Direct-to-Consumer Strategies Now Increasingly Important to Channel-Dependent Consumer Products Companies

Barney Beal, Former Content Director

June 5, 2020

For companies that depend on indirect channels to sell product, things have changed drastically due to COVID-19.

NetSuite customers T3 Micro, C.O. Bigelow Apothecaries and Dippin’ Daisy’s Swimwear all found themselves facing customer channel challenges, and all adapted in a similar way: By reining in costs, taking stock of their situations and ultimately ramping up their ability to sell direct to consumers.

Change Came Quickly

Amanda Afeiche, vice president of finance and administration for hair care product-maker T3, said things started changing well before the U.S. started shutting down. Because Los Angeles-based T3 relies on manufacturers in China, it began experiencing supply chain interruptions earlier in the year, and then, when the spread of COVID-19 started forcing business shutdowns in the U.S., retail partners stopped placing orders.

The company reacted initially by halting unnecessary spending, gauging the market and then shifting employees to working from home. Since then, every day has brought new and evolving challenges.

“We’re trying to manage and take things day by day, but things are uncertain, you have to be flexible,” Afeiche said during the most recent event in Oracle NetSuite’s Open for Business virtual event series.

C.O. Bigelow Apothecaries, the oldest pharmacy in the U.S., had a different supply chain issue arise due to its reliance on China. New York-based Bigelow, which sells everything from creams and body products to fragrances and remedies, doesn’t assemble or package its products in China, but it does get most of its components there — components that became suddenly sought-after.

“Everyone wants bottles, everyone wants pumps, everyone wants caps,” said Ian Ginsberg, president of the 182-year-old company. “Every day is a new challenge, and we’re out there trying to figure it out.”

Contending with Retail’s Disappearance

As challenging as supply chain shortages can be, few things are as scary for a small business as what happened to Dippin’ Daisy’s Swimwear. The Los Angeles-based company had relied on retail partners to sell 90% of its women’s swimwear products, but by mid-March, stores were closing, the company was being flooded with order cancellations, and its partners were asking for steep discounts or simply not paying their bills.

Elaine Train, the company’s CEO and owner, thought about the suddenly murky prospects for the travel, hospitality and leisure industries, and the future of swimwear didn’t look good.

“We were so scared about the future,” said Tran. “I had to try to preserve as much cash as possible.”

Once Tran got her bearings, she noticed all of the extra fabric inventory the company had on hand and thought about friends in the medical world who kept mentioning the shortage of masks. She recalled that Dippin’ Daisy’s had sold masks at music festivals to help attendees contend with dust and debris, and to promote the brand.

It wasn’t long before Tran had her staff making 1,000 masks a week to help meet the needs of first responders, and that quickly grew to 5,000 a week. Then she started posting about the masks on social media, and encouraged by the response, launched a promotion: The company would donate one mask to a first responder for every mask a consumer bought.

The promotion took off, mask sales have been beyond her expectations, and the effort has drawn more customers than ever to the company’s website, which Tran and her team are hustling to beef up in order to support more direct-to-consumer ecommerce going forward.

“Now that D2C has been magnified, I wish I’d focused on it sooner,” she said.

When Dumb Luck Isn’t Enough

T3 Micro had more of a head start, having already begun investing in refreshing its own ecommerce site before the pandemic started. Afeiche said the company also had the “dumb luck” to have worked on automatiing several business processes that have helped the business to keep humming during the shutdown.

Now, however, the company had to prepare for its wholesale business-to-business sales to be off significantly for an unknown period, and that meant focusing on its D2C ecommerce initiative. Afeiche said the company has added resources to that team and is currently working on a platform to improve consumer engagement and branding.

It’s very much an exercise in accepting what is out of the company’s control.

“That’s all we can manage,” Afeiche said of ramping up T3’s D2C efforts. “We can’t manage our retail partners.”

Ginsberg said C.O. Bigelow is also devoting more resources than ever to its ecommerce site. It’s also looking to work with retail partners like Neiman Marcus on piggy backing on their websites to extend its D2C reach.

Perhaps just as important, Ginsberg said the company is learning to communicate differently with consumers, whose sensibilities are very much in flux. For instance, he said the company is focusing on sharing stories of what the company’s staff is doing internally, which customers seem to prefer at the moment to promotional messaging.

“It’s a little tone deaf to be sending out emails about $300 serums,” he said.

Afeiche agreed, sharing that T3’s messaging has also taken on a lighter touch, with messaging that offers to help with beauty regimens rather than sales-oriented outreach. And, as for providing any reminders of what’s going on in the world, the company doesn’t send out any content about what it’s doing to contend with COVID-19, but simply publishes that information to its website.

Preparing for a Foggy Future

While all of these changes are designed to help these companies weather the pandemic and thrive once the economy reawakens, neither Afeiche nor Ginsberg has any expectations about where any of this is headed.

In T3’s case, for instance, Afeiche said it might make a sense to encourage employees to continue telecommuting, as they’re reporting more job satisfaction while working at home, but it’s hard to know if it’s a sustainable model.

“It’s very ambiguous,” she said. “What we’ve found is working now may not work when stores open up.”

Meanwhile, Ginsberg believes C.O. Bigelow will have to let go of the retail channel emphasis it has long embraced.

“Retail is never going to be back where it was,” he said. “We’re planning for D2C to be a bigger part of mix going forward.”

For more helpful information from the NetSuite Blog and our friends at Brainyard(opens in new tab) and the Grow Wire(opens in new tab), visit the Business Now Resource Guide(opens in new tab).

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