DTC delivery model increased since early 2020

Category: Data & Insights
DTC delivery model increased since early 2020

Nearly six out of ten European organisations (59%) across ecommerce, manufacturing, retail, transport and logistics supply chain, and wholesale say their investment in the DTC (Direct-to-Consumer) delivery model has increased since early 2020, with a total of 18% saying it has increased significantly, according to a report from omnichannel supply chain fulfillment solutions company, Deposco.

Setting aside the financial incentives of cutting out a retail channel and adopting a D2C strategy, Asendia discovered that overwhelmingly, UK shoppers feel brands that operated Direct-To-Consumer (DTC) were more authentic than those retailers who just operated via marketplaces. Over half (54%) of UK consumers felt that retailers that operated their own DTC channels were more authentic. Even if customers choose to buy through alternative channels they will likely spend more money with retailers they perceived to be authentic, with 56% saying they would only shop exclusively with authentic retail brands.

However, organisations are also facing a range of barriers related to people and technology when it comes to achieving the DTC success they are seeking. These include, in the former category, lack of skilled staff, highlighted by 17% of the survey sample and culture of the company (16%), and in the latter, physical infrastructure (19%) and difficulties identifying the right infrastructure for DTC (16%).

Getting the right team in place is crucial according to Adrien at Mirakl, it’s not just getting buy in from the board, there’s actually a lack of talent of people that can operationally run ecommerce businesses from marketplaces to channel and DTC. Indeed, while one might on the face of things think there is plenty of talent available due to the massive tech lay offs from FANG companies, the reality is that while many will be strategically useful, others have been previously hired or kept on simply to prevent them defecting to competitors. When times are good, such as during pandemic booms and you are future proofing your talent pool for quick execution, this doesn’t retain the same appeal when the salary bill remains high and growth significantly slows.

The latest technology is key in helping businesses protect themselves from failing to fulfil customer expectations when operating DTC. Deposco’s findings reveal that many organisations are considering complete categories of products and even their whole range through DTC. Organisations must ensure that they are investing in people and technology and making sure that that their systems and processes are working at optimum efficiency levels. Putting money behind order management and fulfilment will be a key part of that.

Almost a third (32%) of the businesses surveyed said they already do offer, or would anticipate offering, their entire product range through DTC. A further 32% referenced offering complete categories.This is a market whose sales potential is soaring, and the survey results indicate a confidence in its potential to grow even more strongly across Europe over the near future and longer term.

42% of the survey sample highlighted investing more in order management and fulfilment technology as a key way of protecting themselves from failing to fulfil customer expectations when operating DTC while 29% referenced creating real-time visibility across all inventory locations.

As well as the headline numbers about DTC growth, our survey shows that companies have generally seen increased sales through DTC channels. More than 9 out of 10 respondents (93%) have seen increased sales through DTC channels over the previous 12 months, with 56% seeing increases of more than 10%.

– Deposco

The rise of Direct-to-Consumer models is showing no signs of slowing. In this DTC environment, organisations need to find new ways to drive operational efficiencies across increasingly complex warehouse environments. Furthermore, embracing DTC will require high-quality warehouse and order fulfilment solutions that can support new functionality as and when needed, concludes the report.

You can read the full Deposco report here.


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