Diffusion’s 2020 Direct-to-Consumer Purchase Intent Index

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If American consumers are buying it, then direct-to-consumer (DTC) companies are selling it—redefining the way Americans shop for everyday items that were once brick-and-mortar staples.

Across all industries, shopping habits are shifting to match a growing culture of convenience and exceptional customer service, a focus made popular by DTC brands. Traditional retail brands have been, however, taking cues from these DTCs to maintain a stake in their industries – but is it working?

To shed light on the issues, Diffusion investigated the motivating factors behind consumer purchasing habits to see where DTC and traditional retail stand and where they have room for growth. The results are in our 2020 Direct-to-Consumer Purchase Intent Index, live today. We found that while DTC brands are shifting purchasing habits, there is room for both DTC disrupters and traditional retail brands to gain (and keep!) customers by maintaining and one-upping critical, timeless factors driving purchase intent in modern retail: faster shipping, cheaper costs and superior customer service.

DTC has Cracked the Consumer Code

As purchase options for products continue to grow, Americans are taking more care to make educated decisions on what they purchase and from where they purchase it. In the past year alone, 2 in 5 Americans purchased from a DTC company, with that number projected to grow by nearly 50% in the next five years. We’re seeing a true shift in the marketplace, with at least four major industries (wellness, apparel, big retail, tech) where more than a quarter of American DTC purchasers are shifting their purchases from traditional retail to DTC. The industry most threatened by the shift is the wellness category, with the highest percentage (35%) of Americans buying these products from DTCs over traditional retail.

The Power of Earned Media

While our research shows how factors of convenience play a critical role in the consumer decision making process of whether to buy from a DTC brand over traditional retail, over a quarter of Americans (26%) still look for positive reviews or coverage by the media before making such a purchase. Media influence is strong, and many consumers aren’t willing to buy items they see online without a trusted source confirming it’s worth the purchase, and their time.

The Future of Retail and Realignment of the Marketplace

As the retail marketplace continues to adapt to the rise of DTC competitors, consumer sentiment is shifting and the differences between DTC and traditional brands are leveling off. This year’s data found that 22% of Americans plan to make at least 40% of their purchases from DTC brands in the next five years, down from 33% who planned to make these purchases in 2018. While there is still a 50% growth projected over five years, the findings do suggest a slower growth pace than initially predicted, likely due to the fact that more DTC companies have entered the landscape to compete for market share.

Want to learn more about the opportunity both DTC companies and traditional have before them by ensuring the shopping experience of new customers is an outstanding one? Or how the lines between DTC and traditional retail will continue to blur as each borrow from each other’s playbook? For the full findings of Diffusion’s 2020 Direct-to-Consumer Purchase Intent Index, click here to request your copy.

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