Disclaimer: this in-depth analysis is a collection of personal thoughts, data points and quotes from experts. All info is publicly available. The content hereby written does not reflect in anyway the position of the company I work for.
The importance of Direct-to-Consumer
Direct-to-Consumer (DTC) brands are products, services or “experiences” that are financed, designed, produced, marketed, distributed and sold by the same company, without the need of a retailer. They bypass the middleman and connect directly to consumers. More than 40% of brands now sell DTC and are predicted to reach $130bn by 2025. The potential is huge. And the trend seems unstoppable.
DTC models are becoming more and more important for the Consumer Packaged Good (CPG) industry and many other big players. Here a few examples by well-known companies:
- Sneaker and sport apparel manufacturer Nike, grew its DTC channel eight times faster than its wholesale business in 2016. While this channel only generated $9.1 billion of revenue, or 28% of Nike brand sales for the company in fiscal 2017, it accounted for 70% of the growth
- Disney ended the deal with Netflix and it’s planning to launch its own DTC subscription streaming service soon
- Kellogg has eliminated direct-store delivery for its snack division to redirect resources and efforts to direct-to-consumer marketing and increased support of e-commerce
Big companies are investing more in DTC because of consistent disintermediation: via DTC they can get a deeper understanding of their consumers and behaviours while developing agile solutions to keep pace with start-ups’ agility.