Where Direct-to-Consumer Brands Are Winning Consumer Confidence

Direct-to-consumer (D2C) brands—encompassing everything from startups like Billie offering women’s razor subscriptions to Casper, the once online-only mattress company that has products now being sold at Target—have been growing in popularity for a variety of reasons.

Often these products speak to convenience, others woo with lower costs than big brands, some appeal to consumers who care about ethical consumption and transparent supply chains and many derive appeal from being well-designed with clever ad campaigns.

An August 2018 survey by Diffusion and YouGov sought to uncover consumer attitudes around D2C brands. Regarding future purchase intent, 81% of US internet users said they would buy at least one item from a D2C brand in the next five years. More specifically, 36% said they would make 1% to 19% of their purchases from D2C brands in the next five years.

Convenience was the leading motivator; 27% perceived buying D2C brands as easier than going to a traditional store. This idea was more common among older consumers; 26% of those ages 56 and older cited convenience as a factor compared with 17% of millennials.

Where D2C brands fell short was personalization and customer service. Just 11% of US internet users thought these brands offered more personalization or buying assistance than traditional ones, 9% thought D2Cs provided better customer service and 7% of respondents said the returns process was easier.

Only 6% bought D2C brands for the auto-replenishment features, despite that being a common selling point, especially for consumer packaged goods (CPGs). This might not seem unique since retailers like Amazon and Target offer subscribe and save programs too.

Using organic or eco-friendly ingredients also didn’t have high appeal. Only 10% overall preferred D2C brands for this reason, but 16% of millennials did compared with just 6% of those ages 56 and older, and 21% of this younger age group prioritized this factor generally.

Whether accurate or not, a marker of many of these brands’ success appears to be when they transition from ecommerce-only to opening physical stores. Eyewear brand Warby Parker was one of the first to recognize that social sharing of eyeglass selfies and the efficiency of online retail could be enhanced by interactive stores where shoppers could try glasses on in person rather than their homes. The company now has around 71 locations in 28 states (and two in Toronto).

Most D2C-brands-turned-omnichannel-retailers have a smaller physical presence, though, often augmented with temporary locations. Cult millennial beauty brand Glossier has one showroom in New York City, a store in Los Angeles and a pop-up currently running in Chicago. Allbirds, an eco-friendly wool sneaker brand, has a shop in San Fransisco and New York City, and recently featured a Toronto pop-up.

This week Walmart acquired Eloquii, a plus-size fashion brand that originally spun off from The Limited, for a rumored $100 million. The company has expanded from ecommerce to opening stores in Detroit, Chicago, Miami, Houston and Washington, DC. It’s not yet clear how Eloquii will be merchandised or if there’ll be a brick-and-mortar push, but it is apparent from Walmart’s latest move that traditional multichannel retailers see value in D2C brands.

Courtesy of eMarketer


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