Direct-to-consumer e-com sales grew 40% in 2020: Report

“Fears that consumer spending would dip because of the pandemic never really panned out,” said Cindy Liu, eMarketer director of forecasting at Insider Intelligence. “In fact, most people spent more money shopping online than ever before, and that was a boon for digitally native brands that were uniquely positioned to weather store closures and capitalise on the shift to online.”

“In recent years, many D2C brands realised that, in order to scale their businesses, they needed to experiment with secondary distribution channels, like opening up stores, partnering with retailers, and selling through wholesale distribution,” Liu said. “But during the pandemic, the majority of D2C brands' sales were coming from their online channels.”

Cuts Clothing co-founder and CEO Steven Borrelli had said last year that the company had planned to open a retail location in New York later in the year, but that was put on hold due to the pandemic. Instead, Cuts Clothing shifted its attention to delivering a premier online experience. Other D2C brands went through similar motions, and this digital-first approach is expected to continue, especially as the shift to e-commerce persists, said Insider Intelligence in the report.

As more stores reopen and consumers once again shop at brick-and-mortars, D2C brands will continue to expand into multiple distribution channels—with the focus still on e-commerce, the market research company said. D2Cs will also expand into new categories that are natural extensions of their brands.

Beyond this, there will be a greater focus on aligning brand values. Consumers have been paying closer attention to sustainability, locally sourced products, and whether or not brands are helping to serve communities.

“Now is the time for D2Cs to get into expansion mode and figure out how to capitalise on the growth they saw last year,” Liu said. “With shoppers feeling more comfortable returning to stores, these brands will likely face heightened competition, so the last thing they want is to lose relevancy with the customers they’ve just acquired.”

ALCHEMPro News Desk (KD)