enables check-out at a physical retail store. There are many cloud POS software options like Shopify, Teamwork Commerce, and Heartland Retail - all of which Endear integrates with!

POE: Point-of-Everything

As brands have become more omnichannel, unifying their e-commerce and POS data becomes more important than ever, especially in order to ensure there's a single source of truth. Therefore some companies have started to rely on or build solutions that have the ability to manage both sales channels (online and offline), and refer to these solutions as point-of-everything. The goal is to have all transactions pass through this system in one way or another. One of the first brands we know of to launch a POE was Warby Parker.

CPG: Consumer Purchased Goods

All hard and soft goods, including apparel, food and beverage, home goods, and beauty products, purchased by consumers for their direct use.

CTR: Click-Through Rate

If a brand is 100% dependent on digital for sales, one of the most important metrics it will track is its click-through rate on marketing channels like banners, emails, and sponsored content. The click-through rate refers to how often people are clicking on a link you've provided to go to the next destination (likely your website or product page). For example, if you send an e-mail to 100 people and 10 people click to learn more about an event or an item, that's a 10% click-through rate.

CAC: Customer Acquisition Cost

Your customer acquisition cost is the amount you spend to to acquire one customer. CAC is calculated by dividing total marketing spend by the number of customers you gained. You can have a CAC for your whole business, as well as CAC per channel (for example, how much it cost you to acquire customers through social media advertising compared to Google advertising).

LTV: Lifetime Value

The total dollars a customer will spend with you over time - or a customer's entire value to you from the time they are acquired to the time they stop shopping with you. The higher your average LTV, the more you can afford to spend on acquiring a customer. Keep in mind that in retail, "lifetime" is a lot harder to define than it is with subscription services, but also keep in mind that repeat customers spend 67% more than new customers and repeat customers also spend more than double after two years what they spent with you originally. That's called loyalty.

RaaS: Retail-as-a-Service

A play on SaaS (software as a service), RaaS companies offer brands and retailers a way to sell in-store without having to manage locations on their own. Some companies like Leap white label the experience so that the store location still has their customers' branding while others like Neighborhood Goods approach RaaS as a modern take on the department store.

IRL: In Real Life

While not technically an industry term, IRL has become a marketing way of explaining that a brand has moved offline into either their own stores.

GMV: Gross Merchandising Value

GMV refers to the total value of the merchandise that customers purchased. Different from sales or revenue, GMV does not take into account any discounts you may have offered or any returns that were made.

MSRP: Manufacturer Suggested Retail Price

The recommended number to put on a price tag for an item, also known as the "sticker price" - this shorthand is basically irrelevant in the DTC world since the manufacturer and the retailer are one and the same.

AOV: Average Order Value

The average amount a customer will spend on an order. AOV is typically higher in-store than it is online.

SKU: Stock Keeping Unit

This is the equivalent of a single item's social security number - a unique numerical identifying number that refers to a specific stock item in a retailer's inventory or product catalog. While products may have the same name, no two items have the same SKU, which may take into consideration details like color and size.

UPC: Universal Product Code

If a SKU is like an item's social security number, then a UPC is basically a dog collar, also telling other companies which retailer owns the item. a unique 12-digit number assigned to retail merchandise that identifies both the product and the vendor that sells the product.

RFID: Radio-Frequency Identification

Think of RFID as a unique, scannable tracker inside each item of clothing so that no garment can ever be misplaced.

ERP: Enterprise Resource Planning

Large data management solutions, typically related to a brand's inventory and logistics.

3PL: Third-Party Logistics

Outsourced services that manage inventory & fulfillment for brands & retailers.