The direct-to-consumer (DTC or D2C) trend has been popular among retail businesses for a few years due to a number of advantages. However, the COVID-19 pandemic has accelerated adoption. According to a study Open a New Window by Insider Intelligence, D2C sales are expected to reach $175 billion by 2023. It is also predicted that the DTC industry will include mostly retailers.

Now the fascination with D2C seems to have begun to wane. Part of the drop can be attributed to many retailers pivoting quickly during the D2C boom. Another part is that consumer expectations are changing rapidly, and the “DTC” labels and inscriptions have become so blurred that the distinction between a digital-native retailer and a brick-and-mortar retailer is virtually impossible. distinguishable.

So is there any hope for the DTC brand? And are there any opportunities to maximize sales and brand relationships for consumers, especially the younger generation? Diffusion recently conducted a study to find out, of which here are some conclusions.

A significant number of consumers made a purchase last year

Research shows that around 63% of consumers have made at least one purchase from a DTC company in the past year. This is compared with all respondents (100%) who predicted in 2018 that they would make at least one purchase, and 70% made at least one purchase by 2020.

Furthermore, as we look ahead, consumer spending projections are mostly flat from 2021.

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According to research, in 2020, about 26% of D2C consumers say direct-to-consumer brands are the arbiter of what’s cool and trendy. Now, while brick-and-mortar retailers have had time to catch up, only 13% of D2C consumers say direct-to-consumer brands have a trend-setting aesthetic. That’s an increase of nearly 50% since 2020.

Consumer perception of the DTC brand has changed

According to research, consumer perception of D2C brands has changed over the past two years. For example, in 2021, 57% of D2C consumers said if a brand offers guaranteed, free, and fast delivery, they will be loyal customers. However, in 2022, only 12% of consumers said they would prefer to shop with D2C brands because they offer free and fast shipping.

Additionally, in 2022, only 26% of consumers said DTC brands are easy to buy online using e-commerce channels, compared with 31% in 2021. Additionally, only 17% of consumers in 2022 says DTC brands have overall superior customer service compared to 21% in 2020.

The dominance of brick-and-mortar retailers remains strong

Traditional retailers have faced a number of challenges over the past two years, such as the COVID-19 pandemic and supply chain disruptions. However, their reign remains strong as many consumers prefer traditional shopping methods. There are several reasons why consumers prefer to shop from brick-and-mortar retailers, such as convenience and accessibility over DTC brands, existing trust, and availability. Here are the top consumer motivations to buy from brick-and-mortar retailers in 2022.

Customers want a better and more affordable return policy

Traditional retailers should deploy more opportunities to be able to move the needle among key demographics. Consumers want more affordable prices and better return policies when looking at the products they need.

When consumers consider buying from a brick-and-mortar retailer, 24% said they are more likely to buy from a brick-and-mortar retailer that offers a price guarantee in line with D2C competitors. About 23% are more likely to purchase from a retailer that offers a 100-day no-questions-and-answer policy. Additionally, 15% are more likely to buy from a brick-and-mortar retailer that has more stories and reviews about the product, which will make the buyer feel confident about the quality.

DTC brands have the opportunity to connect with young audiences

D2C brands have an opportunity to capitalize on their online popularity and connect more directly with younger audiences. This can be done by leveraging the virality of online marketing, influencer impact, and traditional media relations tactics.

About 20% of consumers who say DTC brands are generally aesthetically pleasing and trendy by 2022 are in the 18-34 age group (compared to 14% of consumers aged 35-54 and 5 years old). % of older shoppers 55 and older). Similarly, about 12% of people who are more likely to buy from a D2C brand if they see a lot of media reports or influencer posts by 2022 are in the 18-34 age group.

Value-based marketing will connect brands with the younger generation

In addition to targeting younger consumers through media relations and influencer marketing, research shows these generations aren’t just concerned with aesthetics. While DTC brands should focus on quality and customer service, they will be more likely to connect better with younger consumers if they also focus on value-based marketing and brand engagement. shared value.

Among consumers who said they want to buy from a B2C brand because of their commitment to using more organic and eco-friendly ingredients than a traditional brand by 2022, 19% are 18 years old and over 34 years old.

Expectations

Research shows that if consumers continue to buy from DTC brands, their passion for DTC is likely to fade. And consumer perception of DTC has changed. But DTC brands and retail companies trying to move in this direction still have the opportunity to maximize brand affinity and sales, especially among the younger generation. By taking the necessary steps to meet consumer expectations, such as better return policies, affordable prices, aesthetics, and value-based marketing, DTC brands can expect to wait for a successful year.

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