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How the Direct-to-Consumer Shift Accelerated Overnight

In a WWD-produced webinar, Craig Harris, industry principal, apparel, fashion and accessories at Oracle NetSuite, and Billy Thompson, coinventor and president at Thompson Tee, joined WWD executive editor Arthur Zaczkiewicz in discussing the impact the coronavirus pandemic has had on sales and business operations, a shift to direct-to-consumer models from traditional retail and wholesale businesses and the steps Thompson Tee made to successfully pivot during a disruption.

The coronavirus pandemic has had an impact on every industry, from fashion and beauty to home and grocery. In the fashion industry specifically, major retailers and brands experienced severe repercussions including shuttering doors and manufacturing facilities leading to employee furloughs and some companies even filing for bankruptcy. Early reports found retailers were canceling orders and postponing payments hitting vendors hard.

“We were seeing a significant shift in businesses wanting to be able to upgrade in a direct-to-consumer environment,” Harris said. “That shift was already under way as stay-at-home orders started closing stores and preventing companies from business, and simultaneously, it caused some very big retailers to cancel their wholesale orders, which had a ripple effect.”

During the shutdowns, Harris said, consumer brands that had the ability to execute direct-to-consumer were able to preserve sales and even have upticks in sales. And as big retailers that closed as a result of the pandemic are forced to make the decision not to reopen those companies that relied on wholesale are having to analyze all processes and those brands who did not already have direct-to-consumer capabilities, Harris said, are now having to quickly develop those channels.

Looking back, Thompson said he has felt very fortunate to have adopted a direct-to-consumer model and said it has played a large part in allowing the company to survive the recent crisis. Thompson Tee has operated with a direct-to-consumer model since before the pandemic and has seen great success and higher margins. Having experimented with big-box retailers in the company’s early days, Thompson says the company ultimately found its stride when it adapted its direct connection with consumers.

Still, the pandemic created multiple threats for all companies including challenges with production and warehouse facilities. For Thompson Tee, which is primarily based in Las Vegas and Los Angeles, the pandemic closed offices and a disruption of its supply chain. And like many others, the company saw sales plummet virtually overnight. According to Thompson, the company hit a low point as 80 percent of its business disappeared.

“You’re in a bit of shock because you know, you do all this sort of analysis on your business risk analysis, you look at everything and I don’t know if anybody would have ever planned for a global pandemic to actually wipe your business,” Thompson said. “To get blindsided by this was a very difficult thing.”

A turning point for the company, Thompson said, was the decision to begin creating masks, which coincided with the CDC recommendation that everyone wears masks. For Thompson Tee, that process was able to be put into effect quickly, utilizing an existing abundance of raw material and the company’s existing supply chain based domestically.

The quick pivot saw sales immediately begin to increase once again and prevented warehouses to shut down. To date, Thompson Tee has not needed to furlough any employees. Thompson Tee has also donated more than 30,000 masks to hospitals and organizations around the country that are in need.

Thompson shared that utilizing NetSuite, the cloud-based ERP, was fundamental in its ability to change workflow and refactor Thompson Tee so quickly.

Could-based platforms, like NetSuite, with real-time intelligence, allow companies to stay in tune with what is happening within the business. For many, like Thompson Tee, these platforms are key for agility. “To make changes to be able to get out in front of things and adapt, improvise and overcome, I think is key to survival for really any business big or small,” Harris said. “The ability to pivot relies on an agile business system. And in the apparel business that necessarily involves multiple pieces of software. There’s always elements that need to be brought together, what a lot of businesses find themselves in, is having point solutions that are either poorly integrated or don’t talk to each other at all. That is an inhibitor to any kind of ability to rapidly sort of change the business model.

“Prior to NetSuite, we were on an e-commerce system that was very difficult for us,” Thompson said. “We were really looking for a system that had an omnichannel ability to manage all of our sales channels and not just that but also manage the supply chain down the road material level because that’s so important to for planning cash flow purposes. Having NetSuite and NetSuite’s ability to all the dynamic abilities to cater to our business and work with our business was, you know, was crucial to us.”

“Having a base platform that gives you real-time intelligence on your business is what really empowers and enables the ability to pivot into different sales channels,” Harris said. “Right now, we’re talking about direct consumer wholesale, we probably recovered, and there will be a wholesale business and maybe there’s pop-up stores. Having a platform that allows you to do that it doesn’t inhibit you from doing that. I think is a key value proposition, as other businesses have to figure out, how they can prevent COVID-19 shutdown number two from impacting them as severely as the first shutdown.”

Credit: WWD – Click here to view the article

More related articles: Top 25 DTC Sites: Smaller Brands Thriving OnlineThe Pandemic Is Rewriting the Rules of Retail, and Websites Used to be Secondary to Stores. That Dynamic is Shifting.

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