This is the latest installment of the DTC Briefing, a weekly column from Glossy sister site Modern Retail about the biggest challenges and trends facing the volatile direct-to-consumer startup world.
The holidays are already a stressful time for e-commerce and direct-to-consumer startups. November and December will determine whether or not they make-or-break their growth goals for the year. There’s sure to loud and angry customers grumbling over not receiving their products two days after Black Friday. But this year, the stress level has been ramped up significantly, CEOs say.
“This year, I feel like I’m flying blind because it’s such a unique year,” said Ju Rhyu, CEO of Hero Cosmetics, which sells through Amazon, Target, Goop and Urban Outfitters — in addition to its own website. “The completely unprecedented nature of this year makes it hard to imagine what to plan for,” said Rich Fulop, CEO of home goods brand Brooklinen.
Many e-commerce startups have reported than higher-than-expected sales growth during the pandemic, because of the fact that people are now shopping online more frequently than they are in store. But that still doesn’t mean that they can rest easily during the fourth quarter. Modern Retail spoke with five DTC CEOs, who cited potential shipping delays — as well as the fear that more retailers will offer steeper online deals this year — as their biggest concerns leading up to the holidays. To prepare, founders are looking at diversifying the number of carriers they’re working with, trying to encourage their customers to order ahead of big sales days like Black Friday and looking at other ways to entice customers beyond steep discounts.
And, keeping with the theme of business during coronavirus, they’re trying to prepare for a number of worst-case scenarios.
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Logistics woes
U.S. e-commerce sales grew during 31.8%between the first and second quarter of this year, which has strained the ability of carriers like FedEx, UPS, USPS and DHL to deliver packages on-time. According to data from third-party logistics provider ShipBob, the total average days in transit for all four carriers’ ground services is still higher than what it was before the coronavirus. E-commerce startups are bracing for packages to take even longer to get to customers during the busy holiday shopping season. They’re also worried that an increase in the number of coronavirus cases over the fall and winter could lead to some warehouses being temporarily shut down or having to reduce operations. And, depending on how bad the coronavirus outbreak is in other countries, factories could experience issues as well.