You better start drafting your letter to Santa: the Golden Quarter is here. We’ve recently discussed how e-commerce is set to dominate the peak season in 2021. And in this post, we’ll zoom in even closer on one group of retailers: direct-to-consumer, or DTC.
40% of American consumers have recently shopped with a DTC retailer. And while DTC brands still account for a minority of online sales, even big legacy retailers are turning to DTC tactics for the holiday season.
We explore why DTC e-commerce is perfectly positioned to meet consumer demand in 2021
What makes DTC different?
In its most basic definition, DTC just means selling directly to customers. But that direct approach has knock-on effects. Modern DTC retailers succeed because they offer a better operations experience.
Let’s break it down. DTC retailers are known for:
- Proactive customer service.
- Fast, direct delivery.
- Personalized communications, recommendations, and even products
- Digital-first marketing
- Values-driven messaging
In a recent analysis of 10 DTC brands that are 10 years old, the National Retail Federation argued that flexibility is DTC’s greatest strength. Flexible communications mean that customers never have to hang around for a response to their queries. Flexible delivery options give them control over when and how their purchases arrive.
DTC brands also tend to focus on niche audiences. Customers who buy from DTC retailers tend to be well-informed, loyal, and keen to try out new products. (To put it into numbers, transactional emails from DTC retailers have an average 148% open rate.) That makes them ideal targets for upselling, cross-selling, and customer retention.
How data can help you thrive this peak season
All the strengths of DTC retail are based on good data. You need accurate, up-to-date information in order to offer this kind of high-speed, personalized service.
And that’s what really makes the difference. With new privacy laws and advertiser rules coming in 2022, retailers are scrambling to find alternatives to cookie tracking and conventional online ads.
Even the most traditional companies are switching to DTC tactics of email marketing, social media, and loyalty programmes to keep their sales up. DTC is the future of retail marketing and customer service.
What consumers want for Christmas
Remember our list of DTC advantages? Fast delivery, friendly customer service, personalized products… they’re all at the top of customer wish lists. DTC retailers are ready to offer the holiday shopping experience that consumers want.
But there are a few new trends to look out for, too. The Golden Quarter in 2020 was healthy, but underwhelming. According to Salesforce, that’s because consumers were focused on basic needs (remember the toilet paper shortages?). In 2021, they’re finally interested in wants.
That means social events, outdoor adventures, and luxury purchases, plus a boost for health and beauty retailers. For DTC retailers – who tend to stock lifestyle products – that shift in consumer sentiment represents a big opportunity.
Will people head back to the shops this peak season?
There are also signs that customers are heading back into stores. DTC brands have already begun experimenting with pop-up stores, pick-up options, and experiential retail. Physical locations can also be a good way to take advantage of seasonal demand and try out new products or pricing structures.
Once again, the success of these stores will rely on data. Can DTC brands successfully adjust their messaging to include brick-and-mortar stores? Do they have the right data to predict customer demand in store?
Finally, this is set to be the longest peak season ever. Customers started shopping for Christmas back in August, and online retailers know that the surge in returns and exchanges could last until February. So the challenge is to keep people engaged with your brand throughout that time.
How can brands make it happen?
Yep, you guessed it: personalization, customer service, and consistent communications… all based on good DTC data. Want to learn more about how DTC brands can use data and operations experience to win the holiday season? Read our research series about global DTC retail.