There’s no denying that DTCs won 2019—and new research shows they stand to be the victors of 2020, too.
A recently released study from Diffusion PR revealed that over the past year, 40 percent of consumers have purchased from a direct-to-consumer brand. That number is slated to grow by a whopping 50 percent over the next five years.
Analysts said four major industries—apparel, big retail, tech and wellness—are being disproportionately impacted by DTC’s rise, with consumers looking to innovative startups for their enticing “culture of convenience and exceptional customer service.”
More than one-third (35 percent) of consumers said they look to DTC brands for their health and beauty purchases, while a near-equal number (34 percent) said that they preferred these brands for apparel. About a quarter (26 percent) of consumers said they preferred to purchase tech gadgets from DTCs over traditional retail.
While direct-to-consumer brands possess a number of qualities that are sure to pique shoppers’ interest, the prevailing reason respondents chose DTCs over traditional retailers in 2019 was cost. Nearly half (48 percent) said lower-priced goods were their primary motivator for turning to DTCs, while more than two-fifths (43 percent) said they were swayed by fast, free shipping and convenient returns.
Even in today’s constantly connected digital landscape, only about one-fifth (19 percent) of shoppers said they discovered their favorite DTC brands through social media or influencers. Nearly the same number of shoppers said they found brands through print or online ads (18 percent), and 14 percent said they relied on print or online reviews to direct their search for new products. Word-of-mouth recommendations accounted for 15 percent of new consumer engagement with DTCs.
When it came to purchase, though, consumers were hesitant to pull the trigger without third-party validation.
Diffusion PR’s research showed that more than a quarter (26 percent) of Americans still look for positive media coverage about a product or brand before whipping out their credit cards.
And while DTCs have revolutionized retail through their decidedly 21st century brand of virtual engagement, it turns out that consumers still crave the brick-and-mortar experience. Over the past year, DTCs have been quietly invading physical retail spaces, dipping a tentative toe into traditional retail.
More than one-third of shoppers (37 percent) said they were interested in visiting physical storefronts run by DTCs so they could get a better sense of their products. And despite near-ubiquitous offers of fast, free shipping, 32 percent of consumers said convenience was a reason they’d be interested in visiting a physical store instead. More than one-quarter (28 percent) said they wanted to walk out with their purchase instead of having to wait.
While the data reveals the potential for expanding omnichannel strategies as DTCs head into 2020, it also reveals that there’s hope for traditional retail. As it turns out, digitally native startups can’t stamp out the joy of shopping in person.
“We found that while DTC brands are shifting purchasing habits, there is room for both DTC disrupters and traditional retail brands to gain (and keep) customers,” Diffusion PR analysts said.
By delivering on “timeless factors driving purchase intent,” like fast shipping, low prices and superior customer service, DTCs and traditional retailers may both emerge as contenders in the new year.