Direct To Consumer 2020
In recent years manufactures of consumer packaged goods(CPG) have had three options to deliver products to consumers. The one that made the most change prior to this year have been online retailers who often promote their products before other brands and also send “substitutions” in place of the intended product. The more traditional distribution channel have been retail stores which have always been an effort in seeking shelf space and competing with store brands. Traditional retail was also making the turn to go online prior to 2020. In 2020 it has been direct to consumer (DTC) that has seen a sudden uptick.
In a year where going to the store has been prohibitive many consumers preferring in person retail have gotten increasingly more comfortable with online purchasing. This combined with shortages that have occurred this year led many consumers to use DTC sites for the first time.
The advantage to consumers of online retail is choice, speed, and price. The advantage to consumers of DTC is knowing they will get the product requested. These two different modes of consumer behavior would be brand loyal for DTC and switchers for online retail.
Combined with the increase in DTC along with the unique consumers that utilize it there is an opportunity for high volume manufactures to deliver directly to the consumer in addition to selling in areas where there is a high amount of interest. Online retail is optimized for choice and speed which have the product go through many different types of handling to the final destination requiring more robust packaging. Delivering directly to consumers means less chance of post manufacturer mishandling of products. In addition DTC consumers are more concerned with staying stocked with a product which opens up the willingness for periodic deliveries via a subscription. Delivering to consumers on a schedule is a level of optimization not available to online retailers.
While online retailers, traditional retail, nor direct to consumer is going away opportunities have changed.
