Member Exclusive   /   December 4, 2020

DTC brands are preparing for nightmare holiday shipping delays and out of stocks

This is the latest installment of the DTC Briefing, a weekly Modern Retail column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. Join Modern Retail+ to get access to the DTC briefing–as well as all articles, research and more.

If someone wants to buy a four-piece set of Caraway cookware to arrive in time for Christmas, it’s already too late.

The next earliest ship date for one of Caraway’s cookware sets is December 20 (the individual items in the set, which are packed and stored separately from the sets, are still available for purchase however, as of press time). “Some products are already sold out for the 2020 year, and only ship after the holiday season,” reads a section on Caraway’s website about “how to get your cookware faster.” The statement goes on: “for products shipping in December, order now to avoid the holiday shipping frenzy and increase the chance of receiving yours in time! First come, first served.”

It’s the cost of doing business in 2020. Despite reporting record sales, direct-to-consumer brands still have a number of logistical headaches to contend with during the busiest shopping season. For starters, some of them have been having trouble securing enough raw materials and inventory all year, and thus won’t have some of their best-selling products in stock in time for the holidays. Second, items are taking longer to ship as warehouses and carriers are having to fulfill and deliver more packages than ever before.

Founders who spoke with Modern Retail said they’ve had to quickly adapt their marketing. In an attempt to get ahead of any negative experiences, they are trying to post as many messages as possible on their websites and social media pages about potential shipping delays. And in some cases, they’re incentivizing customers to order early.

A year of supply chain woes

“Our Instagram isn’t full of memes,” but rather, supply chain updates, Karen Young, founder of shaving and skincare brand Oui the People joked. Last week, Oui the People posted an email that it received from one of the warehouses it works with, to alert customers to potential shipping delays in the weeks ahead.

“We are reaching out to share a very concerning trend we are starting to see in the labor market due to the spiking cases of Covid-19,” the email from the warehouse states. The email goes on to state that as coronavirus cases continue to rise around the country, fewer warehouse employees are showing up for shifts. “In California, for example out of 1,000 people scheduled to start on Monday, we only had 150 that actually started,” the note stated.

Young said that when the warehouse sent that email last week, it was estimating packages might take five days to be shipped out after an order was placed. Conditions have since stabilized, and now it’s taking less than 24 hours to get packages sent out — which is the amount of time it normally takes. But, Young wanted to post the email in hopes that it would still convince people to shop early, and to be sympathetic about any delays.

It’s not the first time Young has had to send out updates encouraging customers to be patient — it’s taken longer than usual this year for the company to get shipments of its razors, which are manufactured in Germany. So much so, that a couple weeks ago, Oui the People added an “in stock now” section to its websites. “[A customer] is not sitting there thinking, ‘oh I wonder if Covid has had an impact on their supply chain, I wonder if they are having trouble getting bottle caps,’ said Young. “It’s up to us to identify and share those issues that we are having with [the customer].”

Still, the supply chain issues haven’t  hampered Oui the People’s growth — Young said that sales are up more than 100% year-over-year.

Preparing to make cutoffs

Now, the biggest issue that DTC startups are going to have to contend with is how to get orders to people in time for Christmas, if the purchase is intending to be a gift. Matthew Hertz, co-founder of logistics consulting firm second Second Marathon, said that he’s advising startups to consider December 11 as the cutoff for when orders need to be placed by, if they want customers to receive it by December 25.  That’s slightly earlier than FedEx and UPS advise — FedEx’s website states that ground orders need to be placed by December 15 in order to be received by December 25, only a day earlier than last year. But, Hertz advises caution because many startups are resource-constrained.

“Many [startups] don’t have sufficient logic in their backend to say hey, ‘we ship from New Jersey, the customer is also in New Jersey, that is a much shorter transit time than that same customer who might be in California,'” said Hertz. “So they create these blanket rules, that the final date for standard shipping is X.”

Young said that right now, Oui the People hasn’t yet given a cutoff date as to when orders need to be placed in order to arrive by Christmas — but it’s offering free sitewide shipping until December 15.

Caraway founder Jordan Nathan told Modern Retail that his brand was “pretty much on backorder” from April to August. But past customer responses to these snafus informed him that long ship times and out-of-stocks probably won’t severely hamper Caraway’s holiday sales. “We’ve seen customer interest in buying as far as six weeks out,” Nathan said. If an item is on backorder or the company is experiencing longer-than-expected wait times,

Caraway tries to communicate that “three or four or five” different times on the website — on the home page, on the customer chat box and on product order pages, Nathan said. And to incentivize people to buy early, Caraway has run some Facebook ads encouraging customers to get on the backorder list before the next shipment sells out. Or, encouraging customers to buy a gift card if the item they want is currently out of stock.

“Being on backorder isn’t always a bad thing,” Nathan said. “With good messaging you can minimize those [negative] impacts.”

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