Coronavirus is having profound impacts on consumers and the behaviors that drive our economy. While many retailers have been negatively impacted due to store closures and shelter-in-place directives, direct-to-consumer (DTC) brands stand to weather the storm by acting quickly and responsibly—especially if they can remain nimble and listen to their customers.
Many of the brands I work with at BVA have been asking how best to cope with the challenges and fears raised by COVID-19. Properly reacting to the pandemic and immediately launching into proactive planning for the future will determine each brand’s chances of not just success, but survival.
Illustration / Angelina Bambina
Before we start reacting and planning, we need to understand the current state of markets and where things might be headed. How has social distancing impacted behavior, supply, and demand?
One thing is for certain, based on local and state government directives: there will be forced adoption of eCommerce with many consumers stuck at home for an indefinite period. Amazon’s recent move to add 100,000 people to its workforce suggests home delivery will continue for the foreseeable future.
But what about the impacts to eCommerce so far? I can tell you the portfolio of brands I engage with are generally seeing downward impacts—especially when comparing MoM and YoY data.
The biggest callout? Customer acquisition costs and conversion rates are generally moving in opposite directions with CACs surging and down-funnel performance inching lower over time. It’s too early to callout any more specific trends, but if we zoom out more broadly, here’s what we see in three different categories of DTC:
- Omnichannel: Omnichannel businesses have both retail and digital storefronts. I’ve heard all sorts of predictions about how these brands will perform and most are relatively positive (predictions vary based on physical footprint size). An analysis of aggregated performance data is beginning to yield that conclusion with both revenue and conversion rates recovering from negative YoY figures just last week. I’ll be keeping a close eye on this group.
Source / WITHIN
- Pure-Play eCommerce: This category refers to digital brands that do not have a brick-and-mortar presence. Similar to omnichannel, we see a clear downturn in performance across the board with users buying a bit less frequently and spending less overall per order but I see a potential for recovery here—time will tell.
Source / WITHIN
Subscription Services: As some sectors go down, others must go up. In the immediacy of the COVID economy, we see subscription brands experiencing significant lifts not only in customer purchasing behavior, but spending per orders to boot. It’s fair to assume that consumers view this service as an existing extension of their new reality.
Consumable and CPG products are likely seeing the greatest upticks here. What remains unknown is if there was a run early on in the crisis and we’ve now plateaued—or perhaps there’s a supply issue behind these numbers. In either case, as the x-axis grows the demand variable will reveal itself.
Source / WITHIN
Changes to Retail and Consumer Behavior
These trends and behaviors will be the new norm (if they aren’t already):
- Visits to physical locations will decline dramatically (or cease entirely) matched with an increase in online shopping
- Consumers are stocking up on essentials wherever possible with a strong preference for online ordering
- Significant increases in social browsing, streaming activity, and overall device usage
- Consumers are “window shopping” while quarantined at home
- Major shifts in consumer discretionary spending will be felt across categories, verticals, and business models
Immediate Steps to Take
No matter what happens—before you do anything else—consider these immediate actions:
- Craft an email communication to your global customer list to drive awareness and convey empathy
- Implement a simple storefront message in your announcement bar or on the homepage to drive awareness, education, and reduce shopping uncertainties
- Launch a dedicated COVID-19 education page on your storefront that is linked from the homepage or global header; the content should be more comprehensive than previous outbound messaging; example content might include product availability, processing times, shipping information, etc.
- Pause planned campaigns and embrace a period to reflect or perform a 360 on social media strategy; we’re entering a period where knowing when to stay silent is just as important as knowing what to post and when
- Consider sharing social messaging to drive awareness and reassurances; pin these messages to feeds for improved visibility
Examples of On-Site Messaging
Crafting the right copy for your brand can be a challenge; how you implement it on-site doesn’t have to be. See below for a few simple examples of how you can cover your bases.
