Top 5 Challenges for DTC brands in 2024 🧩

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📆 Friday, 3rd November 2023

Hi, and welcome back to Growth Espresso - your one-stop destination for 👏 everything 👏 DTC growth.

A quick note before we start with today’s edition -

Edition #20 of Growth Espresso (sent last Friday) was taken from Eli Weiss’ newsletter and we duly apologise for the missing credit to Eli. Eli is one of the top creators in the DTC space and is one of the top sources for many DTC leaders to keep up with the latest trends and happenings in the industry. Do check them out -

Today, we've got our eyes on the horizon and are ready to dive into the emerging challenges for DTC brands in 2024❓️ 

With lowering returns on ad spends to shifting the landscape towards omnichannel - DTC professionals have found themselves navigating through a series of complex problems in the past year. As we inch closer towards the dawn of the new year, some of these problems will continue to stay and others, not so much.

Bring up, the Top 5 Challenges for DTC brands in 2024 🧩 

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💸 Managing ad spends

As DTC brands grow, their advertising spending tends to increase dramatically, costs that eat into their overall e-commerce revenue. There are a range of factors that contribute to these rising advertising expenses, such as the growing cost of social media adverts.

To keep things under check, DTC marketers have to think about optimising their existing channels while ensuring a high LTV at the same time.

Here are some articles which will help you -

🤖 Integration of AI

Not much of a challenge, as it is a result of the changing landscape, DTC brands are competing fiercely to integrate AI into their day-to-day processes.

According to Statista report, 84% of eCommerce businesses are adopting AI to skyrocket their brands.

Be it personalisation, customer support, and supply chain optimisation - AI and especially, generative AI has opened up a lot of opportunities for the DTC brands to make their businesses more scalable. Some of the use cases where AI is already delivering very strong value:

1. Increase in voice-enabled shopping and voice search

2. Increased adoption of AI chatbots

3. Increased use of real-time data analytics

4. Personalization throughout the customer journey

5. Using generative AI in e-commerce

For more on this topic, you can follow this blog

🤝 Customer Support

An individual who shopped in a traditional retail setting would visit a retailer or an e-commerce marketplace and choose their product from a variety of brands on offer. As a brand, you would not be notified when the purchase was made, but at a specified time interval. Additionally, you would not be able to identify the customer who purchased the product. Retailers and customers have a relationship.

DTC is a bit different. It is unlikely that your customers will contact Walmart, Target, or Amazon if there is an issue with your product. Instead, they will contact your company directly. Returns and refunds are also included. As a result, there are more customer service requests and more pressure on the team.

Going forward, DTC brands are adopting several measures for good CX such as:

1. Maintaining a strong knowledge base + FAQ section

2. Having automated chatbots trained on customer data

♻️ Sustainability Matters

This Forbes research reveals that consumers across all generations—from Baby Boomers to Gen Z—are now willing to spend more for sustainable products with nearly 90% of Gen X consumers saying that they would be willing to spend an extra 10% or more for sustainable products.

With this shift in consumer trends and increased consciousness around climate and sustainability, DTC brands are adopting various measures like lowering return rate, improving supply chain, and more to reduce their carbon footprint.

You can check our in-depth article on this topic -

🚚 Supply Chain Transformation

According to a survey by Locus Robotics, 52% of eCommerce consumers expect their orders to be delivered within two days, while 18% expect same-day delivery. To meet these demands, DTC brands must have a solid #logistics infrastructure that optimises fulfilment operations, minimises costs, and improves visibility into supply chain operations. Some steps you can take in this direction:

1. Streamline Inventory Management

2. Optimise Fulfilment Operations

3. Leverage Technology like WMS and VMS

4. Improve Visibility of your supply chain processes

Let’s wrap up!

2024 holds both opportunities and hurdles for DTC eCommerce brands. Embracing these challenges with a proactive mindset and strategic planning can lead to growth and success. Our goal is to equip you with the knowledge and strategies to thrive in this ever-evolving eCommerce world!