Dive Brief:
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Forty percent of Americans have made a purchase from direct-to-consumer (DTC) brands in the last year, according to a new survey from communications agency Diffusion. Of those shoppers, 14% said they made between 1% and 19% of their purchases from DTC companies. Meanwhile, only 2% said they did almost all their shopping through DTC brands.
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Notable categories for DTC purchasing over traditional retail included health and beauty products (35%), apparel (34%), and tech and gadgets (26%). The leading reason for choosing DTC over a traditional retailer was cost (48%), followed by fast, free shipping and easy returns (43%).
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Consumers reported hearing about DTC brands via social media or influencers (19%), print or online ads (18%), word of mouth from friends (15%), or print or online reviews (14%). Only 9% reported hearing about brands via podcast ads.
Dive Insight:
Direct-to-consumer brands have increasingly moved into the physical space, blurring the lines between their business model and that of traditional retail. In Diffusion's survey, consumers showed interest in visiting a DTC's physical store to get a sense of the product (37%), for convenience, (32%) or to get the product right away (28%). They also expressed interest in visiting multiple DTC brands in one location (27%).
The most popular locations for digitally native brands to open a store are New York City, San Francisco, Los Angeles and Boston. But that may leave out large parts of the country, forcing DTCs to find other means of attracting those customers to their brands.
Simon Property Group announced in November it would open The GuesstHouse, a space for DTC brands within The Westchester shopping mall in White Plains, New York. Other companies like BrandBox and b8ta offer tools to help make moving into brick and mortar easier for digitally native brands.
Direct to consumer businesses are also looking to temporary pop up concepts to test out physical spaces. Skincare brand Glossier, which has two permanent locations, opened seven temporary pop-up locations at Nordstrom stores this month. Birchbox announced in November it opened 500 temporary pop ups in Walgreens for the holidays.
Other brands are getting more creative with how they enter physical spaces. Furniture brand Burrow previously had partnerships with coffee shops and co-working spaces to give consumers the opportunity to view products before making a purchase and Outer created a program to allow existing customers to open up their homes to potential customers who want to view a product in person.
Some traditional retailers have looked for ways to capitalize on digitally natives' popularity, whether its by hosting pop ups or by acquiring them outright. Walmart, for instance, purchased DTC brands Bonobos, ModCloth, Eloquii, and Allswell, although it later sold ModCloth.
