How are DTC Brands Surviving Inflation?
DTC brands are those that directly sell their products to consumers. They don’t use the traditional distribution channels of distributors, wholesalers, and retailers.
The direct-to-consumer model is also known as B2C (business-to-consumer), C2C (customer-to-customer), DTC (direct to consumer) and eCommerce.
The best way for DTC brands to survive inflation is by being transparent with customers about pricing, costs, and margins. Brands should be clear on what they’re selling and how much profit they’re making on each item.
Inflation can be good news for some companies that have a large product margin or are able to raise prices without losing customers, but it’s not all positive news for everyone. Inflation means that people will have less money in their pockets and might have less disposable income available to spend on luxury items such as shoes and handbags.
Could Raising Prices be the Solution?
Raising prices can feel like an easy solution to the problem of rising costs. But it’s not a long-term solution because it alienates customers and makes them less likely to shop again.
What’s more, when prices are raised, people start buying less of a product, especially if they have other options available to them, which is usually the case. And when people buy less of a product, it becomes harder to turn a profit or even stay in business.
Prices should be raised gradually over time so that customers won’t notice any significant increases right away because when the cost of living goes up and the price of goods increases, people look for alternatives. Brands that offer products that are cheaper and deliver more value are a good option.
As the economy becomes more competitive, the demand for products that help consumers save money increases. This is where brands such as Dollar Shave Club and Birchbox come in. These brands have created strong brands by offering affordable products at a high-quality level.
Why Inflation must be Addressed
Inflation is a hot topic among economists and politicians. It’s also a real concern for every business owner and consumer.
As the cost of goods, services, and labor increases, companies become more challenging to maintain profit margins.
When inflation spikes, especially in the aftermath of an economic crisis like the 2008 housing market crash and subsequent recession, many companies are forced to close their doors.
However, there are some brands that have managed to survive through these tough times. Here’s how they’ve done it:
- The first step in surviving inflation is simply raising prices. Unfortunately, this isn’t as easy as it sounds because consumers don’t always react favorably when they see higher prices on shelves or in online stores.
- Increase only a few products at once especially those with high margins while keeping others at current levels until they can be raised later.
Inflation and the rising cost of goods and services are among the biggest challenges for businesses today. It’s a problem that can affect any business whether it’s a small home-based business or a large corporation with multiple locations.
Co-CEO at 5W Public Relations, Dara Busch oversees 5W’s Consumer PR Practice, which includes Travel & Entertainment, Apparel & Accessories, Non-Profits, Home & Housewares, Health & Wellness, Mom & Baby, Beauty & Grooming, and Consumer Packaged Goods.