The global pandemic upended the way humans interacted with one another, be it in business, shopping, or everyday experiences. The sales figures of products or services got staggered from their path due to erratic consumer behavior.
However, direct-to-consumer marketing has enjoyed a unique position as they were operating relatively few stores and had a prominent presence online where consumers had diverted their spending.
Heading into 2021, DTC brands will continue navigating through the pandemic-induced headwinds that will shape the market in the long term. Here are seven direct-to-consumer statistics and trends anticipated in the year ahead -
In order to beat the best direct-to-consumer brands on their turf, traditional retailers have started emulating them. With less footfall in brick-and-mortar stores, retailers have sought inspiration from DTC brands on ways to approach tech-savvy customers.
Nike shut down nine wholesale accounts in August 2020, as per Susquehanna Financial Group, to expedite its DTC strategy. Under Armour also revealed that it would exit a few thousand wholesale doors and adopt a DTC strategy. Its DTC revenue escalated 17% to $540 million in October 2020.
Since the beginning, DTC brands have portrayed inherent qualities such as personalization, and user-friendly platforms have proven competent during the pandemic.
DTC brands received widespread success online and swore off physical retail. However, over the years, they must rely on brick-and-mortar stores to a certain extent to surmount the competition.
Several brands forged partnerships with traditional retailers to test out the feasibility and profitability of physical retail. Other brands opted for pop-ups or permanent locations of their own.
Several DTCs have adopted a showroom model where they do not sell merchandise in-store but provide consumers with the opportunity to touch and experience a product before purchasing it online.
The pandemic has been the root cause of demand for casual as-well-as self-care products as people continue working from home. For digital-native brands like Thinx, Ipsy, and Bombas, growing into these categories seems like an extension of their brand.
As top businesses lose market share in some categories, DTC companies enjoy the opportunity to widen their product offerings.
Social distancing measures have made consumers increasingly reliant on eCommerce platforms, and by entering new market domains, DTC brands are devising creative ways to retain their newly acquired customers.
Retailers desired a dynamic eCommerce platform, something already owned by the DTC brands. Since the past year has made in-store shopping difficult, eCommerce sales escalated to roughly $795 billion in 2020.
While consumers devote less time wandering in malls and more on their gadgets surfing the internet, DTC brands have the opportunity to approach a new demographic and retain their existing ones. Sourcing new prospects and sales via a targeted list of BigCommerce stores is one way for direct-to-consumer brands to keep up with this trend.
DTC brands' commitment to sustainability is also set to strengthen social media campaigns that continue to resonate with millennials and Gen Z. With no forecasted end to the pandemic and continued funding, direct-to-consumer trends in 2021 will continue to rise in popularity.
The pandemic has had a significant impact on how investors perceive the retail sector and the DTC brands. The seismic shift in consumer behavior because of nationwide lockdowns has resulted in massive eCommerce sales.
The rise of eCommerce was the harbinger of success to many DTC brands that had few brick-and-mortar stores to cater to and capitalize on the move to online shopping.
With some DTC divisions receiving more funding compared to others is debatable, but investors are still fascinated by direct-to-consumer sales. DTC darling Allbirds procured a whopping $100 million in September, and outside furniture brand Outer secured $10.5 million this January.
Recently, as popular DTC brands scale much vaster than their startup times and executives encounter operational and workplace culture deterrents, founders have considered taking a step back, and retail veterans have assumed C-suite roles.
The founder of Outdoor Voices, Tyler Haney, resigned early the previous year. Away's Steph Korey stepped down for a seasoned Lululemon executive to assume the role.
Founders, however, will not shy away from the mundane tasks of their brands. Successful DTC brands will continue advancing and recruit leadership to guide them towards reaching the next growth stage.
As more online companies are beginning to trade publicly, providing people with a glimpse into their finances, trends revolving around their profitability have surfaced.
Until the second quarter of 2020, Wayfair declared its net losses since its public debut in 2014 while simultaneously reporting rising advertising costs. The retailers in the financial year 2019 declared aroughly $1 billion net loss. Online retailers like Chewy and Casper have encountered similar issues.
Media costs plummeted during the pandemic, bringing some relief to brands struggling with profitability; however, the fix is temporary, and brands must continue searching for ways to alleviate the exorbitant costs of gaining customers online.
To regain lost profits, brands will have to continue searching for solutions to entice consumers, whether it is by establishing brick-and-mortar stores, gathering insightful data via a comprehensive eCommerce website list, or building partnerships with leading brands.
With the pandemic disrupting the mode of operation of almost every sector in the market, DTC brands have enjoyed a unique position. These brands have witnessed substantial growth due to more people shopping online.
Most people have started browsing the internet to look for desired products. This trend has provided DTC brands with an upper hand over brick-and-mortar stores. However, these brands have also witnessed a shift in operations that might impact them for the better or worse.