According to McKinsey, e-commerce sales penetration in the United States more than doubled to about 35 percent in 2020 from around 16 percent the previous year, the equivalent of roughly ten years of growth within a few months.
But DTC is just a trending acronym for what has been called “disintermediation” for years. The direct-to-consumer trend essentially means bypassing traditional “middlemen” including retailers, wholesalers, distributors and advertisers in order to connect directly with the end consumer.
Researchers recommend that in the medium- to long-term, brands that want to thrive will need to aim for a 20% DTC business, or higher.
Early movers in the DTC space including legends like Warby Parker and Dollar Shave Club who essentially reinvented how to do business online – were ready to seamlessly transition to a different economy when the pandemic hit.
Brands with a successful DTC business saw their ecommerce sales climb to almost 50 percent of their overall revenue, a level expected to persist or increase as consumers continue to demand flexible purchasing and delivery options.
Now as we head into 2022, many businesses are still playing catch up when it comes to DTC and digital commerce. We call them “commerce conservatives” the brands that hold on to the past… as if it’s coming back.
The world of commerce moves quickly and now that we are waking up from the 2020 hangover, companies are realizing that the backbone of a sustainable DTC operation is driven by nimble supply chains, distributed logistics and with the right technologies and partnerships.
Here is our prediction on the Top 10 DTC Trends of 2022. We can see that there are several levers to pull and trends to follow that will impact how organizations can craft the right DTC approach for the coming year and beyond. This list of the top 10 DTC trends for 2022 will help you customize your strategic plans for the coming year.
- DTC Acceleration
- For 2022 companies are waking up to the fact that just selling online is very different from building a sustainable ecommerce business.
- The top priority for a comprehensive DTC strategy does not start with your website or marketing plans, it starts with aligning your supply chain and logistics and preparing for DTC growth from the bottom up, not the top down.
- Another advantage for 2022 is that DTC brands are realizing how important it is to own their first-party data, which gives them access to a deeper level of customer and trend data, (think beyond Amazon).
- For brands that have accelerated DTC in 2021, the shift will now focus on improving the customer experience as experts estimate that 30 percent of consumers who have a poor DTC experience with a brand don’t return, and that rises to more than 70 percent if they have had three bad experiences. Shipping delays, delivery issues, out of stock items, poor return process, this can all cascade to thwarting the best laid marketing plans…
- Just getting started? The benchmark should be; start with Amazon + your DTC website, expand from there
- Multichannel Matters (thinking beyond Amazon)
- It took awhile for big brands to catch up to Amazon, now we’re seeing the same trend on Walmart.com, it has surpassed eBay to become the second-largest marketplace and it accounts for 6% of all online sales.
- The proper approach should be to prioritize customer experience, per channel. Shoppers like Amazon for convenience, but maybe it’s not where they’re going to buy clothes, cream cheese or tires.
- Also understanding your brand’s “gray market” is essential going into 2022. The gray market are the 3P resellers on every marketplace from eBay to Amazon to Walmart.com and beyond.
- But customers are encountering 3P sellers not handling your brand or pricing properly
- The first step would be to establish a brand presence for your products on Amazon and Walmart, whether you’re selling directly there or not (ask us how to do this).
- But there are other niche channels as well that should not be overlooked, as multi channel fulfillment partners (like Amazon) make it easier than ever to fulfill orders across marketplaces
- The convergence of digital and physical in retail
- You see it all the time, major retailers are turning some of their traditional brick and mortar stores into “dark stores” or fulfillment centers, this is only going to accelerate in 2022
- In store pickup, curbside pick up, shop online pick up in store, shop at the store and have it delivered to your home… all of these options enhance the customer experience but require monumental shifts in infrastructure and technology on the backend. Don’t wait another year to figure this out, customers won’t wait for you to invest in the future.
- Shoppers have choices and a lot of that is based on geography, understand your Manhattan customers and your Kansas City customers, because the experience is going to be vastly different, especially for CPG brands that can get into programs with Amazon and Walmart for speedy delivery options.
- Digital Commerce for Live Events
- Spaceshop is one of the leading providers of digital commerce solutions for the live event industry. We understand that events are lightning in a bottle and that attendees and exhibitors are now looking for better options when it comes to digital commerce
- Trade associations and consumer event organizers can now easily offer niche marketplaces, B2B purchasing paths and other digital commerce first offerings that tie the show flow to an “add-to-cart” experience for their audience
- Although the live event industry is still not where it was in 2019, events are slowing coming back and now that most events offer a “virtual” component, it only makes sense to also offer a digital commerce experience in tandem with the live show
- Limitations like logistics and transaction processing can all be customized in order to create a digital commerce platform that is right for your event and audience and plans for future growth
- Social Media and Shopping
- Instead of redirecting users to other channels, users can often review and buy right there in the moment on their social media channel of choice
- The concept itself is not new per se, but social media shopping experiences are accelerating, which is what makes social shopping suddenly a lot more interesting
- Data shows that social media users seek out inspiration from the friends, influencers and brands, they follow which can lead to instream purchase decisions
- But brands should consider this a curated experience and a gateway, not the total experience. For example social media users are not Amazon shoppers, they’re not there to shop, you’re interrupting their experience, so the products you present should be lower cost, simple, visual and easy to ship.
