Executive Summary

The direct-to-consumer (D2C) brand movement has flourished in recent years, but it may finally be reaching a point of reckoning. As the venture and financial markets rationalize, there will be separation between the next great brands from the also-rans. Which brands have what it takes to make the leap into the mainstream?

What’s the current size and growth of the D2C market?

We forecast that D2C sales will account for $17.75 billion of total ecommerce sales in 2020, up 24.3% from the previous year. While overall sector growth remains strong and outpaces total US ecommerce gains, momentum is slowing.

Why are many D2C brands now struggling to grow?

The same low barriers to entry that enabled D2Cs to spring up overnight have also led to overcrowding and increased customer acquisition costs (CACs). Many D2Cs also lack the competencies to scale their brand via new advertising and sales channels.

What are the common elements of great D2C brands?

The most powerful brands combine modern-day aesthetics, high-quality product design and experience and differentiated positioning within their category.

Which advertising tactics are D2C brands using to reach their next phase of growth?

Many D2C brands are evolving beyond performance-based search and social ads to more traditional branding media, like TV, podcasts and out-of-home, but they are doing so while incorporating performance advertising principles.

How are D2C brands getting into physical retail?

D2C brands are expanding distribution by opening permanent stores, pop-ups and creating retail partnerships with traditional brick-and-mortar retailers.

WHAT’S IN THIS REPORT? This report provides the latest trends in D2C brand adoption and analysis of how D2Cs can best position themselves for long-term growth.

KEY STAT: In the US, we estimate that there will be 87.3 million D2C ecommerce buyers ages 14 and older in 2020, up 10.3% from the prior year.