4 September 2020
Craft Beer Craziness
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Image Credits: Beavertown Brewery, Nike, Babe
Is it just me, or does the start of lockdown feel like a lifetime ago?
The world certainly hasn’t improved since the relaxation of lockdown measures – COVID-19 remains
Somehow, I don’t think anyone will be looking back at 2020 through rose-tinted glasses.
Anyway, I digress. Moving on from the general state of the world, I want to talk about the positive impact of lockdown (yes, you read that right). Namely, how several brands were able to modify their approach, and adopted a direct-to-consumer (or DTC) strategy to unlock new opportunities and potential, to ensure they survived the crisis.
So, how will this switch to DTC continue to impact marketing, even when the pandemic becomes a distant memory?
As the name suggests, direct-to-consumer (or DTC) brands are brands that market their products directly to its intended customers, encompassing all parts of the traditional process (from manufacturing to shipping).
The DTC approach has revolutionised retail in recent years. Unlike business-to-consumer (or B2C) retailers, DTC manufacturers sell their products (and their products only) to customers. In contrast, B2C brands would typically enlist the help of other retailers and third parties to get its goods to consumers. Choosing a DTC approach also allows brands and retailers to interact with their intended target audience first hand.
It’s always worth keeping in mind that customers are often faced with several options when it comes to buying a product. So, if you (the retailer) chooses to market a product directly to its target audience, then you are negating the need for a third party. Plus, not only are you providing your customers with an end-to-end experience, but, you’re also retaining control over the entire customer journey, and reducing the likelihood of a customer going elsewhere to buy your products.
Over the past five years or so, DTC brands have gradually infiltrated every aspect of modern life, by finding simple products and overhauling them to suit the modern consumer. You will have heard of many of the pioneering DTC brands – like Dollar Shave Club and Simba Sleep.
Even pre-COVID, DTC brands were redefining retail. And, while some DTC brands came into their own during lockdown, it’s probably no surprise to find out that some big-name brands also had to make the switch to DTC, to stay relevant.
During the height of lockdown, you couldn’t just go out and buy a product – making it the perfect time for DTC brands to try and crack new audiences. Here are some of the brands leading the way…
Nike’s switch to DTC wasn’t unsurprising by any means (lockdown just brought it forward). It reported losses of more than $790m in Q4 after its stores had to close, which forced its hand with the strategy change.
By streamlining operations, (unfortunately) cutting staff and putting more effort into a data-driven customer experience, Nike managed to boost sales by more than 30% during lockdown. And, with digital sales skyrocketing by more than 75% at the height of the pandemic, this change in strategy worked.
And, as part of a more comprehensive strategy overhaul (dubbed the Consumer Direct Acceleration (CDA) strategy), the sporting giant is aiming to “aggressively leverage technology to make Nike better”. These changes include further trimming of its corporate leadership team, and simplifying the customer experience both online and in-store.
However, this strategy change doesn’t mean that Nike is going to ditch its original brick-and-mortar stores for good. In addition to its more aggressive adoption of DTC, Nike’s latest concept store (which was previewed in China last month) aims to revolutionise the personalised shopping journey that connects consumers to sports in real-time. By doing this, it’s fair to assume that the offline experience isn’t completely dead. Even following COVID, there is still (and has been) a very real demand for event-based and experiential experiences.
Customers want every aspect of their journey enhanced – whether it be online or offline. So, with that in mind, it’s no surprise to learn that brands are shutting their traditional, generic stores, in favour of enhancing the offline experience in other ways.
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Beavertown Brewery totally overhauled their marketing to become a DTC brand during lockdown. It may sound harsh, but if it weren’t for this change in direction, then the brand wouldn’t have survived the pandemic – let alone come out of the other side winning.
Before COVID, 85% of Beavertown Brewery’s sales came from pubs, bars, and restaurants. So, when the pubs shut, that source of revenue dried up overnight.
Not only that, but the brewery was planning the launch of Nanobot, its freshest, low-alcohol brew. Beavertown had already forged distribution deals with Sainsbury’s (which would stock Nanobot in-stores) and Fuller’s (which would serve it in its pubs). So, when the pandemic interfered with Nanobot’s launch, the show still had to go on.
Thankfully, due to significant investment in its physical and digital infrastructure, Beavertown was able to weather the storm, and make Nanobot’s launch a success. By swapping kegs for cans, and increasing the number of staff working online from two to eight, the brewery was able to slowly improve online sales, until the new brew’s launch.
So, when it was released, Nanobot’s launch was one of the brewery’s most successful to date, generating over £25,000 in revenue in just over twenty-four hours, and accounting for a sales increase of over 1000%.
And, even though Beavertown has survived the “worst” of the pandemic, it’s planning on keeping the DTC focus – with future plans including a subscription model, or craft beer club, to ensure it continues appealing to the community forged during the pandemic.
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Babe is a canned wine brand, and, unlike Nike or Beavertown Brewery, was already a DTC brand before the pandemic and lockdown.
At the beginning of lockdown, to reflect the mood of the time, Babe launched its ‘Cancel 2020’ campaign, and utilised DTC to capitalise on its consumer-savvy, social-first strategy, which saw the brand give away over $1m worth of wine to those who needed cheering up.
While the DTC infrastructure was already there, Babe’s problem came from poor customer experience. Thanks to the increased focus on social, Babe saw a 182% increase in web traffic throughout lockdown, and sales increased sevenfold. Plus, Babe also has a repeat purchase rate of 49% (which is remarkable, when compared to the industry average of 25-35%).
To put it simply, this strategy kept sales fizzing all the way through lockdown.
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Of course, there has to be a balance. For many brands, choosing to adopt a DTC strategy during lockdown has paid off for many reasons – from increased sales to bolstering brand awareness.
It’s simple, choosing to incorporate DTC into your brand’s broader marketing strategy will remain an essential part of the omnichannel experience long after the pandemic ends – but will this be out of necessity, or laziness?
For example, a product subscription service would have been necessary during lockdown because the shop you usually bought it from had to close. Now that the shop has reopened, will you continue with the subscription service, or will you cancel it, knowing that you can get it in-store once again?
Choosing to invest in DTC was a gamble that paid off for many brands – but if they want to continue riding this wave of good fortune, they need to be smart. The worst thing a DTC brand could do is be complacent – just because the custom was there during lockdown, doesn’t mean it’s going to come back now restrictions are relaxed.
It may sound cliché, but when the pandemic meant that we had to stay physically apart, the work of new and established DTC brands (like Beavertown Brewery and Babe) helped ensure that their customer relationships didn’t necessarily suffer. To survive something as catastrophic as lockdown, brands had to radically change their approach – to become more human, and bring their communities together.
As we (hopefully) head towards the end of the pandemic, all that many brands can do is continue to support these communities, to ensure that they come out of this year more robust than anticipated, and ready to face a crisis like COVID-19 again – if it happens.
And, in the end, lockdown allowed many DTC brands to thrive, and not just survive – which is pretty extraordinary, when you think about it.
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