By Andy McCaul, Director, The Bigger Boat
COVID-19 has hit all kinds of sectors hard and fast. Businesses struck in particular – such as travel, restaurants and pubs – have a long and hard road ahead of them which, for many organisations, may seem impossible.
Retail is right up there too. A lot of businesses saw sales drop to zero overnight, but others have been privy to the exact opposite – a complete reversal of fortunes following COVID-19.
Why such variation? Some of it is purely down to sector-specific good fortune, but a key factor concerns ecommerce.
If a company had embraced digital methods and was set up pre-COVID-19 to handle online sales effectively – and was lucky enough to be in a sector where demand for products remained high – then there has been a golden opportunity for sales figures to achieve mind-blowing results.
However, for a manufacturer or brand owner that traditionally sold through retail only, there may have been an immediate pain during the pandemic – and for many organisations sales will have unfortunately dropped off a cliff. Why? Because this is essentially an ‘all eggs in one basket approach’ which, in times of crisis, can perhaps lead to a real struggle to maintain a resilient and flexible approach when challenged to adapt swiftly.
If there’s one take home from this whole moment in history, it’s that organisations need their own ecommerce offering – they must be more in control of their own destiny.
The pros and cons of DTC
But, as with anything, there are advantages and disadvantages to any approach. Having a Direct-to-Consumer (DTC) channel provides an improvement in product margin and it can also sell the entire range, not just part of it. But there are logistics involved and an ecommerce website to invest in, to maintain any form of success – and achieve a consistently healthy bottom line.
However, there doesn’t need to be a total shift towards diving right in at the deep end. Brands should start with a simple ‘set up and scale up’ strategy as sales and traffic builds. It’s essential to get experienced assistance throughout – whether that’s via an internal ecomms team or by hiring an external agency that the organisation can outsource everything to.
With two partners involved – logistics and a digital agency – the business should have enough resource to get going with minimum hassle. With any kind of digital or technology, there’s often the fear of the unknown or a ‘we’ve always done it this way’ mentality that perhaps holds companies back from making this move. However, now is the time to adapt and embrace positive change.
Why critical partnerships matter in a true time of crisis
This doesn’t mean that organisations should be walking away from retail – it’s not an ‘all or nothing’ situation. In fact, the relationship with this industry should continue and maintain strong relationships through initiatives such as retailer ‘exclusives’.
Keeping those key partnerships going whilst running a DTC offering can be a difficult balance to strike, but there must always be an element of flexibility if a brand is going to survive – especially during a crisis. And, for many, this has shone a light on why the traditional model may not always provide such agility when it’s vitally needed.
Have organisations missed the boat or is it too late to explore DTC ecommerce? No. There has been a huge increase in online shopping activity, and that’s likely to continue. At the moment, no-one really knows when life will return to ‘normal’ and it’s possible that some restrictions will exist in such new territory. Additionally, who is to say another crisis like this won’t happen again in most people’s lifetimes? Of course, let’s hope that won’t be the case.
For many people, they may prefer to keep ordering their products and services online to maintain a level of safety and security, but people will return to the shops and High Street and so retail must be ready. Throughout all this, lessons must be learnt. Brands should be adaptable to vast change where necessary and be in a position meet the strong demands that ecommerce presents.
Any business that focuses entirely on physical stores – and ultimately has no backup plan – will never be in a healthy position to tackle the modern-day needs of consumers and the unpredictability of everyday life. The solution for many will be ecommerce because it offers both a strategic way to provide calm in the storm and a vital opportunity for critical organisational growth.