2020 wasn’t a great year for most things, but it was a fantastic one for ecommerce. As a pandemic gripped the nation, consumers turned to online shopping to fulfill every need, from groceries to apparel to entertainment. Nearly every category of consumer packaged goods saw a surge in online demand.
But not all online brands benefited from the changes in consumer behavior this year. A lot of that money flowed to the deep pockets of behemoths like Amazon and Walmart. Many smaller direct to consumer (DTC) companies struggled due to supply-chain issues, a decline in consumer confidence, and dramatic changes in consumer buying habits. Rent the Runway, was forced to completely overhaul their offerings when demand for their fashion-based subscription boxes evaporated during the lockdown.
The DTC brands that thrived in 2020 are the ones that quickly adapted their marketing efforts to “the new normal.” They leaned into 2020’s curveballs and invested heavily in building and leveraging trust and community.
Anomalie Grows by 25% Despite a Canceled Wedding Season
2020 has been a devastating year for the wedding industry, with cascading cancellations affecting everything from venues to photographers to apparel. But amid the carnage, bespoke wedding-dress brand Anomalie grew using word of mouth and a generous refund policy to build trust among potential new customers.
Anomalie, a company focused on disrupting the wedding industrial complex, was uniquely poised to profit in 2020. They offered a way to design and purchase the perfect wedding dress entirely online, from consultations to fittings. Perfect for a socially distanced 2020.
But it wasn’t enough to present themselves as an alternative to in-person dress-shopping. Wedding dresses are a huge expense and a pivotal part of a bride’s special day, so the upstart brand had to build trust with their prospective clientele.
They offered customers a 1.5x refund if the company didn’t deliver the bride’s gown one month before the wedding date. This offer helped alleviate some of the supply-chain fears that plagued were plaguing other retailers.
Alongside this guarantee, they used content marketing tactics to target consumers sourcing a wedding dress during a pandemic. This shareable content, coupled with heavy Instagram and Pinterest campaigns and a generous referral program, all helped generate word-of-mouth buzz for the brand.
image source: https://www.dressanomalie.com/referral/sign_up
Anomalie’s unique business model and trust-building efforts paid off. Despite the marked decrease in weddings in 2020, the company saw record sales. Consultant sign-ups have increased by 25% since the start of the pandemic.
HelloFresh Maintains Market Dominance by Staying Front of Mind
HelloFresh spent years battling to become the leading DTC meal kit company. Their past investment in a “be everywhere” marketing strategy meant that the brand was already front of mind when consumer trends shifted.
As lockdown loomed this past spring, the demand for home-cooked meals surged. Pre-pandemic, the average family cooked at home four times a week. That number is now closer to seven.
This new emphasis on home-cooking was great for pre-packaged meal kit sales across the board but especially great for HelloFresh. They had already spent years building brand recognition for likely customers via influencer marketing, mailers, podcast ads, and more. At certain points they poured more than one-third of their revenue into consumer outreach. The company has a robust affiliate program and frequently distributes discount codes that allow consumers to try a free box.
As a result, HelloFresh didn’t have to extend much effort to take advantage of the pandemic surge. Previous customers and those who had trialed HelloFresh in the past were primed to turn to a brand they knew and trusted.
During the pandemic, HelloFresh continued to market to potential customers using their tried-and-true methods. They also did some outreach via their #HelloAtHome video series, where HelloFresh staff members cooked alongside customers.
The pandemic meal kit surge has only bolstered HelloFresh’s market position. While other meal kit services like Blue Apron and Purple Carrot are experiencing increased demand, HelloFresh is surging faster and stronger than the rest. Active customers are up 73% year-over-year, and orders were up over 100% as of June.
Brooklinen Doubles Down on Targeted Marketing to Increase Engagement
Like HelloFresh, luxury-sheet purveyor Brooklinen entered 2020 from a position of strength. They maintained their advantage by pivoting their strategy early on in the pandemic to double down on their historically proven marketing tactics.
