Direct To Consumer: Impact On Consumer Expectations

Cutting out the middleman has helped many retailers provide a quicker experience for consumers. Some may argue that it also enhances the quality of produced products.

In today’s tech-savvy age, providing a direct-to-consumer (DTC) experience has slowly worked its way to becoming the norm. Merchants are bypassing third parties to help bring products and services to consumers without any added hassle.

Reaching out directly to consumers has likely had an impact on their expectations as far as both speed of service and quality of merchandise.

With eCommerce sites like Amazon and Alibaba taking over a majority of the industry, it may be hard for companies to not sell their products there instead of in traditional brick-and-mortar stores. One of the latest examples of this, as we reported recently, was Nike’s decision to finally start selling its shoes on Amazon after an arduous two-year back-and-forth with the eCommerce giant.

Ecommerce has become the ultimate driving force behind the direct-to-consumer model. As one of the largest retailers in the industry, Amazon is pushing other retailers to innovate beyond the historical avenues as it moves to brick-and-mortar locations. At the recent Future Stores retail conference, retailers from around the country were discussing just how to deal with eCommerce’s impact on their stores.

In IBM’s 2017 Customer Experience Index Study, it was revealed just how much the eCommerce arena, and subsequently DTC, is having an impact on customer expectations.

Most retailers are failing to meet customers’ expectations according to the study. Out of a score of zero to 100, customer satisfaction was rated at an average of 33, which comes to approximately 40 percent of retailers lagging to live up to expectations. Omnichannel shopping experiences were identified as one of the major contributing factors to retailers not meeting customers’ expectations in the online arena, where most DTC activity takes place.

Within the report, IBM shared that “Brands struggle to personalize the omnichannel shopping experience and to provide self-service customization capabilities. Only 19 percent of brands offer more than a basic level of personalization of the online experience.”

IBM also found that just over half (53 percent) of brands were providing customers with information outside of basic inventory. A mere 17 percent of brands were going beyond inventory details and into more personalized or tailored experiences. An astounding 30 percent of brands provided inconsistent or no supply chain data at all across its channels.

In DTC news this week, a new company is entering the space that’s hoping to disrupt it entirely. Brandless is an online DTC retailer where everything is $3, and the products include basic everyday household products and groceries.

Barnes and Noble may be heading into the DTC business with its new hire announcement. The brick-and-mortar bookseller has hired on retail vet Carl Hauch who has over 20 years of experience in the DTC space. As Amazon moves into physical locations for bookstores, this may be Barnes and Noble’s effort to help win back the bookstore space.

While the DTC avenue has worked its way to become a popular customer interaction, IBM’s study shows the retail industry has a long way to go.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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