Last month, Fruit of the Loom, a stalwart of the mass-market wholesale industry, stunningly announced that it was releasing a new direct-to-consumer line to be sold online only. Such a drastic departure from Fruit of the Loom's traditional model serves to underscore what's becoming undeniable in the evolving retail landscape: brands must make bold digital moves if they hope to keep up. More specifically, brands are using digital channels for margin-saving direct-to-consumer plays as a means of boosting revenue. Coming in the wake of Sears’ bankruptcy and possible liquidation, it's not surprising that wholesale brands that have relied on now-embattled mass market physical retailers like Sears and Kmart are looking for digital alternatives. Heading into the holiday season, we should expect to see an increasing number of predominantly wholesale and brick-and-mortar brands leveraging digital channels to make more direct sales.
Fruit of the Loom’s announcement highlights some of the biggest emerging opportunities for traditional retail companies. With the ascent of digital sales channels, the longtime walls between wholesale and retail have thinned. It's easier than ever for brands that already control most of their supply chain to take over the entire sales process. Fruit of the Loom plans to sell the new line on its own website as well as on Amazon.com, making the bet that the increased margins will offset the cost needed to drive sufficient traffic to a standalone site. Selling online allows brands to enter new markets and target different customer demographics without the risks and costs involved in establishing a physical presence or seeking new wholesale relationships.
Numerous large wholesale and predominantly brick-and-mortar brands have been making similar bets to Fruit of the Loom, using innovative digital strategies to sell directly to consumers. Like Fruit of the Loom, many are creating web-only lines or selling via Amazon. Other brands, like Nike and Saks Fifth Avenue, have invested in chat channels like Facebook Messenger as a key sales driver. Saks launched a Holiday Gift Guide bot on Messenger to make smart gift recommendations and enable checkout directly from a mobile window opened in Messenger. Brands are using chat applications (e.g., Facebook Messenger, WhatsApp) to interact with, assist, market to and deepen relationships with their prospects and customers, and to send abandoned cart reminders, sale alerts and personalized product recommendations.
Nike has notably shifted its focus in recent years to its direct-to-consumer business, launching a multitude of websites and apps intended to offer a personalized sales experience. Other traditionally wholesale brands like Champion have used influencer marketing as a means of building up its own brand cache in an effort to boost direct-to-consumer sales.
This move by Fruit of the Loom should also serve as yet another warning to retailers that their model is in trouble. As their own suppliers launch direct-to-consumer lines and sell them across a range of standalone sites as well as Amazon — which currently is the starting point for a staggering 49 percent of product searches — it’s unclear that non-Amazon retailers retain any competitive edge. Brands, especially those like Fruit of the Loom producing basic products chosen primarily based on price, must shift their sales and marketing focus to Amazon to compete for the massive sales occurring there. The move by Fruit of the Loom to create a standalone brand and focus the entirety of its sales strategy for it on Amazon and direct e-commerce forecasts a de-emphasis on new wholesale by brands, as well as a strong focus on competing for Amazon and direct e-commerce digital dollars.
Dana Gibber is the co-founder and COO of Headliner Labs, a technology platform for chat marketing, enabling hundreds of retail brands to market to their customers via chat channels.