Payments and delivery drive shoppers to Amazon over DTC brands

Dive Brief:

Forty-three percent of consumers would choose Amazon over a direct-to-consumer brand because the e-commerce giant offers cheaper or free shipping, according to a report by Scalefast. Thirty-six percent said they prefer Amazon because it ships faster.
ScaleFast's report found that 38% of consumers familiar with a DTC company would be more likely to purchase from a DTC if the product was manufactured in the U.S. Thirty percent of consumers are more likely to purchase from a DTC company if its products are sustainably made.
Per the report, 26% of shoppers say that stronger payment security would improve the overall DTC buying experience, and nearly 22% of shoppers said they would like to see DTC companies offer same-day delivery options.

Dive Insight:

The Scalefast research sheds some light on the shortcomings of DTC brands.

It shows that even DTC brands aren't immune to the Amazon effect, especially when it comes to shipping. Amazon noted that its one-day delivery efforts drove sales, prompting other retailers to speed up their shipping process and slash delivery costs to keep up with consumer demand.

The report also indicated that 28% prefer Amazon over a DTC because the e-commerce giant's returns process is easier. To improve its returns, last year the company expanded its free return policy and partnered with Kohl's to accept in-store returns at all of the department store's locations.

"[O]ur research showed that while some consumers know of and buy from DTCs, this new retail category is a blurred line in the minds of most consumers," Olivier Schott, founder and CMO of Scalefast said in a statement. "If DTC brands want to become the new normal in retail, they need to learn from traditional retail mistakes, decide if Amazon is worth the risk and adapt to a changing customer that is more sensitive to concerns like their payment security to where a product is made than ever before."

Hiccups among online upstarts like Brandless and Harry's have recently provided contrast to the otherwise glowing perception of DTC brands. Still, consumers appear to be receptive to shopping DTC companies — a December survey from communications firm Diffusion found that 40% of Americans made a purchase from a direct-to-consumer company in the past year.