From razors, to house plants, to mattresses – there is barely a product today that isn't being made by a trendy direct-to-consumer brand. These digital darlings have no doubt changed the fabric of the retail industry, and the way that consumers interact with brands themselves.
At the start of 2020, DTC brands were poised to take hold of the retail industry and win the hearts (and wallets) of consumers – but after a year of immense uncertainty, they have not been able to successfully keep their end of the bargain. In 2021 as the pandemic continues to dictate the industry's future, online marketplaces, traditional retailers and branded manufacturers have tremendous opportunity to leverage their perceived reliability to their advantage to attract and keep customers.
Retail Playing Catch Up
When eCommerce became the only option for many shoppers this year, brands and retailers were handed a huge opportunity – the chance to shift their operations online at a huge scale. For those who weren't prepared, it became impossible to catch up in the short amount of time necessary to capture customers before they turned elsewhere. For others, this switch was a massive success, and retailers were able to learn from the brands already excelling, to the point where nearly one in three (30%) Americans now see no difference in the experience between buying online from a DTC company versus a traditional retailer.
The snowball effect of a pandemic, an overburdened supply chain, and a postal service stretched thin has created a whirlwind of anxiety for consumers who have been burned by late packages and unpredictable deliveries for the past year. With supply chains still heavily impacted, customers want what they've always wanted – fast shipping, seamless experiences and a decent price point. As DTC brands fight to remain relevant and deliver on these simple promises, experienced branded manufacturers have been far more capable of pivoting and addressing these key needs.
This unpredictability – much of it through no fault of brands themselves – has changed consumer priorities and given significant advantages to brands and marketplaces considered the most reliable. For over half (57%) of Americans, that title of "most reliable" fell to large online marketplaces, like Amazon or Walmart, followed by traditional retailers. The opposite was true for DTC brands, who have fallen behind on that all-important reliability factor. With only seven percent of Americans finding that DTC brands were most reliable over the past six months, they have a long way to go to make up for dipping perceptions of the past year.
Consumer Perceptions Slipping
It's fair to say that DTC brands have faced high expectations as they've touted incredible customer experiences and fast shipping times as some of their key selling points. But unforeseen circumstances meant DTC companies were unable to advance consumer commitment to their respective brands – and customer perceptions reflect just how much traditional retailers and branded manufacturers have caught up in 2021.
Heading into 2020 – 1 in 5 consumers (20%) believed that DTC brands cared more about their customers than a traditional retailer, a perception that was bolstered by the personalized messaging and high-quality experiences these brands were known for. In 2021, that number has slipped to 14%. But customer care isn't the only area where DTCs have faltered – consumer perceptions have also faltered when it comes to ease of purchase, even trendiness. The reason for this may not be that DTCs suddenly became unreliable or less on-trend – instead, these perceptions might be due to the investments that traditional retailers have made to catch up and close the gap.
While digitally native brands have fought to prove themselves as the most innovative with creative sales models and influencer endorsements – these strategies may be distracting from the key value that shoppers want from the brands they frequent. So, with their customer base on the line, where do these DTC brands go next? It's time to bring ever-evolving direct strategies back to the basics, and remember the three key differentiators that today's anxiety-ridden shoppers are looking for: speed, cost, and convenience.
The New Differentiators
Marketplaces like Amazon have upped expectations for what service should look like – to the point where free, 2-day shipping is the norm, and anything else is a compromise. That also means it's a major factor in the decision-making process for shoppers anxious to receive their packages on time, with 42% of Americans stating they would purchase directly from a branded manufacturer over a third-party if promised free & fast shipping.
Technology makes comparing options & price points easier than ever. Shoppers are scrutinizing more than just price, but reviews, options and warranties, providing opportunities for a brand to take a competitive advantage. Technology has also heightened customer expectations. While cost and quality are purchasing drivers, a bad online experience can turn a customer away just as quickly as a high price tag. Brands need to focus on offering a seamless experience from the first point of contact through to customer interactions and even returns – and seek help through qualified partners with the logistics they don't have the ability to handle.
We're reaching a point in the retail cycle where there could be a shift from digitally native darlings to more traditional powers. Coming out of the pandemic into the next evolution of the retail landscape, we'll see that the winners will be the traditional heavy hitters: branded manufacturers and retailers who have the experience and capital to re-invent themselves for changing consumers. Customers will be looking for trust and stability and digitally native brands will either earn their place in the hierarchy or be left behind as yesterday's shiny objects.