Rise of Direct to Customer (D2C) E-commerce

Direct-to-consumer online sales, or D2C, have been fast on the rise. In 2019, the D2C market represented $14.28 billion of revenue in the U.S. Today, it’s worth $21.25 billion (growing almost 50% in two years). The appeal of D2C is as clear for consumers as it is for brands. Consumers gain direct access to brands whose products they love, and prices are lower as a result of cutting out the “middleman” retailer. Consumers also gain a more personalized service and a look behind the curtain at the brand itself.

Brands, for their part, do face more competition but also gain control over how their brand is represented. They also gain direct access to consumers and create more meaningful (and enduring) connections with them.
Some D2C brands are digital natives and others are long-established brands that saw the writing on the wall. No matter the channels they sell on, with 88% of consumers preferring to buy directly from brands, D2C is fast becoming a new standard for the market.

D2C Changes the Landscape of Competition

D2C sales are growing at two and a half times the rate of overall e-commerce (which, itself, is growing fast). Big online retailers and brick-and-mortar stores have both taken a hit due to this trend. On top of that, with changing consumer preferences, the competition for D2C brands looks very different today than the standard retail competition five years ago.

Back in 2016, e-commerce was already big. Even more retailers were popping up online and ensuring an omni channel experience for their customers. Any brand looking to sell D2C then had those big-box retailers to compete with. Today, the number of brands selling D2C online is enormous. This means brands have more companies to compete against, however, the competition isn’t as “unreachable” as big-box retailers felt five years ago. Competing with another brand like your own is far different than racing against Macy’s, Sears, or Best Buy.

D2C e-commerce sites still make up the minority of the estimated 24 million e-commerce sites online today, yet they still enjoy consumer preference with the personalized experiences they offer. This means a colossal opportunity for the D2C brands who position their products right. Learning from the competition is the first step to stand out. Brands do this with a strategy that ensures they’re able to track competitors on a regular basis.

D2C Supports Deeper Customer Relations

D2C brands helped attract new buyers to e-commerce and have also increased spending per buyer. In 2020, D2C spending increased by almost 13% to $203 per buyer per brand. Successful D2C brands use data management technology (primarily customer relationship management software [CRM] and product information management software [PIM]) to personalize everything they can in the buyer journey. This maximizes relationships with each consumer, which is the principal practice driving spending trends.

For example, personalized product suggestions can be segmented down to the granular level. The product logic for segmented suggestions can be stored in PIM, and the communications that include the suggestions are managed in CRM.

This level of personalization is not only a sales tactic, it’s what consumers today expect. According to an Adobe survey, 42% of consumers get “annoyed” when content isn’t personalized to them. It feels “irrelevant” and is enough to turn a consumer off to a brand entirely. In fact, 66% said that encountering a lack of personalization or a poor design of the content is enough to stop them from making a purchase. The infrastructure for these personalizations is in place at just 38% of the largest companies in e-commerce. D2C brands do best when selecting a modern CRM and PIM solution to ensure they don’t get lost in the shuffle.

D2C Lets You Control Your Success

In D2C e-commerce, there’s a lot more responsibility that falls on brands. Instead of selling products in bulk to a retailer that has its own traffic, the brand has to generate its own traffic. D2C brands also have to support their websites, fulfill a much greater number of orders, manage customer data, optimize product information, and collect customer reviews. At the same time, all that responsibility brings opportunity. Every part of a brand’s image, marketing, and internal processes can be built to support that brand’s priorities. D2C brands can also ensure full use of proprietary websites and apps that fit into their bigger strategy. The more brands leverage this control, the more they’ll be able to help consumers feel even closer to them. This is what today’s consumers are after, and it’s a win-win for brand and buyer alike.

Why should everyone care?

D2C eliminates the barrier between brands and the consumer. The model gives D2C brands access to a new kind of competition, greater control over their image, and deeper relationships with customers. With 88% of consumers preferring to buy directly from brands, it’s clear that D2C e-commerce is already important to just about everyone. It’s equally important to the brands reaching those consumers. Even consumers who haven’t adopted online shopping yet and those brands who haven’t taken the D2C plunge will be impacted by these trends as part of the future of e-commerce. With changing consumer expectations and a new buyer journey, these changes will impact all of retail.