In 2020, DTC ecommerce has proven to be another sensible way to reach your customers, and many brands are looking at starting from B2B and transitioning to direct to consumer.
Those of us working in ecommerce have been seeing the shift for a while now. As more and more stores transitioned their inventory online, the ecommerce boom wasn’t just happening – it was inevitable.
Fast forward to spring of 2020 though, and NOBODY could have predicted what happened next.
Massive store closures triggered the single largest exodus from brick and mortar the world has ever seen, with more than 100,000 small businesses in the US alone closing for good as a result of the COVID-19 shutdowns.
But small businesses weren’t the only ones to take a hit. Larger retailers like Neiman Marcus have filed for bankruptcy in the last few months, and that list continues to grow.
All things considered though, the pandemic has thrown into sharper relief the need for a stronger ecommerce presence for many of these retailers. Record-breaking numbers are rolling in for ecommerce for 2020, including a growth spurt that put the industry four to six years ahead of schedule.
The Problem With Wholesaling During COVID-19
Even in spite of many shoppers setting their sights online, manufacturers saw major hits to their B2B sales as brick and mortar stores shut down. Those relying on wholesale relationships to float their revenue took devastating hits in the midst of the shutdowns.
As consumers turned to ecommerce sites like Amazon though, the fallout continued. In mid-March, Amazon restricted their B2B purchasing of nonessential goods in the wake of unprecedented demand for household staples.
As Amazon made room in their warehouses for hand sanitizer and toilet paper, purchase orders for nonessential goods rolled to a trickle or stopped completely, and manufacturers saw B2B sales plummet.
In the scramble to recover these revenue losses and brace for a potential second wave of retail shutdowns, many manufacturers are turning to DTC ecommerce models.
What Is DTC and a DNVB?
DTC stands for direct-to-consumer. It’s an ecommerce business model wherein the brand sells directly to consumers, rather than through retailers, essentially cutting out the middleman. Some DTC evangelists will tell you the goal is to handle production, sales, distribution, and marketing under one roof and never go wholesale, but in 2020, it’s proven to just be another sensible way to reach your customers, and many brands are looking at starting from B2B and transitioning to DTC.
A DNVB is a digitally native vertical brand that starts this way. Best typified by brands like Avocado Green Mattress and Allbirds, DNVBs typically start with a simple product line (typically one or two options), clear, crisp branding, and a strong mission-driven component.
With brick and mortar sales remaining unstable and manufacturers now dealing with the fallout from their Amazon backlogs, DTC ecommerce is looking more attractive all the time – and consumers are taking notice, too.
Mission-Driven Shoppers Are Fueling the Fire
Interestingly, DTC brands are creating evangelical customers and devoted fan bases centered around two things:
- Amazing products
- A unifying brand mission
Consumer data shows that millennials now make up the majority of buying power in the US, and are 63% more likely to purchase from a brand because of their mission and values.
This data, coupled with the boom the DTC sector has seen from innovative consumer goods startups has created a replicable business model that’s looking all the more attractive to manufacturers who entered the industry through wholesaling.
Four Components of a Successful DTC Ecommerce Site
Over and over again, we see brands killing the game in DTC ecommerce, and the best of them have a few things in common:
- Clean branding. Visually-driven shoppers respond to powerful messaging and clean logos. Brands like Tushy and Anese are leading the pack with memorable branding that leaves a mark in a saturated market.
- Smooth UX. At Nexcess, we know that an ecommerce site’s performance is directly linked to its ability to generate revenue. The best DTC ecommerce sites have an intuitive layout, load fast, and have a smooth interaction with their shoppers.
- Simple product lines. They say simplicity sells, and that’s certainly the name of the game in DTC ecommerce. Strong DTC brands typically have one or two flagship products they make their mark with and expand on.
- Strong missions. The data supports that today’s consumers are more conscious of their purchasing decisions than ever. Making your mission clear and building your brand around it (instead of as an afterthought) will literally win you more sales, and good karma.
Is It Time for You to Go DTC?
If COVID-19 has taught us anything in ecommerce, it’s that you can’t have enough backup plans. Diversifying how and where you sell your products makes all the sense in the world. Those high-volume retail POs may seem nice for a while – until they vanish, and your revenue vanishes with it.
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