Over the last decade, direct-to-consumer (DTC) brands continue to disrupt the retail landscape across all verticals. Brands like Casper, Peloton and Dollar Shave Club flipped traditional retail on its head and have inspired a slew of brands to follow, including now manufacturers.
DTC brands are known for their digital-first strategies that are hyper-focused on creating personalized customer experiences. After years of growth and adoption, let’s see how DTC brands are shaping the future of retail.
What is Direct-to-Consumer?
Also referred to as DTC or D2C, selling direct-to-consumer means a merchant bypasses any third-party distribution and sells their products directly to their end users. There’s no middleman in the process like a big-box retailer.
Without a traditional supply chain, most DTC brands sell exclusively and/or primarily online.
Let’s look at some of the statistics and trends for DTC brands.
The Size of the Direct-to-Consumer Market
See just how far the DTC market has come.
- DTC sales are forecasted to account for $17.75 billion of total eCommerce sales in 2020, up 24.3% from the previous year. [3]
- Globally, DTC startups have raised between $8 billion to $10 billion in known venture capital across more than 600 deals since the start of 2019. [4]
- Today, more than 57% of consumer brand manufacturers are embracing DTC. [2]
- From 2016 to 2019, DTC eCommerce grew at three to six times the rate of overall eCommerce sales. [3]
- Chewy is the top-ranked DTC brand for average monthly unique visitors at 14.3 million, followed by SmileDirectClub with 6.8 million and Stitch Fix with 4.1 million. [3]
- By 2022, the number of DTC eCommerce buyers will reach a milestone, at 103.4 million. [3]
Consumers Prefer Direct-to-Consumer Brands
Today’s consumers prefer the brand authenticity that DTC brands offer, along with the convenience of online buying.
- A third of U.S. consumers plan to do at least 40% of their shopping from DTC companies in the next five years. [1]
- 81% of consumers say they’ll make at least one purchase from a DTC brand within the next five years. [1]
- More than one in four (27%) American consumers will purchase DTC products in the next five years because of greater convenience. [1]
- Two-thirds of consumers expect the ability to connect directly with brands. [2]
How Direct-to-Consumer Brands Market
DTC brands are known for their savvy marketing. See how brands reach new customers.
- The top ways internet users hear about the DTC brands they bought from are social media ads (34.6%), online search (24.8%), and word-of-mouth (16.4%). [5]
- In 2019, 78% of DTC marketers said their budgets had increased, compared to 60% of traditional retailers. [6]
- In 2019, the top innovation investment priority for all eCommerce marketers, regardless of business model, is in customer data platforms. [7]
Direct-to-Consumer Brands Amid COVID-19
See how digital-first DTC brands are faring during the global pandemic versus traditional retail.
- Only 22% of DTC brands reported sales declines since the onset of the pandemic, far fewer than 80% of traditional retailers. [8]
- 52% of DTC brands experienced surges in demand since the start of the pandemic. [8]
- 85% of brands will invest further in Facebook during the second half of 2020, along with other digital channels like Instagram, Amazon and TikTok. [8]
What’s Next for Direct-to-Consumer Brands: Overcoming Customer Acquisition Challenges
Without a doubt, the DTC model is changing retail forever. Sellers are embracing digital strategies and connecting with consumers directly.
However, DTC is not the same as it was in 2010.
Fast forward to 2020 and it’s now a different game. Having a strong identity and savvy social media strategy isn’t enough to cut through the noise.
As traditional retailers like P&G and Nike start their own DTC channels, it’s becoming harder for brands to scale. Finding and acquiring customers comes at a cost.
Nearly 45% of DTC brands named ”achieving profitability at scale” as a top barrier to meeting 2019 marketing goals. [7]
Leading DTC brands though are finding more unique ways to connect with their community, while tightening up operations on the backend.
Building Your Own DTC Brand? Get Funding to Grow Your Business
If you’re building your own DTC brand online, you know it’s a highly competitive landscape. Opportunities to grow your business come and go, but you can only take advantage of them if you have cash on hand. If you’re ever in need of fast funding, you can turn to Payability. They provide funding quickly based on your online sales. It’s fast and easy. A no-brainer for most eCommerce stores.
Sources and Citation Info:
To be clear, none of the statistics above are based on research by Payability. This post is a compilation of statistics from various web sources that are cited below. We hope to give you one, convenient place to find data about DTC selling.
For any formal or academic purposes, please cite the original source of the data.
The links below are where Payability found the statistics and we encourage you to check these sites for more insights.
1. 2018 Direct-to-Consumer Purchase Intent Index, Diffusion.
2. A look ahead: Trends driving brands to prioritize direct to consumer in 2019, DigitalCommerce360.
3. Direct-to-Consumer Brands 2020, eMarketer.
4. Where top VCs are investing in D2C, TechCrunch.
5. More D2C Brands are Relying on Traditional Channels. Here’s Why., eMarketer.
6. Study: DTC brands increase marketing budgets ‘dramatically’ compared to traditional retailers, MarketinglDive.
7. Direct-To-Consumer Brands Are Out-Marketing Traditional Retailers–But It Comes At A Cost, Forbes.
8. Covid Has Direct-To-Consumer Brands Pumping Resources Into Expanded Services, Digital Channels, Forbes.
