Digital River CEO: Branding Will Drive Holiday Success

For retailers, the beginning of November would normally be the ramp-up to the holiday season. It used to be a time to check inventory, optimize media campaigns and revisit strategies for Thanksgiving weekend.

Not this year.

Retailers have been trying to pull the holidays forward for months, and whether or not they’re doing so remains to be seen. Black Friday, rather than being a kickoff to the season, is almost an afterthought of retail brands creating their own selling holidays.

One things is for certain: This year’s holiday season will be digital-first – and for many companies, it will be digital-only. It’s that second group that seem to be in the best position, as the pandemic looks poised for yet another wave and consumers reconsider nonessential trips. PYMNTS research certainly shows that consumers will spend more online, but will fall short of spending more on the holiday in total.

Other estimates have placed holiday 2020 in the “slight increase over 2019” category. The latest entries are typically mixed. Gallup says spending on gifts will drop 14.5 percent this season, and that 28 percent of Americans expect to spend less on gifts than last year. However, Wells Fargo predicts that holiday spending will rise by 9 percent, the biggest year-over-year jump on record.

“A forced thrift that has curtailed spending in the service sector and canceled travel plans frees up income for more spending on gifts,” Wells Fargo said in a note. “After the anxiety and stress of a year defined by the virus, natural disasters and a divisive election, we suspect holiday sales will also benefit from a yearning for comfort and normalcy.”

One of the executives in the best position to case the holiday is Digital River CEO Adam Coyle. He serves as “the man behind the curtain,” running all the infrastructure needed for some of the industry’s biggest players. According to Coyle, the “Black Friday mentality” has been removed from this year’s holiday, replaced by a series of brand-specific events, and he sees that as a solid strategy in a year that desperately needs one.

“I think you’re going to see brands try and create their own noise in the marketplace rather than being sort of a ‘me too’ on Black Friday,” Coyle said. “Everybody’s looking at what Amazon was able to achieve with Prime Day, and they want to create their own excitement. I think that mentality is trickling down, even to brands that don’t have the market share or the brand recognition that somebody like Amazon has.”

One of Digital River’s brands, a high-end audio microphone and headphone manufacturer, Sennheiser, has had success so far by bundling some of its product for its professional customers and the shoppers who are gifting them. It’s an example of what Coyle said is the importance of retail and direct-to-consumer (D2C) brands to define their own presence. Even if they can’t get play at the scale of an Amazon or Target, it’s worth spending the capital to grow existing customers and find new ones.

But other brands do have the scale to play big on the D2C stage, and Coyle likes what he sees on that front.

“Brands are realizing that even if they already had a direct customer channel, COVID has created a permanent shipping channel,” he said. “Consumers in some cases have come to the direct channel for the first time and they will return, you can bet on that. Maybe not exclusively, but they’re going to return. And that means the brands need to invest in that channel, whether it’s Pepsi or a toilet paper manufacturer or someone in the consumer electronics space. They’re all realizing that their consumers have permanently shifted, and that they need to invest accordingly.”

Payments and payment systems are among Digital River’s core competencies. For eCommerce companies, that means payment methods, but it also means reconciliation, settlement, payment capture, recurring and nonrecurring payments, and more. Coyle said brands need to be equipped with the right billing optimization toolkit — including strategies like dynamic transaction routing and machine learning — if they want to boost authorization rates, increase engagement and optimize revenue in the long run.

“Our solution is to basically enable all of that through a single integration,” he explained. “So rather than having, say, five- to seven-point integrations with one or more payment providers, we have one. And rather than having several regulatory compliance providers or shipping providers, we have one integration that basically covers everything that happens after hitting the ‘buy’ button on that website. Our approach is to focus on the things that really differentiate the brand and define the consumer experience.”

And while he won’t take any specific guesses at the size and shape of holiday 2020, Coyle comes back to the importance of brand and the customer experience.

“I would say the most important thing is for brands to manage and get control of their inventory, wherever it may be,” he said. “That has been a big challenge through COVID. Brands that haven’t invested in treating their stores like warehouses, so they can access that inventory and seamlessly sell it across channels, really need to do that. And I think that coming out of COVID, we’ll see a lot of investment in that. And longer-term, it’s important to focus on the consumer experience, because that’s what’s going to bring them back.”

Above all, Coyle believes that brands need to ask themselves these key questions: “How do you want to be perceived in the marketplace? What do you want your brand value proposition to be? I don’t think companies can spend too much on that.”