- Also making this shopping experience super seamless every step of the way is key, reducing friction points and offering direct and one-click purchasing options will boost consumers’ confidence and sales.
- Livestream Shopping
- From TikTok to Amazon Live, Instagram, YouTube, and up and comers like NTWRK, live stream shopping is both discovery, entertainment and ecommerce… it’s the evolution of QVC
- From influencers to brands to creators and people in their basements, live stream shopping is one of the most interesting aspects of DTC for 2022
- The barriers to entry are low, but having professional production quality, and engaging “host” and a well-defined “show” are critical to success
- Offering exclusives and incentives is also a component of this growing trend for 2022
- Buy Now, Pay Later
- Bottom line here is that DTC for 2022 is all about choice. Your customers want to shop how and where they want, select a customized delivery experience for the products they’re shopping for, and they now want to pay how they want.
- This isn’t a fit for every brand, but it is a growing trend especially for brands that target a younger audience
- There are a multitude of shop now pay later apps that can be easily added to your DTC website, even as a test or pilot program
- According to research from Grand View Research, “the global buy now pay later market size was valued at USD 4.07 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 22.4% from 2021 to 2028.”
- According to a survey of 6,500 adults conducted by Cardify in 2020, “around 44% of customers said that buy now pay later solutions play an important role in determining how much they spend over the holidays.”
- Another recent survey also says that 48% of customers said that BNPL solutions allow them to spend 10% to 20% more than they would by their traditional credit card.
- Subscribe & Save
- Stocking up on toilet paper was a light bulb moment for brands and retailers. For commodities and consumables, it just makes sense to put some of these products on autoship. Making it attractive from a pricing standpoint it’s also an added value to consumers, and can help defend a merchant’s recurring revenue predictions.
- Organizations of all sizes and in several categories can now delight their customers with intentional and curated subscription-based products and services.
- There is also a net benefit of brand building with the subscription model. It works really well for almost any CPG brand because the customer benefits from convenient auto-renewals and builds a deeper relationship with the brand.
- Meanwhile, the business generates predictable revenue – because, so long as you continue to provide value for the customer, they will continue to pay for it.
- Subscriptions also help with inventory planning and forecasting, so there are organizational benefits that transcend the marketing department.
- Consider building out a new subscription model for your audience, Spaceshop can help you design, build and manage your DTC subscription business for 2022.
- Enhanced Personalization
- DTC shoppers want to feel that their shopping experiences are curated and unique to them, unlike the mass marketing strategies of the past.
- Industry research indicates that consumers will spend more when their shopping experience is personalized. But that is sometimes easier said than done. As you look to 2022 and the growing trend around personalization of DTC brands and ecommerce sales, it’s going to start with the fundamentals and that starts with the data.
- Have a good platform for harvesting and understanding customer data, across channels, Spaceshop can help you figure out a technology stack that makes sense for your business, budget and goals.
- Consider a chat bot for your website and app because AI-driven chatbots can be configured to engage customers and nurture them through purchase funnels.
- Creating a solid influencer program is another way to enhance your personalization efforts, and start thinking beyond just the tech stack.
- Seek out influencers that line up with your reputation, that have deep penetration in your core audience’s channels and influencers that align with your brand ethos. How they engage with your audience is up to them, but providing a structured program can go a long way ensuring your investments in influencer marketing feel authentic and personalized to your audience.
- To further the personalization play, consider your packaging and delivery experience and what that “feels” like to the end customer. Are you shipping generic cardboard boxes? Or are you shipping branded packaging with personalized notes that welcome the customer. It’s all about marketing’s time to shine at this point in the funnel.
- Multi Channel Fulfillment
- Supply chain, shipping and fulfillment methods are the lifeblood of your DTC efforts. The best website and marketing campaigns in the world won’t help you be successful if you’re out of inventory or it takes a long time for the end customer to actually receive your products.
- 30 percent of consumers who have a bad experience with a brand don’t return, and that rises to more than 70 percent if consumers have three bad experiences.
- A recent study from Oracle found that 80 percent of consumers will cut ties with their favorite brands if products are delayed or out of stock, and 58 percent of consumers said they would stop buying from a brand altogether after one to three delays or disruptions.
- Multi Channel fulfillment methods can help to mitigate logistics choke points and offer a much more nimble approach to multichannel commerce
- There are partners like Amazon that will even fulfill orders that flow in from your website and other channels, and taking advantage of Amazon’s low shipping rates is also an advantage. The only disadvantage with MCF from Amazon is that you’re putting all your eggs in one basket. When Amazon goes south, so do you… (think April 2020).
- With supply chain and logistics constraints, DTC brands have no choice but to work from the ground up to create a more nimble approach to fulfillment, if this is something you need help with, let our DTC fulfillment experts help you craft a plan to scale.
Need help crafting or accelerating your DTC strategy in 2022? Spaceshop specializes in helping companies, brands and retailers boost their sales across the marketplaces and channels that matter the most. Consider connecting with one of our specialists by reaching out here. Or call 888-651-1554 to speak with one of our specialists.