Data Shows the Rise and Fall of D-to-c and What’s Next
Despite sentiments from just a few years ago, consumers no longer view direct-to-consumer brands as being the arbiters of cool, according to new data from Diffusion’s annual 2023 Direct-to-Consumer Purchase Intent Index.
The index, which looks at the last five years of consumer spending trends, demonstrates the ever-changing retail landscape and consumer sentiments, especially as popular direct-to-consumer brands experienced a rise and fall during the pandemic. The report shows consumers care more about convenience and affordability (especially in times of inflation and economic uncertainty) and further unveils where consumers are willing to spend and why going into the holiday season.
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As consumers seek more affordable prices and better return policies when it comes to getting the products they need, 29 percent of survey respondents said they are more likely to purchase from a traditional retailer that offers fast, free shipping over a direct-to-consumer brand and another 23 percent said they would be more likely to purchase from a traditional retailer that offered a 100-day return policy, no questions asked.
At the same time, 26 percent of consumers said they are more likely to purchase from a traditional retailer that they already trust and 24 percent agreed they are more likely to purchase from a traditional retailer that offers a price match guarantee with direct-to-consumer competitors.
Kate Ryan, managing director at Diffusion U.S., said that while part of the direct-to-consumer decline can be attributed to traditional retailers quickly pivoting in the direct-to-consumer boom by bringing direct-to-consumer brand in-house and adopting direct-to-consumer methods like fast and free shipping, “the other part is that consumer expectations have fundamentally changed and the [direct-to-consumer] label and lines have blurred so much that nothing really separates the ‘cool,’ digitally native brands from their brick-and-mortar counterparts.”
According to the report, for 35 percent of consumers, traditional retailers are more convenient than direct-to-consumer brands, which goes a long way since this year’s findings saw that only 13 percent of respondents think that direct-to-consumer brands are “cool and trendy.” A key finding in the report was the noticeable difference from 26 percent of Americans believing direct-to-consumer brands to be arbiters of what is cool and on-trend to the just 13 percent who fell the same this year.
Consumers were also less likely to say that direct-to-consumer brands are easy to shop online and perceived to be e-commerce driven, falling from 38 in 2020 to 26 percent in 2022. The perception that direct-to-consumer brands have superior customer service has fallen slightly as well from 21 percent in 2020 to 17 percent in 2022. Additionally, whereas just last year 57 percent of d-to-c consumers agreed that if a direct-to-consumer brand offered guaranteed, fast and free shipping it would secure continued loyalty as a customer, the same was true for only 12 percent in 2022.
Importantly, the love for direct-to-consumer brands is not completely gone and 60 percent of consumers confirmed they had made a purchase from a direct-to-consumer brand in the last year. As a key learning, the authors of Diffusion’s report recommend that brands lean into the online popularity with younger audiences. To do this, the company suggests reaching young consumers more directly by leveraging the virality of online marketing, the rise and impact of internet influencers and traditional media relations tactics. More than any other generation, 18 to 34 years old Americans said they are more likely to purchase from a direct-to-consumer brand if they see a lot of media reporting on it or inclusion in influencer posts.