2020 was supposed to be a year of change for Brooklinen. In 2019, they raised $50 million with the intention of opening a series of brick-and-mortar stores. After years of targeted online consumer outreach, they planned to expand their market with traditional television ad buys.
Then COVID-19 reared its ugly head and forced the company to reassess their plans. They scrapped the retail projects, as well as their TV advertising efforts. In its place, they returned to their DTC marketing roots: data-driven marketing based on email marketing, referrals, and targeted promo codes.
The company leaned harder into personalization to maintain and engage their existing customer base. Instead of email blasts, they sent targeted, personalized emails to consumers, triggered by external events, like birthdays, and internal events, like abandoned carts.
The result was a 90% increase in email engagement and 12 times more revenue generated per triggered email versus a generic blast. Brooklinen avoided a financial hit this year, and next year they will be in a better position to move forward with their brick-and-mortar retail plans.
Imperfect Foods’ Focus on Existing Customers Inspires Loyalty and Profits
While Imperfect Foods could have used the pandemic to bloat their system with thousands of new customers, they instead focused on sustainable growth. This decision led to a more loyal, stable user base and a healthy Series C funding round.
With restaurants closed or at limited capacity, 2020 saw a 37% spike in online grocery shopping. While much of that went to traditional grocery stores, a greater interest in health and wellness also increased organic food sales. Imperfect Foods, a grocery subscription box specializing in organic produce, was perfectly poised to profit.
The brand intended for 2020 to be a year of acquisition. But as the pandemic sent them a massive influx of new customers all at once, the company found itself at a crossroads: They could stretch their resources to take on as many new customers as possible, or they could limit customer onboarding and focus on retaining customers and scaling up the company’s infrastructure.
Imperfect Foods took the latter route. They created a waitlist for new customers (a concept that was be been unthinkable only a year prior) and focused on fortifying their supply chain. They could source more food and grow at a more sustainable pace, thereby ensuring that no customers were left without food.
The focus on quality services during a trying time boosted customer loyalty and potential evangelism. When the company was ready to grow, their customers did the acquisition for them through a robust referral program and Christmas gift basket program.
With their supply chain secured, Imperfect Foods is incentivizing customer referrals via an ambassador program. Top ambassadors receive prizes and recognition on the website.
Imperfect Foods is on track to deliver 200 million pounds of food in 2020. Although they focused on slow growth, they still saw a 40% increase in their active user base this year. Their robust customer base was a significant selling point to investors: The company raised $72 mil in Series C funding in May.
Winc Builds Community to Leverage a Spike in Membership
Winc, a personalized wine club, saw its membership numbers rocket in March, thanks to soaring wine sales. Instead of trying to attract more sign-ups via advertising, they shifted to building community. Their goal was to make sure that customers stuck around even after they had the option of purchasing wine in stores again.
Winc experienced 42,000 new sign-ups in March alone. Their challenge wasn’t attracting customers but inspiring loyalty once the pandemic’s emergency alcohol stockpiling phase passed.
The company focused on community building through virtual wine-tasting events. Participants all purchased the same wines and then attended a virtual event, during which a sommelier walked them through the wines. Winc also hosted Lost Poet Wine Readings. Both types of events had the same goal: to encourage customers to sign up for Winc’s monthly subscription service.
Winc also doubled down on referral programs. Studies have shown that referred customers have a 37% higher retention rate and an 18% lower churn rate than customers acquired in other ways. With Winc’s referral program, customers get two free bottles of wine for signing up a friend.
The jury is still out on whether customers will stick around postpandemic, but the numbers look good. Winc has had a 578% increase in new member sign-ups week-over-week and more than a 100% increase in average order size.
To Survive, Direct to Consumer Companies Need to Focus on Customer Experience
The pandemic won’t last forever (thankfully). But even after the world returns to “normal,” consumers’ buying habits, priorities, and shopping expectations will remain. COVID-19 has forever changed the future of retail.
To weather the maelstrom of changing customer demands, brands need to build an impeccable reputation for delighting customers. The fastest way to do that is leverage your customer base by turning them into ambassadors for your brand via loyalty and referral programs.