Strategy

The DTC Model Was Built for Coronavirus

How DTC brands, digital retail, and retail innovation became central to the coronavirus story.

When the histories of the COVID-19 are eventually written, there will be plenty of ink devoted to the difficulties, the shortcomings, and the tragedies wrought by the pandemic. But there will also be stories about the culture of the pandemic; how social norms and behaviors shifted and created new 21st century ways of being. 

One thread of the story will center on how digital retail and retail innovation were not only central to the era of coronavirus, but central to the experience of making it through. That’s where the DTC movement comes in.

The Accelerated Shift Online

Long before the pandemic hit, industry predictions of future eCommerce growth were characterized by words like slow, steady, and moderate. One widely adopted estimate placed total U.S. retail sales from eCommerce to hit 14% by 2021. But then everything changed.

As Salesforce reported recently, eCommerce revenue in the first quarter of 2020 grew 20%, compared to 12% growth a year ago. More than six months before we ring in 2021, the total eCommerce retail spending in the U.S. has hit 28%, doubling the earlier expectation. “Americans have shifted spending to the virtual economy, compressing 10 years of anticipated e-commerce growth into a matter of weeks," wrote Derek Thompson in The Atlantic.

“Consumers are not only growing accustomed to a different retail dynamic, they are growing to love it.”

Of course, trends are trends, tenuous and temporary. However, as shelter-in-place orders and social-distancing mandates stretch on, consumers are not only growing accustomed to a different retail dynamic, they are growing to love it. And there is plenty of evidence to suggest that new long-lasting habits and loyalties are being forged. Last month, for example, a consumer survey by PYMNTS found that a full quarter of consumers expect that their new coronavirus-consumption patterns will stick for good. 

Quick Thinking, Quick Moving

There are some clear and obvious beneficiaries from the massive shift online of the past few months. Brands—be they retail behemoths or scrappy startups—that invested heavily in their digital infrastructure are doing good business. After all, customers are prioritizing a reliable and seamless online experience more than ever.

And then, there are those lucky purveyors of items deemed essential during a period of public health vigilance, remote work, and excessive home-bound lounging. DTCs like Richer Poorer, which sold three times as many sweatpants in the three-week period after the outbreak than in all of 2019, were readymade for a moment like this. 

And so, unless you were a DTC bidet-maker during a national toilet-paper shortage, you had to adapt. This is where the nimble, the savvy, the creative, and the adaptable stood up. Sneaker marketplace StockX shifted from selling kicks to focusing on making face masks and puzzles available to bored and socially-isolated shoppers. The Oregon-based athleisure DTC brand Dhvani staked out philanthropic terrain by launching an initiative to get a free mask to every person in America. Other fashion-minded outfits like Twillory and Beau Ties of Vermont created patterned masks that wouldn’t look out of place in haute couture catalogues. 

With quick thinking, there were other natural pivots undertaken with sharpness. Hamama, the DTC microgreen kit producer, emphasized to the sourdough-starter crowd that if fresh produce was hard to come by, you could always grow your own. Meanwhile, Gusto, the small-business payroll administrator, worked to get fledgling businesses loans after the Paycheck Protection Program was signed into law by Congress. 

Saie, the clean beauty and wellness DTC, wasn’t even six months old when the pandemic hit. Nevertheless, the team read about hand-sanitizer shortages and swung into action. “With a little bit of research and approval from the FDA, we located some raw materials (Glycerin, Isopropyl Alcohol, Vitamin E, and Mandarin Oil to name a few) and worked with one of our labs to dedicate some of our production space to make it,” they wrote. In addition to including free hand sanitizer with every order, the Saie team paired up with Feeding America to make free bottles available for people also seeking food donations.

The Future of DTC and Retail

In the midst of working to outlast coronavirus and a weakened economy, businesses are also preparing for an unknown future. This means more evolution and agility—the constituent fibers of the DTC model. 

Even as traditional retailers itch to reopen their stores at the earliest possible moment, the digital first community is, by design, not necessarily feeling the same urgency. “We were already 85% online and now our online sales are way higher,” Ashley Merrill, the CEO of DTC sleepwear brand Lunya told Glossy ahead of New York City’s reopening in early June. “We were really concerned, at first, since revenue dropped to like 30% of what it was supposed to be. But in April, it recovered, and now online sales are growing past where they were before. I don’t feel like I need to reopen stores right now or anytime soon.”

For other brands whose in-store retail experiences remain part of what makes them stand apart, small-scale modifications are inherently easy to implement. The bespoke suit DTC Indochino, for example, is emphasizing safe shopping in their brick and mortar locations with online appointments and sanitized samples instead of previously tested inventory. For employees, there are mandatory temperature checks and the fresh cycling of new gloves.

As the consumer landscape shifts and new priorities emerge, the early retail patterns of 2020 may become a distant memory. But regardless of what happens next, more adaptability and tinkering will bring ideas that animate consumers to the fore—whether it’s exclusive events, creative collaborations and initiatives, product expansions, innovative pop-ups, or concepts that are only taking shape right now. In other words, whatever comes next is exactly what the DTC model was built for.