Retail has another headache on the way: The popularity of D2C

According to Invesp, a third of consumers said in May that they had bought their goods directly from a producer

Four out of ten people will turn to D2C retail for 40 percent or more of their purchases in the next five years

Marketing spending for brands that sell direct to users is growing faster than that of intermediary companies

Direct-To-Consumer (D2C) is not only an increasingly popular trend among entertainment brands. According to ., it is also a resource that is gaining traction in the packaged food industry. Leading brands such as Kraft Heinz, General Mills, Kellogg’s and PepsiCo are relying more on proprietary e-commerce platforms to sell their products. In the process, they could be bypassing retail businesses.

Kraft Heinz ecommerce sales doubled in 2020, although they are still only five percent of total operations. It should be noted that its count also includes sales achieved in online retail sites such as Amazon and Walmart. In the UK, Europe and Australia, it has even started to set up subscription systems. For its part, PepsiCo launched two sites this year, to which it will put 45 percent of its capital investment in the future.

D2C is not only being preferred because it is a great sales opportunity. According to Kellogg’s, they would also be an important opportunity to obtain “data and insights” from consumers. General Mills notes that they are also seeing an “unparalleled gathering” of first-hand information about their consumers. . notes that food prices in retail sites like Walmart are still lower than in these own ecommerce.

D2C, a real danger for retail companies?

It should be noted that this trend is not new. As CB Insights points out, for some time now, several companies have shown that it is possible to be successful in retail without relying on intermediaries. They have achieved this through simple designs that allow them to charge an extra, as well as creating much more satisfying brand experiences. At the same time, they also seem to be very dependent on the virality of their brands.

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But it must be accepted that the pandemic has made the D2C business model more attractive in retail. According to Good Rebels, not only the pandemic helped fuel the growth of these types of operations. By 2021, direct-to-consumer sales are expected to still skyrocket 19.2 percent from last year. Trends such as social commerce could lead to the disappearance (or replacement) of current traditional intermediaries.

At the same time, as ADK Insights points out, agents like Walmart and Amazon are unlikely to stop being popular anytime soon. These businesses also grew like foam in the pandemic, so it is clear that they still have a role in meeting consumer needs. But with the popularity of the D2C, it could mean that these retail brands need to try harder to grow. At this rate, your allies could become rivals.

The advance of the D2C

As noted above, packaged food brands aren’t the only companies that have turned old allies upside down over the D2C trend. Companies like Disney have already launched aggressive positioning strategies for their streaming services. Along the way they have not only managed to generate income even with the closing of cinemas. Also, similar to what is happening now with retail, they threaten the survival of their historical allies.

Of course, not all D2C trends are the same. Some agents are already talking about a Quality Direct To Consumer. This concept is described as a much more specialized direct sales experience to customers. It no longer talks about intermediaries or brands selling their own products. Rather, it describes a shopping environment where users can find the highest quality goods on precise pages quickly.