Monday, February 26

The 5 things in DTC you need to know today

February 26, 2024

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🚨 In today’s newsletter đźš¨

  • The Fall and Rise of DTC Retail

  • Navigating the Free Shipping Conundrum

  • eCommerce Growth Slows, Challenging Retailers

Let’s get into it👇

ANALYSIS
#1 - The Fall and Rise of DTC Retail

The Rundown: Direct-to-consumer brands saw huge hype and growth last decade before crashing down to earth, but an omnichannel evolution could fuel a resurgence.

The details:

  • DTC brands disrupted industries by selling innovative products directly to consumers, but ran into issues sustaining rapid growth-focused models.

  • Many DTC stocks have crashed 50%+ as marketing costs rose and investors emphasized profitability over growth.

  • Casper and other DTC brands have exited public markets as scrutiny and expectations shift.

  • However, DTC still shows promise through more sustainable "pure play" digital models or "hybrid" omnichannel models.

  • Hybrid models allow brands to maintain DTC narratives and margins while achieving scale.

  • Formerly pure play DTC brands like Glossier, Peloton, and Dollar Shave Club now sell through traditional retailers.

Why it matters: The future success of DTC retail depends on achieving profitable business models, not just chasing scale and hype unsustainably. Omnichannel flexibility improves viability.

MINISOCIAL
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LOYALTY
#3 - Navigating the Free Shipping Conundrum

The Rundown: Online merchants face tough choices when it comes to shipping costs - absorb them to attract customers or pass them on to protect profits?

Step-by-step:

  1. Recognize that today's customers have clear expectations around free and fast shipping. Meeting these is table stakes for any e-commerce business.

  2. Don't succumb to pressure to always ship for free. This quickly eats into margins. Instead, set minimum order values for free shipping to balance customer satisfaction and bottom lines.

  3. Communicate shipping timelines and costs clearly throughout the buying journey - transparency is key. Offer choice in shipping options, but steer customers toward lower-cost methods where possible.

  4. Invest in loyalty and rewards programs as a "value-add" that incentivizes customers to pay for shipping on smaller orders. Point-based free shipping and free return shipping options are great loyalty boosters.

  5. Keep optimizing packaging and negotiating with carriers to further trim logistics costs over time. Savings here have a direct impact on profitability.

Actionable Takeaway: Experiment to find the right balance between building loyalty and protecting profits. The winning combo likely includes strategic free shipping offers, excellent communication, and loyalty incentives. What works for today's customer?

DTC Daily’s Monthly Spotlight:

Tools and Services

Need a Graphic Designer? Cost effective solution, instead of full-time employee: Delesign 

Get a Metal Business Card: My Metal Business Card

Use influencers to create UGC for your brand: minisocial


🗣 Have an upcoming event or tools you’d like to recommend to 24,000 DTC Brands? Click Here

RESOURCES
#4 - Things Worth Checking Out

AI - How this startup is revolutionizing product data management with AI

SECURITY - Here's what 2023 taught us about ecommerce security

REPORT - eCommerce pet subscription services altering shopping patterns

TOOLS - 10 best automation tools for your online store

STOCK - Amazon vs. Shopify stock - which is a better buy?

GROWTH
#5 - eCommerce Growth Slows, Challenging Retailers

The Rundown: E-commerce sales growth is decelerating after years of rapid gains, with online retail's share of total US spending stuck at 15% since late 2021.

The details:

  • Annual online sales growth dropped from 20%+ to single digits in 2022, with projections of around 12% annual gains going forward.

  • Shoppers blend online and offline, complicating measurement of pure e-commerce activity.

  • This fluid "omnichannel" environment creates uncertainty for retailers around planning, pricing, products, and shifting consumer behavior.

Why it matters: The data indicates e-commerce is maturing as a retail channel. Retailers must rethink strategies premised on high online growth. Omnichannel complexity also presses them to take a sophisticated, customer-centric view of operations. Legacy models won't cut it.

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