There's no doubt that customers have changed over the last 18 months. To find out more, Scalefast and Retail Dive surveyed 203 retailers and 284 shoppers to better understand the DTC customer's perspective and the retailer's view of that perspective. These valuable insights can help retailers and brands develop innovative opportunities to effectively reach their DTC audience.
Survey insights for DTC brands:
● Retailers believe their websites are easier to buy from than brand websites and have a 15%-point advantage in their product assortment. Customers, however, say brand websites are superior in providing a deeper assortment of products (a 10%-point advantage).
● Both retailers and customers are bullish on emerging experiences and specialty stores. Retailers say they will be offering flash sales (39%) and re-sales of pre-owned goods (33%). Consumers say they will be looking for flash sales (44%) and new or limited product drops (22%).
● Most retailers (90%) offer emerging experiences several times a year. Eighty percent of shoppers make purchases at these events, with most (43%) doing so one to two times a year.
The survey highlights several opportunities where brands can have the advantage in filling the needs of today's DTC customers.
Meet the new DTC customer expectations with direct relationships
When comparing retailers' and shoppers' survey feedback, one disconnect was clear. Retailers don't realize that shoppers want a deeper assortment within brands. This is a crucial area where brands can capitalize, says Olivier Schott, Founder and Chief Product Officer at Scalefast.
"Brands are uniquely positioned to provide a much deeper product assortment while responding to changes in consumer tastes faster than retailers – but only if they have established a direct relationship with their customers."
That direct relationship creates a feedback loop informing future product development, marketing voice, and inventory planning, Schott says. "Owning your customer data is critical to making smart, data-driven decisions. And as regulations and privacy policies tighten, brands are losing access to purchased data, making it all the more important to own customer information outright."
Recognize the benefits of pre-sales
Schott says that pre-sales are an option for creating a win/win for brands and their biggest fans. With a pre-sale, real customers serve as a focus group that shares their opinion through clicks, swipes, and advance orders.
Time-limited pre-sales create urgency while also erasing the expectation of next-day delivery. Pre-sales let merchants collect information that informs data-driven decisions on orders and allocation, maximizing turnover and average price over the product lifecycle. Marketing can use the data and research from the pre-sale to understand and segment customers.
"The costs of manufacturing and transporting products are fundamentally changing the economics of retailing and these relatively small changes in practice can create much-needed margin growth," Schott add.
Attract customers with additional emerging experiences
As brands build direct relationships with the consumers, they realize that one ecommerce experience doesn't fit all customer needs, explains Schott. Brands must offer variety to encourage shoppers to take part in the emerging experiences more frequently.
Flash sales can be discount oriented, but product drops and exclusive collections feature products at full or premium prices. Other customers are looking for second-hand or virtual goods, each demanding unique technology and logistics to serve their needs.
"The modern global retail marketplace could be two to three times what it is today with the rapid introduction of virtual products that have no supply chain or raw materials," Schott says. "NFTs will accompany physical products and vice versa. The metaverse being normalized by Roblox and Facebook will exponentially increase consumer demand for a "halo economy" of digital products that don't even exist today."
However, as essential as it is to offer different types of emerging experiences, managing the event's logistics can be challenging, Schott adds.
"These experiences can be intimidating to brands for the same reason they are exciting to customers – the events are limited in duration – 24 to 72 hours usually – and drive high transaction volume," he says. Although customers may love the event, the onslaught of traffic can bog down or even crash a brand's website. "If a brand is not prepared or does not have the right infrastructure, there is a risk that customers will not only be frustrated but may be lost forever."
This fear of website crashes can make brands nervous. If they doubt their system's ability to handle volume and velocity, they could pass on new revenue opportunities that could significantly improve their financial performance, Schott adds.
Use technology to reduce the risks of creating an emerging experience
While there are risks if an emerging experience isn't well managed, brands and retailers should look for ways to reduce the risks versus avoiding having an event, advises Schott. "Customers want to participate in these emerging experiences because they provide added value to the customer relationship. Shoppers want to feel connected to a brand and will provide first-party data in exchange for a unique or more personalized experience."
He adds that brands can use increasingly sophisticated technology to execute these experiences with confidence. There are systems, channels, and platforms built to manage bursts of heavy traffic and transactions with ease. These systems are often separate from the brand's enterprise eCommerce platform for even more peace of mind.
Additionally, Schott adds that tools let brands see how customers interact with the site so brands can optimize the experience. "Brands can and should analyze every piece of data they can and then tailor a flash sale or exclusive experience to the right audience."
Scalefast, a DTC ecommerce expert, makes it easier for DTC brands to reach new and loyal customers through sophisticated specialized eCommerce solutions that enable high-velocity, high-volume product drops, and flash sales, helping them generate millions of dollars in sales.
After nearly two years of uncertainty, Schott predicts 2022 will be bright for DTC eCommerce businesses and their customers. "Customer behavior may have changed, but at the end of the day, personalized, well-executed events could be a huge win for brands of all kinds."