How DTC Brands Are Adapting to Covid-19
The Covid-19 pandemic changed everything in our society, from daily commutes to spending behavior. Despite this, only 22% of DTC brands reported declines in sales, whereas many traditional retailers have suffered sales dips or even bankruptcy during the crisis.
Clearly, DTCs have some tricks up their sleeves. What can traditional brands learn from how DTCs thrived during quarantine?
Meeting the moment for consumers
Once the country began quarantining, businesses conducted massive layoffs and furloughs. With a huge percentage of the country not working, many consumers stopped buying big-ticket items. This meant DTCs needed to pivot their offerings to maintain business. For example, DTC mattress darling Casper started selling auxiliary items like pillows and dog beds to weather the storm.
It isn’t just a matter of chasing revenue. This pivot requires an understanding that consumer behavior has changed. Sock and apparel brand Bombas took a step back in pushing no-show socks, which would usually become a focal point during the summer months, after noticing that consumers weren’t buying as many — presumably seeking comfort over style as they spent more time indoors. Who was in danger of seeing your socks when you’re stuck at home for weeks at a time?
Brands must understand that their products must meet the needs of the consumer in that moment. Bombas recognized that consumers were focused on comfort over style and made that adjustment. Casper expanded their offerings to engage consumers that weren’t in the market to buy a mattress with a big price tag. Everyone can learn from this: It’s important to meet your customers where they are, even outside of a global pandemic.
Do well by doing good
As the coronavirus continues to surge around the globe, DTCs are doing well by donating to charitable causes and producing necessary equipment like masks. For instance, Yoga apparel retailer Lululemon’s senior leadership team reduced its salaries by 20% and used the savings to establish the new We Stand Together Fund to aid employees facing hardship due to COVID.
These types of shows of solidarity help consumers understand the values of companies more than tweeting pablum ever will.
Lean into e-commerce
DTC brands are succeeding over traditional retailers in this environment because DTCs are established in e-commerce. As the pandemic limited in-person shopping, it accelerated the growth of e-commerce transactions. Those with the infrastructure in place to optimize from this dramatic shift, like DTC brands, have been able to ride out the storm.
Experts believe that in-person shopping will probably never return to the way it was, and this is going to be true even for categories like grocery. Traditional brands must catch up or risk obsolescence.
Pivot marketing spend to where consumers are: CTV and email
As more Americans quarantined at home, the connected TV (CTV) and email channels actually saw gains. The time users spent on CTV increased 81% year-over-year from 2019 – around 4 billion hours per week. And as work from home continues, consumers are glued to their computers (and therefore email) for many hours of the day.
Over the beginning weeks of quarantine, we saw a 5% increase in email opens. However, email is also a solid bet outside of COVID. Statista found that 3.9 billion people used email in 2019 and predicts that number to grow to 4.48 billion users in 2024.
Besides consumer attention, why are DTCs leaning into email? It’s because as a personalized 1:1 communication channel, a solid amount of revenue comes from email marketing for DTCs. Consumers have opted into receiving email from the brand and welcome hearing from them in that medium. In fact, we saw that opens for newsletters related to shopping grew by 83% this spring, showing consumers embraced shopping through email.
Traditional brands are missing out on consumer attention, developing a relationship, and, ultimately, revenue if they don’t adequately invest in these digital channels.
When Covid shut down the world, it wasn’t just traditional retailers that were hit. DTC brands were, too. Shifts in consumer shopping habits during the pandemic forced DTC brands to alter the ways they think and they still came up on top. As the world continues to navigate our new normal, we hope that others can learn from the strategies DTCs are implementing.
Kerel Cooper is the Senior Vice President of Global Marketing at LiveIntent.