A DTC ecommerce brand’s data is valuable, but only to the brand–not an external acquirer.

I remember when Unilever acquired Dollar Shave Club for $1B in 2016. While DSC was massively unprofitable, a large part of the acquisition rationale was not only DSC’s revenue and team, it was the inherent value of DSC’s “data.” Techcrunch, reporting the acquisition, said “Unilever will also benefit from Dollar Shave Club’s valuable customer data and existing customer base.”

The idea here is, before 2016, Unilever didn’t know much about their customers because these customers bought nearly all Unilever products through retailers, not directly from Unilever. Because most people buy anonymously in stores, even the retailers don’t know much about their customers.

But DSC knew everything about the DSC customer from exactly what they had purchased historically to their home address. This data, supposedly, would benefit Unilever.

Unfortunately, it doesn’t seem to have helped much. Unilever sold DSC just 7 years later for a fraction of the original purchase price. In my view, a big piece of why this went wrong is the data thesis didn’t work.

In general, I do believe a DTC brand’s data is a competitive advantage, but only for the brand itself. There are many examples. Consider Stitch Fix which uses customer data to predict and select which clothing their users will want to receive in their next delivery box. This data is incredibly valuable because it’s applied across every channel a brand operates in, not just DTC.

Or consider Warby Parker which, famously, uses DTC sales as a lodestar to determine where to next open a retail location. It makes sense: probably the best place to open a store is where you already have a lot of online customers. So DTC data can have tremendous value.

But notice in the above examples, the data is valuable to the brand because they can use it to make better decisions for their business.

This isn’t what Unilever wanted with DSC’s data. The idea was that somehow, DSC’s data would inform how Unilever should make decisions about its other brands.

This ended up not being true. They may have similar customer bases but DSC data doesn’t tell you much of anything about other brands owned by Unilever like Axe Deodorant, let alone Hellman’s Mayonnaise.

Why? Because they have totally different customer bases. The best way to learn about Axe customers is to talk to Axe customers, not assume DSC data will inform anything about Axe. And this is true even though both DSC and Axe are men’s grooming brands.

When DSC was acquired, many people assumed conglomerates like Unilever would acquire DTC brands for assets beyond just the financials of the business. One of those potential assets was the brand’s data.

But the DSC acquisition is a cautionary tale. While DTC data does have real value, its primary–potentially only–utility is to the brand itself, not an external acquirer.