Increasing Drop Frequency in DTC Fashion E-Commerce 2022: Fewer Constraints, Better Inventory Control, and Greater Engagement

With the surge of DTC e-commerce, rising to the challenges of a new “fast but responsible” approach to getting their goods in consumers’ hands.

This makes particular sense with respect to DNVB (“digitally native vertical brands”) that have taken up a commitment to greater personalization, deeper and more meaningful connections with customers, and transparency and sustainability as hallmarks of their conduct.

And of course, such brands are not alone in adopting higher drop rates to address inventory issues, the desire for quick-change stylistic freshness, and consumer expectations for sustainability and visible brand responsibility.

“Fast and responsible” – a serious undertaking in marketing and brand integrity

Clearly, consumer expectations have been changing with respect to stylistic refreshes, with buyers looking to stay as close to the leading edge as possible without having to wait on uncertain seasonal drops and current supply chain issues that have plagued the industry.

Those expectations are making increased drop frequency not merely strategically sound, but necessary from the perspective of proactive brands.

The goal: to be able to market and sell continuously, with less dependence on seasonal promotions, pre-COVID inventory practices, and slow refresh cycles.

In fact, it’s safe to say that the fashion industry’s desire to create evolving trends and extend shopper engagement, and buyers’ desire for a less disjointed and more “certain” stylistic flow, have fed each other. The result is a move toward a more seamless, less seasonal, and potentially continuous relationship between brands and retailers on one hand, and shoppers on the other.

However, there’s more to it. This isn’t just a cherry-picked goal that’s disconnected from the nature and quality of brand or retailer conduct and practice. It’s now no longer separable from greater visible commitments to sustainability, honesty, and personalization in developing ongoing relationships with consumers.

Speed and seamlessness and an evolutionary approach to shaping fashion trends are great brand attributes, especially for DNVB and hybrid enterprises. So is “practical responsibility,” which includes things like refreshing styles and manipulating inventory to sell out more frequently, thereby minimizing waste and overstock issues.

But the events of the last two years have caused a real sea-change in public expectations for brand integrity and actual accountability. In fact, it’s been suggested that the pandemic alone is responsible for packing five years’ worth of development into a single year and pushing DTC to the forefront.

More rationale for fast but responsible in DTC e-commerce fashion

DTC isn’t just a generic business model in which, with minimal tweaking, one size fits all. It’s no longer limited to DNVB, or to entities that take a digital-first approach.

It’s both a business strategy and a channel strategy, as witness the behavior of DTC businesses that have gone public. They’ve maintained their direct-to-consumer online channels, but have moved toward partnering or omnichannel thinking rooted in their DTC experience.

And the digital and social ecosystems that have driven growth in DTC are helping to serve the needs of brands looking to take advantage of increased drop frequency.

There’s more. The eagerness of DTC entities to move to accelerated drops isn’t driven only by practical business considerations of inventory control and more regularized selling that’s less cyclical.

Consider:

• There’s reason to anticipate that the global value of e-commerce fashion will grow to a trillion dollars by 2025. It’s currently close to $760 billion, so the pie is already huge. DTC wants to increase its share, and is uniquely positioned to do exactly that. The more – and the more continuously – DTC brands and vendors can sell, the greater their share will be. Clever brands, like Gymshark, are using a negative cash conversion cycle to their benefit in achieving their goal.  Take note: the fact that Gymshark makes this work doesn’t mean that other DTC businesses should necessarily rush to emulate it...
• Yieldify confirms that the demand for fashion that’s both affordable and sustainable will continue to grow, and that consumers are increasingly interested in “seasonless” buying to get the best products at the best prices year-round. The same thinking extends to luxury brands and their consumers, with Gucci and Saint Laurent leaving traditional fashion-calendar schedules behind.For luxury brands, there’s an opportunity to enhance collection longevity, strengthen brand loyalty, and satisfy buyers who would like new purchases to remain “in” beyond the span of a single artificially defined season.
• All brands should be looking for better ways to address potential threats to brand loyalty. These may include a failure to meet buyer expectations that brands will use sustainable materials they’ve sourced ethically and transparently, and increases in product saturation levels in a market. Drop frequency, inventory control, and planned style shifts give them mechanisms to address these concerns in an orderly and continuous manner, with a visible emphasis on proactivity, rather than reactivity.

Increase the frequency but limit the drops?

There are brands currently taking exactly this approach in handling new drops, based on the idea that limiting the stock available for a specific new or promotional drop creates a perception of scarcity and urgency in consumers’ minds.

It’s working, and not only for online drops.

Shoppers see a drop item as either limited in quantity (when they’re sold out, that’s it), or limited as to availability because of deliberately imposed time limits for purchase. In neither case is there a guarantee that a drop item will be restocked.

If a vendor or brand has been careful to set the drop in the context of a personal connection to the shopper and/or an ongoing brand story, buyer excitement ramps up even more.

The result is usually that the new drop sells out almost immediately, with shoppers showing a whole new level of enthusiasm for participation in the process.

Brands and retailers love this because it lets them capitalize on the psychological response almost everyone has when confronted with scarcity or lack of availability: “fear of missing out,” or FOMO. It becomes a key factor driving sales, even to buyers who lack a strong interest in the dropped item.

In addition, brands get to modify – okay, simplify – their inventory management and estimating procedures. If you’re a brand and you’re handling drops correctly, you order less, sell more, get better data for future projections, and avoid overstocking and wastage. You also get to create an exclusive buying community and give drop buyers a heightened sense of brand participation.

Customers are increasingly reachable directly through social media, and may even buy missed drop items at inflated prices after the fact if that’s the only way to reduce their FOMO.

What’s not to like?

A Shopper-Centric Systemic Approach

If you’re looking for examples of brands who are using limited drops at greater frequency effectively, there are some great ones to consider, including Supreme, KITH, Zara, and others.

They share in common a focus on their consumers’ needs and interests, and growing attention to their target audience’s evolving expectations for the brand. Greater engagement, consistent transparency, commitments to both sustainability and affordability (relative to target consumers), and evolving strategies to improve personalization – all are now parts of the “fast but responsible” equation that increased drops help to address.

These considerations aren’t add-ons after the fact. Instead, they’re integral to a brand’s content strategy and marketing tactics. To the extent that increased drop rates form a key part of brand strategy, they’ll be with us – and they’ll be increasingly useful and successful – for the long term.

For practical purposes, this means that the brands and retailers who will be most successful with increased drops in retail fashion are those whose strategies embody a systemic shopper-centric approach that combines practicality and altruism.

The last word…

At Purple Dot, we know something about helping clients implement seamless drops at whatever frequency they desire. If you’d like to know more, get in touch.

Talk soon.

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