Kelsey Knight has a passion for e-commerce and puts her skills to the test daily as the VP of Global E-commerce of Slumberkins, a children’s brand on a mission to raise the next generation of caring, confident and resilient kids. She leads the charge in any professional setting with her experience analyzing business strategies, building and leading teams and working collaboratively to get things done while reaching financial goals. Kelsey has full P&L ownership of distribution channels, including DTC websites, Amazon and other marketplaces. She has extensive experience with budgeting and forecasting and works cross-functionally to create, plan and implement digital strategies to drive them.
Through this article, Kelsey Knight explores how e-commerce businesses can thrive in a post-pandemic world by focusing on long-term sustainability. Knight shares key strategies, including prioritizing profitability over vanity metrics, optimizing customer retention channels and maintaining internal alignment. She emphasizes the importance of steady, incremental improvements and strong leadership during challenging times.
The industry is buzzing with the idea that the heyday of the Direct-to-Consumer (DTC) brand is over; some even claim that DTC is dead. Terms like omnichannel presence, consumer expectations and retail footprint are re-emerging, suggesting a shift back to pre-pandemic norms. It might seem like the industry is regressing, but I believe it’s simply recalibrating from an unsustainable peak. As with any market, what rises must eventually fall, but is the level at which you normalize in your control? I believe it is, especially if you took control before the pandemic hit.
The Initial Impact of the Pandemic
The pandemic fundamentally altered consumer shopping behaviors, necessitating rapid adaptation by organizations. Retail-dominant stores quickly launched ‘Buy Online Pick-Up In Store’ (BOPIS), while those unable to adapt faced bankruptcy. Brands that gained relevance during this time such as at-home gym equipment, athleisure and grocery delivery services, enjoyed a substantial lift in demand and were able to ride that high for quite some time. However, four years after the world shut down, only some have emerged in a genuinely sustainable position. Let’s examine what was done post-pandemic to sustain a profitable business and what pre-pandemic actions afforded us that outcome.
Key Strategies for Building Resilience
Pre-Pandemic Positioning
In the years before the pandemic, I worked in the collectibles industry, advancing through the ranks of a digital marketing department in a primarily outbound sales-driven business. The role of our DTC brands within the broader business and the industry as a whole was still evolving. However, when tasked with scaling the two brands at the end of 2017, I recognized their potential, given we could establish a solid foundation. In rallying my team around clear objectives, we set out on a 3-year journey to turn around the declining e-commerce business. 2018 and 2019 were critical years of intense focus and fierce prioritization, where our team managed to evolve the business performance of our critical digital channels completely: email marketing, paid social, paid search and organic search. Challenges included 80 percent of our emails landing in spam, CAC misaligned with our six-month LTV, unstable new customer acquisition and unreliable loyalty in a price-sensitive industry. With two brands and an under-resourced team, the task was daunting. Nevertheless, through careful planning and quarterly re-evaluations, we charted a clear path forward.
The results took time to materialize, but persistence paid off. By 2020, not only was the business stable, but it was also beginning to grow. We boldly chose ‘growth’ as our word of the year for 2020, unaware of the pandemic’s role in accelerating that growth.
Capitalizing On Increased Demand
No brand-building efforts could compare to the surge in demand brought about by the pandemic. Historically, times of uncertainty impact precious metals significantly, but this was unprecedented. Gold and silver reached all-time highs, the U.S. Mint produced emergency coinage and new products hit the market rapidly. The groundwork laid before the pandemic was crucial in capitalizing on this opportunity. We improved more than just our marketing channels; we optimized product forecasting, inventory positioning, pricing strategies and internal processes for faster market delivery. This foundational work allowed us to respond to market uncertainties swiftly and effectively. We had the data, business and team alignment to make informed decisions, leading to an 85 percent increase in top-line revenue and a 10-point margin improvement. EBITDA tripled from 2019 to 2020, a testament to both our pre-pandemic efforts and our ability to capitalize on increased demand.
“A leaky marketing engine leads to unsustainable churn. We optimized our customer prospecting and retention channels early to ensure we didn’t unintentionally lose customers on repeat purchases.”
We maintained our guardrails, adjusting spending and staffing judiciously while focusing on rewarding our team and investing in new customers. Motivation from our agency partners, our internal team and our leadership were high because we didn’t completely shake up the business in response to the heightened demand—instead, we doubled down.
The Pandemic Slows – Now What?
As we approached a semblance of normalcy, we contemplated the future. Was the 2020 performance sustainable, or should we brace for a downturn? Adopting a conservative approach, we forecasted for a down year in 2021 while aiming for improvement over 2019. Essentially, we responsibly considered 2020 an outlier and managed the business as if it were the right size. This cautious optimism didn’t stifle our progress. With profitability achieved in 2019, we continued to learn and scale. In 2021, despite the anticipated normalization, revenue grew 19% and EBITDA improved 75% year-over-year.
As we anticipated this normalization of the business, we stayed steady on our initiatives, measuring incremental wins along the way. We leveraged industry-specific opportunities and made significant strides in channel diversification, conversion rate optimization, merchandising and organic awareness. We had established a new ‘steady state’ and projected continued growth into 2022, demonstrating that a sustainable, profitable e-commerce business can emerge even from uncharted territory.
Key Lessons
Despite our impressive results, we faced challenges and made our fair share of mistakes. We learned to meet consumers where they were and to adapt to a fully remote work environment.
The timeless key lessons we learned are:
1. Revenue growth means nothing if you’re not profitable: We had the foresight to prioritize that year prior, so we weren’t tempted to chase topline growth at the expense of profitability. Chase meaningful and sustainable results – not vanity metrics.
2. A leaky marketing engine leads to unsustainable churn: We optimized our customer prospecting and retention channels before the explosive new customer growth. This meant we didn’t unintentionally lose customers on their repeat purchases.
3. Internal alignment can impact your business more than your marketing strategy: We benefited from a supremely unified leadership team during this time. The task was clear in 2017, and the objective didn’t change. Giving our team and business the stability of one goal allowed for internal alignment across the organization and cross-functionally.
4. Prioritize your customers and your people equally. While the business produced results and drove value for our customers, our people reaped the rewards for their hard work. It wasn’t all success all the time—it was really, really hard work on top of an already immensely difficult time. Loyalty when the business is hard derives from strong leadership.
5. Slow, incremental improvements yield better results. The era of ‘move fast and break things’ has passed for DTC. The landscape is changing by the minute thanks to uncontrollable external factors. If you chase every shiny object, you will quickly find yourself on a path to nowhere. Embrace deliberate, goal-oriented progress.
