It can be argued that direct-to-consumer aspect of retail has lowered the entry barrier and served as a catalyst for startups.
Over the last few years, direct-to-consumer (DTC) retail has seen an immense growth trajectory. Due to eCommerce’s impact on retail, merchants have taken note and adapted their sales strategies accordingly by removing the middleman, in this case brick-and-mortar stores, to sell directly to consumers.
Just this past year, companies like Under Armour and Nike have seen tremendous growth in their DTC sales. Under Armour‘s DTC for Q4 saw a 23 percent increase from the year prior, and Nike‘s DTC accounted for 27 percent of its $8-billion revenue this past quarter.
In our new Direct to Consumer news series, we’ll explore the trends occurring in this space on a weekly basis. In this piece, PYMNTS had the opportunity to sit down with jewelry retailer JamesAllen.com‘s CEO and cofounder, Oded Edelman, to learn more about it and Dominion Diamond Corp.’s partnership with CanadaMark to bring the DTC experience to the jewelry industry.
Through this partnership, JamesAllen.com will sell the Dominion-sourced CanadaMark diamonds and provide a clear-cut process that shows transparency to consumers from the mine to the gift box.
“The consumer is able to go to CanadaMark.com and enter their unique tracking number to verify that their diamond is tracked from Ekati and Diavik. They receive confirmation of their diamond’s details, including the original rough diamond weight and its final polished weight,” Edelman said.
Ecommerce has made its impact on nearly every industry, and Edelman says the jewelry industry is no exception. The perks he believes that are derived straight from the ability to quickly sell items online include optimized supply chain management, targeting, consumer benefit overall, content and performance measurement.
While DTC sales can have a direct impact on the job of the sales person, the ability for consumers to take their time to research and find what they truly desire is beneficial for the bottom line. With consumers participating in the DTC process, the entire retail industry, including jewelry merchants, has evolved over the last few years.
“Direct to consumer grants greater control to the consumer, allowing them to purchase exactly what jewelry they want, at the best price, from their preferred site, and customized to their preference,” Edelman said. “Consumers now learn, research and buy on their own terms, versus being sold to. The consumer does a great deal of its research online for engagement ring purchase, and it is very important that CanadaMark’s message is seen to consumers to support all channels of distribution.”
It seems that the key part of the success of DTC comes from today’s tech-savvy consumers’ preferences and the desire to not hear sales pitches.
This week in DTC news, Ralph Lauren reported its shift from wholesale to retail has had a positive effect on the retailer’s sales. As we reported back in April, Ralph Lauren announced its plans to close its 5th Avenue flagship store which was a direct result from less foot traffic and sales conversions. Analysts are reporting that in just a few years, the fashion merchant’s decision to sell directly to consumers will grow to represent 60 percent of its business.
In women’s apparel retailer J. Jill’s Q1 earnings news, it showed DTC sales represented 42.6 percent of its total sales up from 40.7 percent a year earlier.
Target has announced its partnership with Minneapolis-based company Casper to sell mattresses directly to consumers through Target.com. In addition to mattresses, Target also recently partnered up with Harry’s and Bevel to get into the DTC razor business.
With many retailers’ DTC sales accounting for nearly half of their profits, it may be safe to say that it’s here to stay.