Successful direct-to-consumer businesses have already altered the retail landscape, but the business impact of the coronavirus just expedited industry changes for good.
E-commerce adoption has suddenly become the price of entry. With stay-at-home orders in most states forcing many retail stores to close for weeks, if not months, e-commerce has become the channel of choice for consumers. While this growth will taper as more brick-and-mortar stores reopen, this experience will have a lasting effect on consumer habits.
E-commerce’s share of total retail sales was already growing quickly, and data from our own retail customers shows orders more than doubled year-over-year for multiple weeks in April. For much of April, order volume was comparable to the biggest shopping days of the year, like Black Friday and Cyber Monday.
The recent surge in e-commerce growth presents another challenge for large retailers that drive most of their sales through physical stores and the brands that rely on those stores for sales and exposure. That’s why direct-to-consumer retail will play an increasingly important role in the industry’s future, especially now.
As retailers figure out how to adapt to this new environment, d-to-c brands offer a playbook for them to follow as they begin the road to recovery.
Invest in the Online Experience — and Beyond
E-commerce is the foundation of d-to-c retail and, for most of these businesses, the primary sales channel. Since most of these brands started online, their online experience needed to be a step above the competition. Their sites are both visually appealing and user-friendly, with seamless site navigation, a frictionless checkout experience and photo galleries and detailed product information for every item. Many offer free shipping and returns, as well, which increases conversion and encourages repeat purchases.
Businesses that have brick-and-mortar stores need to tie together the online and off-line experience with curbside pickup and local delivery for online orders. A number of consumers recently tried these options for the first time and will want to use them again (especially those still hesitant to visit retail stores).
A d-to-c e-commerce experience gives a company complete control over how its products are described and displayed on its d-to-c site. The business can also feature its story, explaining what it stands for and what makes its apparel or beauty products unique. Retailers need to dream up creative ways to reach consumers at home.
For example, d-to-c sales sunk 75 percent in March for luxury handbag brand Hammitt. Although third-party retailers represent a key part of Hammitt’s business, founder Tony Drockton recognized d-to-c could drive immediate revenue. So Hammitt converted its wholesale showroom in Los Angeles into a broadcasting studio for livestreams and videos featuring not only new handbag styles but a diverse set of guests, from boutique owners to a Bravo TV host to a chef, to explain how the coronavirus has affected them. The company also launched styling appointments with customers that have proven extremely popular. Hammitt’s creativity has paid off: online d-to-c sales have increased 200 percent year-over-year and the brand is once again growing quickly.
Cultivate a Loyal Community
One distinct advantage d-to-c businesses have over traditional retailers is their ability to cultivate a loyal community. The direct connection between business and consumer, along with the focus on the brand’s history and values, fosters a strong sense of community among shoppers. Shoppers today are focused on finding retailers with values that align with their own, and they then become engaged, loyal followers of that brand. This is the community that will support initiatives like new product releases or pop-up events.
These loyal customers are also less likely to abandon the brand during challenging times. They will feel a stronger desire to support this brand than a large department store, for example, because they are invested in the business’ success.
All retailers have changed their communication with customers, but some d-to-c retailers have used this time to deepen their relationship with customers. They’ve shown empathy and concern for customers while also being transparent about the state of their own business. D-to-c footwear brand Sarah Flint has recently seen a 25 percent lift in social media engagement and used Instagram to raise money for hospitals in Italy, where its shoes are all handcrafted. Flint, the founder and owner, also speaks directly with customers every week to gather feedback and inputs on current efforts and future strategies.
Run a Lean, Nimble Operation
D-to-c businesses often do more with less. These retailers have a deep understanding of their typical customer profile, including their interests and values, and they know how to speak to this audience. That allows them to spend advertising dollars wisely while leveraging free channels like social media and a blog to pull in prospective and existing customers.
Brands that sell directly to consumers are usually more flexible, too. They often have no stores, or only a handful of them, and a smaller workforce, so there are fewer fixed costs. That’s a key advantage as retail undergoes a sudden shift and faces an uncertain future. Other retailers must embrace this willingness to change gears quickly as consumer preferences and the overall market continues to fluctuate.
For example, menswear retailer Alton Lane does most of its business through one-on-one appointments at its showrooms. When ordinances forced the retailer to shut down all its showrooms, it began offering virtual appointments and closet reviews with a stylist, mailing fabric swatches and tape measures to customers that needed them. Alton Lane saw promising sales numbers in the first few weeks after it launched this program.
Retailers can continue to succeed in this new retail landscape by learning from their d-to-c counterparts. These forces were already reshaping retail long before the coronavirus left an enduring mark on the industry, but retailers must make these strategies a priority moving forward.
These businesses can no longer rely solely on others to market and sell their products. That’s why they should look inward and focus on what they can control. D-to-c offers a tremendous opportunity for retailers that will both drive revenue in the near-term and become critical to their long-term success.
The way consumers interact with brands has likely changed for good, and retailers must pursue new ways to reach shoppers. Hammitt, Sarah Flint and Alton Lane are all excellent examples of how businesses can continue to succeed despite the challenges.
Jason Maynard is senior vice president of global field operations at Oracle NetSuite.