Retail

Direct-to-Consumer CPG Sales Are Going Mainstream

Direct-to-Consumer CPG Sales Going Mainstream

Consumer packaged goods (CPG) brands and their merchant partners held eCommerce at somewhat of a distance for years, even as they steadily increased their investments in digital. Because brick-and-mortar stores did the big numbers, the old rules favored physical retail.

COVID-19 swept that away, as is now clear across most industries and verticals. Direct-to-consumer (D2C) engagement took over almost organically as lockdowns kept stores off-limits. And like other digital shifts observed in 2020, the move to D2C looks to be enduring.

“Our research strongly suggests that CPG brands face a unique opportunity to capture customer loyalty and drive engagement,” according to PYMNTS’ new D2C and the New Brand Loyalty Opportunity Report, done in collaboration with sticky.io. “The current shift’s durability will depend on brands’ abilities to deliver product availability, offer seamless eCommerce experiences and leverage digital tools to forge long-term personalized relationships with customers.”

Decisive Factors

After surveying nearly 2,200 U.S. consumers on their sentiments toward D2C and indirect channels, the new research found that halfway through 2020, about half of consumers are buying direct from CPG eCommerce sites.

The report notes that “50.1 percent of those who have used D2C channels for beauty and cosmetics have increased their usage of these channels, and 48.5 percent did so for online marketplaces. This indicates that brands exert strength over consumers desiring certain CPG products and that shoppers will go to the channel most likely to offer those items.”

This reflects a broader trend in D2C purchasing. “The share of consumers who reported using online channels more to purchase CPG during the pandemic exceeded the share who reported using them less by at least 20 percentage points for food and retail products,” according to the August D2C and the New Brand Loyalty Opportunity Report.

Product availability turns out to be decisive, with almost 45 percent citing this when purchasing retail products over other factors, including affordability. “D2C users’ second-most cited reason for using brand-based channels is related to the first: the ability to find the specific products, cited by 23 percent of those who purchased retail products. The ability to find a full range of products was also the reason cited by the greatest proportion of marketplace channel users.”

D2C Gaining Forever Fans

Of all the findings in the new D2C and the New Brand Loyalty Opportunity Report might be this: A majority of those who have switched to D2C purchasing won’t be going back to stores.

“Approximately 70 percent of consumers plan to maintain some or all of the new shopping habits they adopted during the pandemic over the next three years,” per the report.

PYMNTS found that 73.2 percent of those who used such channels to purchase retail products during lockdown “…plan to maintain some of their new habits, and 10.1 percent plan to keep all of them. Those who did not use online or D2C channels are most likely to revert back to old shopping habits like going to brick-and-mortar stores.”

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