As the United States continues to be the epicenter of COVID-19 with over 5.44 million positive cases, the country's economy is deeply impacted, and the pressure on businesses to bring it back on track is huge. All 50 states in the country are getting back on their feet over the past few months. However, a lot has changed.
The pandemic has hit America's retail industry hard, especially brick-and-mortar retailers, throwing at them a bunch of tough challenges to battle, and some fast-emerging market trends to keep up with. But at the same time, it has also opened up some massive opportunities for retailers to grab and remain competitive despite the impact of COVID-19 on the market.
As millions of Americans stayed confined in their homes to practice social distancing and the government closed down all but essential retail outlets as a pandemic-prevention measure, mom-and-pop retail stores started losing revenues. The rise in online shopping of essentials, groceries, and food and beverages; and the growing demand for home-delivery services is pushing retailers to come out of the shell, and try innovative business models for sustainability.
Retailers have now come to realize that e-commerce is the most dependable anchor to hold on to and omnichannel is the future of the industry. Among the other trends that have popped up in retail since the outbreak of COVID-19 is the growing shift towards direct-to-consumer sales by retail businesses, consumer goods companies, fashion brands, and even farmers across the country.
In a direct-to-consumer model, manufacturers or retailers sell directly to the consumer without the involvement of middlemen such as third-party sellers, wholesalers, and retail outlets for distribution. Typically, this is done by setting up an online storefront, or even a social media page, from where customers can browse and place orders. The company then directly ships products to consumer locations with the help of an in-house transport facility or third-party transporters.
Direct-to-consumer selling has been a slowly rising trend for quite some time now. According to a report by eMarketer, web traffic to D2C sites has doubled in the last two years. However, the pandemic has given a big push to retailers and consumer goods enterprises to sell directly to consumers, causing a sudden boom in the market. D2C sales are expected to account for $17.75 billion of total US e-commerce sales in 2020, up 24.3% from the previous year.
Fashion and apparel brands like Levi's, Nike, and Adidas are going big on D2C sales, reinventing their web stores, regularly introducing new products, and offering personalized product options to their consumers. Top supermarkets with established retail chains such as Walmart and Publix are also banking on this opportunity and selling online to fulfill the demands of millions of quarantined Americans.
The biggest advantage of going direct to consumers via e-commerce is that it allows brands to build a relationship with their end consumers, and nurture it with effective communication and quick grievance resolutions. It is also a cost-effective selling option for manufacturers and retail brands, who otherwise have to spend hundreds of dollars on secondary distribution to wholesalers and retail stores.
But, at the same time, direct to consumer selling is not a cakewalk for retail brands. There is some serious competition from large-scale online retailers like Amazon, who have been in the market for years now and have a massive customer base. Another challenge faced by retailers, especially small brick and mortar sellers in going online is the ability to promote their online presence effectively to a larger audience.
While selling directly to consumers, manufacturers and retailers must also consider the logistical challenges that can come up. Not all brands may have the best transport management system in place and might have to rely on third-party logistics companies to ensure effective last-mile deliveries.
Even for the ones that have an in-house logistics arrangement, ensuring fast and on-time delivery, coupled with excellent customer experience is a must. Retail brands must not forget that they've set out to fulfill the 'I want it ASAP' and 'Where is my order' customer.
Coronavirus has shown us that direct-to-consumer selling is the next big thing in retail, but in order to make it a huge success, brands need to strategically implement this business model. Efficient logistics is a must-have to ensure two-day and same-day deliveries, and technology such as fleet management, order-tracking, and live status updates will play a crucial role in uplifting customer experience in D2C selling.