Over the past two decades, there has been a steady rise in online traffic caused by consumers turning to the internet and social media to shop for everyday essentials, rather than brick-and-mortar stores. Companies like Warby Parker (eyeglasses), Casper (mattresses), and Wayfair (furniture) marked the dawning of the direct-to-consumer (DTC) era. These DTC brands understood the changing retail landscape, the evolving consumer habits and preferences, and rose to prominence by employing strategies that were still relatively new at the time, such as direct distribution, web-only retail, and social media marketing.
Fast forward to today. With the coronavirus pandemic forcing many consumers to stay home, online traffic and e-commerce sales have grown substantially. Even those who prefer in-store shopping have had to consider digital alternatives. Mid-pandemic, digital sales were up 77.8% year over year to $82.5 billion, tracking higher than holiday shopping levels on Black Friday and Cyber Monday, according to data from Adobe.
For help accommodating this sudden surge in direct-to-consumer sales, and navigating the transition from physical to digital stores, businesses are turning to sophisticated supply-chain technologies. At the same time, established players are looking for ways to use supply-chain and logistics technology to bypass regional distribution centers and get their products in the hands of consumers faster.
Adapting to the DTC lifestyle
Even as lockdowns lift and states begin to reopen, companies should avoid depending solely on the reopening of their physical storefronts and instead shift focus to DTC strategies.
Here are three ways organizations can implement and embrace their own DTC pipeline:
- Invest in advanced technology
It is critical for organizations to employ technology that supports their entire ecosystem (inventory optimization, seamless ordering, last-mile delivery, accurate delivery-window timing). Business leaders should reevaluate their current systems and processes to identify gaps and areas for improvement in operations and the supply chain.
- Leverage data and analytics for key decision making
Traditional scenario planning and forecasting have been no match for the pandemic: Lockdowns have varied from state to state, and the future is very foggy. Business leaders and supply-chain managers should leverage real-time data, analytics, and the insights they generate to optimize decision-making and forecasting in the near- and long-term.
- Allow for economies of scale
Is DTC the new normal for retail? How long will these changes in consumer behavior last? When implementing a direct-to-consumer strategy, supply chain leaders need to balance near- and long-term vision to address immediate needs and anticipate trends.
The rise of e-commerce is not surprising, but COVID-19 has accelerated the transformation of retail and triggered other unexpected disruptions throughout the industry. To keep up with these changes, organizations large and small need to reevaluate their supply chain models and develop strategies that are strong enough to support this new wave of DTC, yet flexible enough to support whatever comes next.