Direct-to-Consumer News | Trends For 2022
Part I - Challenges Faced By Direct-to-Consumer Brands
Over the past few years, direct-to-consumer brands have struggled to scale. The successes of top DTC brands such as Warby Parker and Gymshark have gradually sparked a flood of competition into a space that has been fairly open until the last few years.
A number of mainstream markets such as:
Clothing and Accessories
Fashion Jewelry
Luggage and Travel Accessories
have become severely overcrowded. Consequently, advertising through paid promotions and influencer posts has become increasingly expensive, driving up the cost of customer acquisition and hurting scalability.
In addition to increased competition, brands are challenged by new policies surrounding third-party data. Google has pledged to remove cookies from Chrome browsers by 2023 and the release of IOS14 has drastically decreased the pool of available data from iPhone users.
Overall, there are more DTC companies than ever trying to advertise, and at the same time, advertising is the hardest it’s ever been.
To overcome these challenges, successful brands are focusing on:
Using brick and mortar stores to scale
Joining digital marketplaces such The Fascination and The Quality Edit
Customer loyalty
CRO and Upselling
Part II - The Rise Of Creator Commerce
In light of the current climate, three qualities stand out as significant advantages.
Low customer acquisition costs
A loyal customer base/ strong community
Access to first-party data
Influencers and content creators have these advantages inherently.
As eCommerce companies devote more attention to media, content creators are putting more attention towards developing merchandise of their own.
Creators have access to the data they need to personalize as well as retarget their audiences, they have customer loyalty, and they essentially have free advertising.
Part III - The Rise of Social Commerce
Further, social media platforms are aiding the transition. Recent updates to Instagram, Facebook, etc., support in-app purchases, allowing consumers to seamlessly transition from scrolling through media to shopping online.
While new to the United States, “social commerce,” is an established industry in the Chinese marketplace. According to eMarketer, in 2021, social commerce was a $36.1B market in the United States, but a $363.3B market in China.
*social commerce includes all sales made through social platforms whereas creator commerce is limited to sales creators make off their own merchandise
As many of the factors that led to thte rise and success of social commerce in China also exist on a global scale, it’s likely that the market will expand significantly in 2022. Overall, content and commerce should continue to converge.