Source / UNTUCKit
Home Page Messaging:
Source / NOBULL
Dedicated COVID-19 Page:
Source / EVERLANE
Once you’ve completed the above, you’ve bought yourself time to consider an actual roadmap.
Preparing For Ongoing Challenges
Now that we have a better understanding of impacts to consumer behavior, we’re better equipped to consider how a brand might want to think about its own behavior.
As a brand, here are some strategies to consider:
- Adopt a stronger tone of empathy as part of your brand voice
- Avoid being seen as opportunistic at all cost
- Shift a percentage of budget from conversion-based campaigns to brand awareness channels and brand or product education-focused campaigns
- Adopt a heightened awareness; news and attitudes are changing every hour so there’s a need to be extra agile in messaging
- Craft stories around consumer reassurance rather than product messaging; utilize poll ads to understand consumer’s needs and preferences
- Invest in higher funnel tactics such as Connected TV, YouTube, etc. to increase awareness as consumers may not be ready to purchase but are streaming more media while under quarantine
- Showcase how your brand is helping employees navigate challenges as well as providing any support to the general public, common good, etc.
- Train customer service teams and constantly monitor and act upon customers’ feedback
Storefront Strategies & Tactics
Assuming you’ve got your core messaging nailed down and taken the first few steps outlined above, it’s time to plan for and prioritize the next few weeks or months of your eCommerce backlog to reduce the FUDs (fears, uncertainties, and doubts) that users will be entering with. Try to shift users from concerned to assured using some of the concepts below:
- Add a homepage block or global header message that links to a dedicated COVID-19 education page (just making sure you’ve done this!)
- Add a CEO’s personal note or video to the storefront
- Lean on strategies that make conversion easier based on new circumstances, e.g. shift discounts on products to discounts on (expedited) shipping
- Focus on digital experiences that can emulate in-person and retail store experiences
- Launch sales and promotions where possible as consumers adopt a conservative approach to budgeting
- Expand the return window for all purchases beyond the typical 14 to 30 days
- Revise value propositions as necessary to focus more on safety and convenience; consider moving messaging to areas deeper in the purchase funnel and closer to key interaction points (add-to-cart and checkout)
- Consider adding a delivery estimation feature to cart and checkout to help customers gain back a sense of control (“I know when this will arrive”)
- If you have a wholesale vertical, consider promoting stores that offer local delivery of product on-site in the purchase funnel
- Adopt proactive and preventative strategies around merchandising, content, and logistics (can be applied everywhere)
- Add a chatbot to better communicate with new and returning users
- If supply chains impact product availability, have a plan to shift merchandising on-site at a moments notice so as to not disrupt shopping behaviors
- If product availability, demand, or brand focus shifts rapidly, have backup campaigns and tactics ready to replace current content and copy
- If fulfillment disruption occurs (eg. USPS stops delivering), have a backup domestic shipping service along with a transition plan
- Be ready to switch to another carrier which means confirming proper connections and settings are in place now (i.e. if USPS goes down it’s a quick switch and charging for shipping to cover costs); consider DHL as a 3rd option
- Perform market research and data analysis to help your business react to emerging trends and evolving customer needs
We in the midst of a period of challenges and recurring unknowns. The best path forward will greatly depend on your industry, your audience, and the decision-making framework you adopt. If you find yourself with new questions each day, remember that you are not alone.
You know your customers better than anyone; ultimately they’re trying their best to adapt to an ever-evolving new normal without a lot of certainty and a desire to keep things as familiar as possible. That feeling is driving much of the shifting behavior we’ve witnessed and will continue to see.
My best recommendation? Treat them like family, and make sure you’re offering not just what they want, but what they need.
The recommendations within this article were a collaborative effort of the strategy group at BVA.
Dax Young is the Associate Director of eCommerce Strategy at BVA and carries years of experience helping Shopify Plus merchants reach success.
This article originally appeared in the BVAccel blog and has been published here with permission.