TALLINN, Estonia--(BUSINESS WIRE)--Katana, a cloud-based inventory and manufacturing platform, today revealed the significant impact of the recession, supply chain challenges and rising material costs on direct-to-consumer (D2C) manufacturing companies during peak holiday sales periods in its new, annual report: “D2C Manufacturing in a Recession.” The findings from Katana's proprietary customer survey highlight the criticality of early demand forecasting, proactive stock management and integrated digital workflows for successful sales surges in 2023. The report combines expert consumer and market research and data from real D2C manufacturers and outlines actionable insights that can support D2C manufacturers as they continue to navigate economic volatility during the holiday season.
Key findings from the survey include:
- The supply chain challenges faced in 2022, stemming from factors like COVID-19 and global economic shifts, will continue to exert significant influence in late 2023. To thrive in this rapidly evolving landscape, businesses must concentrate on fortifying their supply chain resilience and adaptability.
- Businesses of all sizes are bearing the brunt of skyrocketing material costs which will likely continue throughout the second half of 2023. D2C manufacturers are facing significant strains on their profit margins. The report reveals a staggering 57% increase in material costs in 2022, with a quarter of respondents experiencing jumps ranging from 20% to 100%. Notably, the corresponding increase in demand during the 2022 holiday season was a mere 3.8%. Some of the most impacted sectors are also visible in a macroeconomic analysis: food and beverage, apparel, packaging materials and shipping costs.
- Early preparation for peak sales periods emerges as a critical factor in achieving success, with the report showcasing that businesses thriving during sales surges are those effectively forecasting demand and proactively managing materials and products. However, the data show that most D2C manufacturers wait until the last minute to place purchase orders and prepare software, causing unnecessary stress and delays.
- The surge during Black Friday and Cyber Monday, resulting in a 44% increase in daily sales order volume, followed by the subsequent decline during the Winter Holiday period (December 23rd – 27th), which experienced a 56% decrease compared to Q4 2021 levels, highlights a potential shift in consumer behavior or fatigue from the extended shopping season. It also suggests that consumers are motivated by sales and discounts, so to optimize profitability in the future, businesses must effectively navigate these fluctuations by reassessing their sales and marketing strategies, adapting to the evolving sales pattern.
"Direct-to-consumer manufacturers are facing a mountain of challenges right now, from supply chain snarls to soaring material costs, over which they have little control," said Kristjan Vilosius, Founder and CEO, Katana. "These brands should be preparing their seasonal checklist now as staying ahead of the curve is the only way to future-proof your business. By implementing the right measures early, including using up-to-the-minute data needed to plan for success, along with proactive stock management, testing accounting and online sales workflows, and factoring in rising material costs, Katana customers have successfully navigated seasonal sales surges and unpredictability.”
About the report
Katana conducted the analysis which includes more than 1,400 businesses based in North America, comprising direct-to-consumer manufacturers across nine industries, including apparel, sporting goods and toys and food and beverage. Katana’s proprietary data was augmented with expert consumer and market research, alongside up-to-the-minute data sourced directly from D2C manufacturers.
Katana’s cloud manufacturing platform covers the live inventory, production, accounting and reporting features that give businesses the knowledge they need to make the right decisions. Founded in 2017, Katana’s portfolio of more than 1,400 companies ranges from multi-million dollar manufacturing businesses to hobby makers, supporting over $1 billion is combined sales revenue in 2022. To date, Katana’s founding team has raised more than $51 million in funding from VC firms and angel investors and scaled its team of six to 140 employees across North America, Europe, Asia, and Oceania.