2022 was a year of change. Unlike previous years plagued with pandemic-related worries, with the year’s end we began to see lives return to some semblance of what they were before as borders reopened and countries took cautious steps to taper off pandemic protocols.
That said, ringing in the new year has come with its own set of challenges and opportunities. On the ecommerce scene, things are more competitive than ever as incumbents, new and old, grapple with a volatile macro environment. Fortunately, consumers have responded to the pandemic in kind. With Baby Boomers compelled to digitally transition and Gen Z becoming the next dominant consumer demographic, there are now substantially more customers online than before.
If you’re running a Direct-to-Consumer (DTC) brand, you’re in luck — we have put together 3 key challenges that we expect to shape DTC in 2023, and how to navigate them. If your brand has yet to foray into the DTC space, this could still serve as a handy guide for you to understand what you might be getting yourself into.
Read on for our take on inflation, sustainability and technology.
Rising Costs Due To Inflationary Pressures
With inflationary pressures on the rise, declining order volumes and increasing COGS are currently at large. While businesses might feel torn about whether to raise prices, a lesser known secret is that DTC merchants with strong brand equity are slightly better positioned to command higher pricing than their marketplace counterparts.
In order to mitigate the effects of price elasticity and avoid sticker shock for your brand, you may consider spreading out price increases among your best-selling products. You should also be transparent about the reasons behind price rises to demonstrate your dedication to openness.
Unprecedented Focus on Sustainability
While sustainability is no foreign concept to most businesses, the recent rise in inflation might just be the deciding factor that drives consumers to develop more sustainable habits in 2023.
Based on a 2022 study by Deloitte, price hikes have led to consumers being more selective and discerning in their efforts to spend less. For example, some consumers have opted for more sustainable products that last longer and can be repaired easily. At the same time, more consumers are taking proactive approaches to sustainable living — reducing the amount of new products and goods purchased, or avoiding purchasing certain products altogether due to ethical or sustainability concerns.
Besides making your current product more sustainable, this movement towards environmentally-conscious living might also inspire new products altogether. Have a look at how your consumers’ purchasing habits have changed: What do they look for in products, and how well are your current offerings meeting their needs?
Keeping Up With Technology
As technology-reliant businesses themselves, ecommerce brands are constantly pushed to enhance their tech stack while making the most of current resources.
Here are some trends that might shape your 2023:
1. The Use of CRM Data How much do you know about your consumers? If you haven’t tried using Customer Relationship Management (CRM) tools yet, it might be time to start. With personalisation front and centre of consumer-facing marketing, utilising CRM tools like Hubspot and Salesforce can provide you with valuable insights on how your brand is performing among different customer segments to customise your offerings. Personalising recommendations through CRM can also create opportunities for you to encourage repeat purchases. Imagine purchasing a shirt: a week after your item arrives, you receive an email addressing you by name, “Hey (Your Name), we’re glad you liked (Shirt Name), complete the look with these matching shorts and shoes!” According to Paul Farris’ book, Marketing Metrics, repeat customers have a 60-70% chance of making a second purchase when revisiting your site. While CRM might seem daunting to master in the beginning, it is definitely worth investing in to ensure long-term growth and value creation for your brand.
2. Safeguarding Ecommerce Customers' Data
Image Source Does this look familiar to you? As hacker attacks grow more frequent, businesses must learn to protect their clientele and business operations from potential threats. As business owners, you can obtain an SSL certificate, which will encrypt communication between the web server and the visitor's browser. One of the well-known certifications that can secure data flowing between the server and the browser is Comodo PositiveSSL wildcard from Comodo. Additionally, you can utilise extra security features such as two-factor authentication or even deploy reCAPTCHA solutions to ensure that users are not bots or potential hackers who can endanger the security of your company's and customers' data.
Juggling the day-to-day operations of your DTC ecommerce brand while navigating numerous macro environmental challenges is no easy feat. As we rev up our engines for the new year, it’s important to be aware of what lies ahead so that you can start preparing for them now. With a little bit of planning and foresight, you can make sure that your brand is set up for success in 2023 and beyond.