As the pandemic continues to wreak havoc on the world economy, apparel and footwear brands are attempting to shift gears to spur sales and recoup losses.
Retailers like department stores have been among the hardest hit in the sector, and many brands are turning instead to building up their own direct-to-consumer channels to try and reach sympathetic shoppers.
E-commerce solutions platform Scalefast has taken up the charge in enabling brands to strengthen their own sales infrastructures. During the COVID-19 era, cultivating self-reliance and the ability to tell one’s own brand story is more important than ever, according to founder and chief marketing officer Olivier Schott.
“You need to deliver your brand experience to your core customers,” he said. “You need to know them to better serve them, and with data, you can create a lasting relationship.”
Brands that rely on retailers to drive business are likely finding themselves in trouble, he added. With brick-and-mortar hubs shuttered, it’s better for brands to preserve their margins by cutting out third parties, and do the selling themselves. “COVID-19 should serve as a wake-up call,” he said.
Any industry that continues to rely on indirect channels to fuel its business will be subject to struggle, he said, because no one knows which retailers will emerge from the crisis intact.
Schott pointed to Nike as the one of the strongest large-scale proponents of direct-to-consumer business. As a globally recognized brand, the athletic wear label was able to take control of its message and secure its place in the market by brushing off retailers that didn’t serve it properly. Nike famously broke up with Amazon after years of counterfeiting headaches that the e-tailer did little to relieve.
Even with the loss of Amazon’s massive consumer base, the uncoupling left the sneaker titan unscathed. “They said, ‘do we really need Amazon?’” Schott said. The goal, he believes, is for all brands to find themselves in the position to ask themselves that question.
Brands that are behind in the DTC push must work to catch up right away, Schott said. At this moment, most fashion brands need to liquidate their stockpiles of seasonal inventory, and the best way is through sales on their own online stores.
While there are third-party deal sites that make it easy to unload piles of stock, Schott believes there are unparalleled upsides to bringing consumers to brands’ own sites. From gathering valuable consumer data to building awareness and firming up brand identity, having full control over the shopper’s experience is a very good thing, he said.
As brands work to strengthen their own sales channels, however, they should resist biting off more than they can chew. Staging a seasonal blowout to unload inventory is great until a site cracks under the pressure, he said.
“You had better be prepared for traffic, because the worst thing that can happen is brand damage if your system crashes,” he said.
Brands should also work to thoughtfully leverage their own physical storefronts, depending on the easing of lockdown orders in their regions.
“You might want to transfer inventory from one store to another based on demand,” he said, and leverage tools like buy online, pick up in-store, aka BOPIS, to give shoppers more options for accessing products.
Shifting inventory in this way requires a delicate balancing act, and most of the time, departments are too siloed to make decisions effectively, he said. Employees managing indirect sales channels don’t always have visibility into what’s available online.
Those in charge of inventory management and planning have access into enterprise resource planning (ERP) software that gives them a fuller picture of what’s available, and those insights should be shared across teams to ultimately open up all avenues possible to the end consumer.
The task of managing a direct-to-consumer business is challenging in the best of times, and many have stopped short of going full throttle due to the daunting circumstances.
“It’s very long and complex to build your own sales channels,” he said. “Walmart and Amazon are solving so many problems that brands don’t even consider,” he said, like ensuring tax and regulatory compliance and enabling easy fulfillment.
Still, Scalefast has seen a huge uptick in interest since the pandemic began, Schott said. That’s because brands are beginning to see that having autonomy is essential in the current retail landscape. “We’ve been advocating for brands to go direct for ages, and we’re lucky to be on the right side of this now,” he said.